Groundbreaking social network LiveJournal is no longer allowing new users to sign up for Basic level accounts, which traded a pared-down feature set for an ad and cost free user profile.
SUP, the Russian company that recently acquired LiveJournal, angered a substantial number of its users last week by instituting the policy before discussing it publicly and going against the advice of at least two members of the company's new high profile advisory committee.
LJ's pricing structure has long been unique among major social networks; none of its competitors allow users to avoid ads or pay for an ad-free and feature-rich account. It appears that the company has given up on that unique approach and chosen the ubiquitous ad-centric path to monetization, itself of questionable effectiveness in monetizing some social networking platforms.
LiveJournal is no stranger to controversy, it seems some fight between users and site administrators breaks out every month. It makes user relations at Facebook seem like a never-ending honeymoon. A "content strike" by LiveJournal users last week doesn't appear to have made an appreciable impact on site traffic due to being scheduled on the Friday before a major holiday. Thanks to Andrew Watson for bringing the strike, and thus the whole story, to our attention.
The new feature comparison page shows only Plus and Paid options; you can view the old feature comparison page, which details the now unavailable Basic accounts, via the Internet Archive. Current basic accounts will go unchanged but new users can no longer sign up for them.
The most recent policy change has angered at least two of the new advisory board members, however, including LiveJournal creator Brad Fitzpatrick. Fitzpatrick is now at Google and leads the cross-site platform effort OpenSocial works on Social Graph technologies there.
"The free users, while not paying, were extremely valuable because they produced the content that the paying users were there to consume," Fitzpatrick wrote in a LiveJournal entry last week. "You know, the whole network effect thing?...I advised against this (when I heard a rumor about it awhile back). I hadn't heard anything recently about it...SUP apparently sees no value in freeloaders not looking at ads, not paying, and oh wait... producing most the content for other members to read, other members who are looking at ads and paying for their accounts. Let's hope my permanent account is grandfathered."
Advisory board member and youth social networking scholar danah boyd reacted thusly in her own LJ entry: 
"While offline this week, I learned that LJ has changed its account levels. Needless to say, Brad's pissed. I'm pissed. Not only because we both vehemently disagree with this change, but because they made such a change without consulting us. Or rather, we were both at a lunch a while back where they asked us what we thought and we both told them that this was the worst idea ever, although for different reasons. I had thought it had been tabled until I learned of this. After it had been posted...I pay for my account (and have for years), but most of my friends who read what I write have Basic Accounts. They produce very little but I would produce absolutely nothing if they weren't reading what I wrote. And then I wouldn't pay. And that's how it gets all entangled."
Those seem like strong and compelling arguments made by ostensibly trusted advisors to the company. boyd further asks her readers how they would suggest that SUP can further growth and monetization at LiveJournal if not by taking steps like this.
Advisor Esther Dyson has said publicly only that "I was not consulted about this in advance... and yes, I think I should have been."
As analyst firm Gartner said in a recent report on AOL's acquisition of Bebo, the social networking landscape is one where "formerly explosive growth rates have slowed and monetization remains a challenge. But to the extent a social site is a platform, it has value." That Platform value seems unproven, however. MySpace seems to be printing money with display ads, despite Google's recent complaints that its search ads haven't been monetizing well on the site.
LiveJournal had served as an interesting alternative to dominant theories about monetizing social networking. Now that example is only half of what it was - it's still interesting that users are offered paid accounts ($20/year) in exchange for an ad free experience. Apparently the original LJ model wasn't monetizing well enough for SUP. That's a shame, because it sure was interesting.
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They are so desperate to monetize the user base...
Posted by: Yakov | March 24, 2008 11:31 AMThis is so typical of businesses today. All they care about is their bottom line and not the customers. Take the food industry for example. Not telling anyone, just making packaging smaller while keeping prices the same or even raising them in some instances.
Posted by: Vicky | March 24, 2008 11:35 AMWhat do you expect from Russians? Russia is one of the most corrupt countries on the planet and it should come as no surprise that their new overlords are making moves to try to milk LJ -- why would they care what a bunch of dippy Amerikans think?
Posted by: putin | March 24, 2008 12:48 PMI don't think Brad really is leading the OpenSocial effort at Google. Good post though, it will be interesting to see how LiveJournal continues to evolve and the effect it has on the people that use it who grew accustomed to past business model choices.
Posted by: David Recordon | March 24, 2008 1:31 PMI'm a bit confused by the opening of this article - you have made it sound, just for a moment, as though the Basic account incurred a small monthly cost, as it does on Typepad, where as far as I know, it's possible to go ad-free. Even at the Plus level.
Posted by: genevieve | March 24, 2008 3:23 PMAnd my Blogger profile doesn't carry ads - so what are you talking about exactly?
genevieve, you've raised an interesting issue. I didn't count Blogger or Typepad as among social networking sites, though there's an element of that going on at both.
