The business model is the message
This is an interesting moment for Silicon Valley and its flagship social media companies. Elon Musk’s chaotic takeover of Twitter and the historic value destruction at Meta are inspiring a national conversation about the nature of social media and the deleterious effects it is having on our health and social institutions. This is of special importance to the team at Joinable: it's critical that we deeply understand the dynamics of the social media model so that we can avoid its pitfalls. Joinable is a social tool, but it must be designed in a way that leads to an entirely different outcome from today's social media products: increasing our personal mental health and strengthening our local communities. As it turns out, this may be easier than it sounds.
In a recent piece in The Atlantic titled “The Age of Social Media Is Ending”, Ian Bogost, a video game designer and professor at the Georgia Institute of Technology, recounts the invention of social networks in the early 2000s, and their rapid transformation into social media just a few years later. In it he argues that social networks were incredibly useful and relatively harmless, and that the negative effects we see today–misinformation and mental health problems foremost among them–are caused by the specific mechanics of social media. Do you remember the joy you felt when you first connected with classmates and old friends in the early days of Facebook? Or the satisfaction of building a network of professional contacts on LinkedIn only to find it useful soon after? Those experiences enriched our lives. So where did it all go wrong?
The transformation from Facebook the social network to Facebook the social media platform was caused by its decision in 2008 to go all in on the advertising business model. Facebook’s original mission statement (in 2004) was “Facebook helps you connect and share with the people in your life” which sounds like the social network we all remember. But in 2008 they hired Google advertising executive Sheryl Sandberg and started the project of growing revenue in preparation for the IPO that came 4 years later. Their choice of business model was a foregone conclusion: advertising. Not surprisingly, that same year Facebook changed its mission statement to “Facebook gives people the power to share and make the world more open and connected.” The word “share” was understood to mean “publish content”, and Facebook became a media company, just like that.
As anyone running a media business can tell you, advertising revenue is determined by the number of ads you can show, which is directly proportional to the number of users multiplied by the number of ads you can show to each user. If you want to increase ad revenue on a fixed user base, you have no choice other than to grab more of your users’ time and attention. At a news publication, this meant that you had to write better articles (and headlines!). But imagine for a moment how that directive must have translated to Facebook: it’s not hard to imagine COO Sheryl Sandberg gathering some of the world’s smartest people in a conference room and asking them to increase the time spent on Facebook per user.
Those people’s best ideas were then built and tested on an unprecedented scale. Many of the changes made to Facebook during that time were likely motivated by this mandate. The ability for people to share web content (like news articles) and then to reshare them. The notifications inviting you back when someone likes or comments on your posts or comments. The careful selection of which content to promote and display to users; not surprisingly, more extreme and controversial content leads to more “engagement” and thus more advertising revenue. Sound familiar? Driven by innovations like these, Facebook’s annual revenue per user soared eightfold from $5 to more than $40 in the 10 years following 2011. Of course it’s not fair to single out Facebook. These same dynamics were operating at all of the other social media platforms: Instagram, YouTube, and Twitter foremost among them.
In our work at Joinable, we find that people often want to talk about Nextdoor. The most common complaint we hear is that the content on Nextdoor is negative, scary, or irrelevant. But we have also heard that the initial mission of the Nextdoor founding team was similar to our mission at Joinable today: to connect people to neighbors and others in their local communities. Why doesn't the product today reflect that mission?
Just as with Facebook, it comes down to the business model. In preparation for IPO, Nextdoor faced the same pressures to quickly grow revenue and turned to the advertising business model. They needed more of their user’s time and attention, so they became a media company: they started allowing people to post content and notify others.
But the Nextdoor team quickly found that they had a serious problem: the frequency of new posts on Nextdoor was pretty low, so it was presumably hard to get enough engagement when only notifying immediate neighbors about posts. To address this, they made a key change that proved fatal to the user experience: they expanded the neighborhood size to an average of 1000 homes, and allowed neighbor posts to notify not just those 1000 users, but in many cases nearby neighborhoods as well, meaning that posts often reach often over 10,000 people. Think about the difference between sending a message to 10-20 people you’re likely to run into in the next week, and sending a post to 10,000 people in your town. You start to feel anonymous, and as well all know anonymity often leads to very different behavior.
Furthermore, like all social media companies, Nextdoor uses algorithms to decide which of the many posts in the new larger neighborhood groups to promote and notify others about. Given the very real business need to increase engagement (the advertising imperative), these algorithms are almost certainly designed to identify and promote the posts that are more “engaging”: more likely to be noticed, clicked on, and responded to. And what kinds of posts are these? The negative, controversial, outrageous ones, of course. Neighbors end up complaining and arguing, with a net effect that is at times more divisive than uniting on local communities.
Almost 60 years ago Canadian communications scholar Marshall McLuhan coined the phrase “the medium is the message”. His observation was that different forms of media effectively change the messages they transmit, inducing different impressions on their audiences. The same report might have a very different impact when presented in a newspaper article, radio segment, TV broadcast, or tweet. It was a powerful observation, and it’s as true today as it was then.
We’d like to promote a corollary to McLuhan’s maxim, critical for this moment: the business model is the message. We first encountered this phrase in a 2017 Medium article by Sean Blanda entitled “Medium and the Reason You Can’t Stand the News Anymore”. In it Blanda examines news publications, and argues that the requirements of today’s advertising industry drive business decisions that change–for the worse–what and how they publish. It’s clear to us that this same dynamic is at work in today’s social media companies: their choice to use an advertising business model has fundamentally changed the nature of the messages that they transmit, and is fundamentally responsible for many of the negative effects of social media today.
Joinable is a new type of social network, designed to help people build meaningful, supportive relationships with each other and strengthen their local communities. We believe that the world is ready for a reset: for beautiful and imaginative new social apps that don’t monopolize and sell their users’ valuable time and attention. With business models that keep them deeply aligned with and delivering value to the real needs of the people and communities that they serve. Joinable will be such a company, and will need to develop a business model consistent with its mission.
Because we have a mission to serve all communities, we are committed to offering everyone a fully functional product free of charge. And because we want to stay aligned with our communities’ interests, we are also committed to not selling ads. People then ask us, “how will Joinable make money, if not from advertising?” The existence of this question is itself notable–it demonstrates just how dependent Silicon Valley has become on advertising.
Fortunately for us, there are several other revenue models that are more aligned with our mission and that have already been validated by other successful Internet companies. One of the simplest is the one used by Discord (and many other companies, LinkedIn among them): keep the core product free and charge customers only for optional premium services. (This model is sometimes called "Freemium", but it is quite different from early freemium products which offered a disabled version of their software for free.) In the case of Discord, a significant portion of their customers choose to purchase "Server Boost" and "Nitro" subscriptions, which upgrade their experience in a way that's meaningful for them.
To be clear, it's too soon for us to be focused on our revenue model–we're heads down getting the product right and building an engaged customer base. But when we’re ready, we’ll work closely with our customers to learn what additional functionality they need and are willing to pay for, and collaboratively design a business model that works for all of us. We will think creatively and stay true to our mission.
After all, since the business model is the message, let's build a beautiful business model, together!