Posted by: Marshall KirkpatrickPretty much blows for us content producers on paid accounts too.
I regularly invite friends to LJ to read and comment on my content; this has always worked out fine because they knew it would cost zero to join up for folks who only want to follow my and other friends content, and/or make comments, while not actually producing content themselves.
Now that this option is gone, I guess their only options are open ID commenting or anonymous (and therefore untrackable) comments. Blows.
Posted by: ProgGrrl | March 24, 2008 3:47 PMBusinesses have to care about the bottom line, otherwise they won't be in business to have customers about which they can care.
Anyone been a member of Yahoo! groups for some years? If so you remember the outrage, group members went through when Yahoo said it wouldn't maintain, free of charge, archives of all pics for all groups. They talked about actually charging for groups!!! Whoa. You're going to charge us for something you've been giving us free of charge? HOW FRIGGIN' DARE YA!!. You're not going to store all of our pics forever?? HOW FRIGIN' DARE YA!!
The fact someone has been given us something for free does not entitle us to continue to receive it for free forever.
Stop and think. Do you want them to "monetize" and stay in business, or keep it free/retain their current business model and disappear?
If the data is worth accessing, it should be worth something, and you should be willing to pay for it. If it's only worth accessing cuz it's free. . . What's it really worth?
Posted by: Corbeau | March 24, 2008 4:41 PMCorbeau, ordinarily I'm totally with you on paying for stuff. The everything-must-be-free movement gets on my nerves too. This though was a unique and interesting case, I thought, where free has been feeding into ad supported and premium upsells. See danah boyd's analysis above, too.
Posted by: Marshall KirkpatrickI've been a Livejournal user for over 7 years, and while I pay for my journal, many of the people who read my journal do not pay for theirs. The sad thing is, because my journal is friends only you must be a livejournal member in order to read it. This move prevents any of my future friends from signing up and reading my journal, something that I've had for so long I use as a main point of contact for a large circle of people.
I haven't checked yet, but I'm also interested in how this effects communities.
If they are so worried about monetization I suggest that they go back to the account code version where you had to have a code from someone who already had an LJ in order to start your own. The only difference here is that you'd have to pay for your LJ in order to get account codes to hand out. This would be a benefit to those who pay for their LJs - an added incentive for paying, and wouldn't totally alienate all of those people out there from having access to content they can only have access to if they are members.
Posted by: Diana | March 24, 2008 5:50 PMLet me get this straight.
People are moaning because they can't get a free account any longer without ads?
Cry me a flippin' river.
Repeat after me: There is no free lunch.
Corbeau, dude, you are right on.
Posted by: GEAH | March 24, 2008 10:23 PMMarshall, there's also a little social networking project of Six Apart's called Vox, which can be joined pretty much for free. And you've made me realise that it carries Google ads for Ebay! which I hadn't even noticed when I signed up as a trial.
Posted by: genevieve | March 24, 2008 10:39 PMAdverts are really all part of the background now, aren't they?
... and similar comments.
I think somebody isn't actually paying attention to what's going on here. Do you see a lot of people here complaining that they can't access LJ for free? Mostly what I see are people who are already paying for their accounts complaining. And current basic users get to keep their accounts, too.
The problem isn't "I want everything for free, boo hoo." The problem is the new rules, however much they make sense in a strictly capitalistic sense, severely change the dynamic of an existing online community. The new owners decided that the free users are merely deadbeats and they can make money by requiring everybody pay, and aside from an occasional whiner dropping out everything will be business as usual. Except with more money. In fact, those who understand the community a little better foresee the destruction of the community.
It's not just about the money. But think about it. If the people who are paying for their accounts decided that it's not worth posting any more, what do you think is going to happen? I predict... they'll find someplace else to post and stop paying money.
I should add parenthetically that I'm one of those paying for his account; my wife is using a basic account. She's planning to leave. Other friends are planning to leave. If all my friends are leaving LJ, why should I stay? ... And the diehards with basic accounts will stay, but the paid accounts will stop paying. And then, desperate for income, the owners will start charging for existing basic accounts, probably using ads, and many of those will leave as well.
I doubt it will become a ghost town, but I think somebody is going to be struggling to make the numbers they predicted after a large portion of their user base starts evaporating.
The phrase you're missing here is "enlightened self-interest."
In any case, our new overlords may actually accomplish what they're hoping -- maybe after a period of adjustment the user base will stabilize and only a few whiners will be gone, and what's-their-names will be making money hand over fist. And LJ will be just like every other pay-for blog in existence.
But again, the point isn't the whining is about keeping everything free. Remember, the people complaining are already paying or grandfathered in. It's about destroying a living community.
Posted by: jnork | March 25, 2008 9:14 AM