Watts (chipotle) wrote,
Watts
chipotle

What's SUP, Doc?: Thoughts on LiveJournal's future

So I’ve generally been steering clear of the various LiveJournal-related controversies, but I’ve been chewing over a few things the last day.

Where we are

With a hosted blogging service that has 1.7 million active users, it’s mind-boggling that there wasn’t some kind of “adult content” filtering in place before last year’s fiasco. The Guardians of Virtue or whoever the hell they were may have prompted Six Apart’s headless chicken dance, but the reason to tie SafeSearch-style viewing preferences to user accounts and to provide mechanisms for labelling content is to protect the service from these kinds of attacks in the first place.

A more recent flap has been about them no longer offering the no-cost and ad-free “basic” accounts. The “content strike” proposed for March 21st, 2008 (tomorrow, as I write this) is built on the premise that all accounts generate content and that’s what brings people to LiveJournal in the first place. Okay, but while all accounts generate content, companies run on revenue; as important as content may be, the bottom line is that the basic accounts are subsidized by the rest of the accounts. Do the other account levels generate enough income to do that? Maybe, but unless someone who actually saw the books can confirm the answer is “yes,” I’m dubious.

Why? Well, Vanna, let’s bring out the chart. Only one, I promise.

LJ User Growth

This data is taken from the stats page of LJ and the web archive of that page, checking each year in March (or as close to March as I could get). The definition of “active user” is, uh, whatever that stats page uses. Note that there’s no breakdown for paid users, so this is not “all users” versus “paid users”; it’s “people who have LiveJournals” versus “people actually doing something with them.”

Notice two things here. One, the fastest rate of growth in LJ’s history was the year before the sale to 6A. I know Brad Fitzpatrick tells us the sale was basically because the Six Apart guys were just swell, but operating costs had to have been skyrocketing during 2004.

Since then the total userbase has been growing at a fairly steady rate, but the number of active users has been in a gradual decline. There are a few possible explanations for this. Old users may be leaving LiveJournal faster than new users are coming in to replace them. New users may not be finding LiveJournal “sticky” and so their journals quickly go inactive. In any case, we can assume the sizable majority of paid users are in that active group, since most won’t keep paying for a journal they’re not using.

Ah-ha! Six Apart killed LiveJournal’s growth! Well… no, probably not. LJ’s userbase is primarily in the high school and college age range, and there are a couple other sites you might have heard of that came into prominence around that time. The new prospective users entering LJ’s prime demographic were starting to collect around MySpace and Facebook. LiveJournal was already, like, four years old. You have a LiveJournal? Oh, that’s so 2002.

6A wanted some of that action, but they didn’t want to revitalize LJ—they wanted inspiration, if not actual code, for Vox, which we can colloquially dub “LiveJournal 2.0.” That was their big community blogging gamble, the next generation platform, where all of their attention was going to. If we assume that most of the code improvements came primarily from Danga’s old team still working under the 6A aegis, then most of what Six Apart gave LiveJournal’s userbase, apart from the occasional fit, was: style sheets imported from Vox.

And enough money to keep going until the sale to SUP for $30M.

Basically, my suspicion is that SUP paid a lot of money for a blogging platform that’s been stagnant for three years. What a deal, right? Well, it’s been mentioned before how important LiveJournal is in Russia, but most of us Westerners don’t understand how important LiveJournal is in Russia. In SUP’s words, “LiveJournal in Russia is effectively the Russian blogosphere.” LJ is the eighth most-visited site on the internet in Russia. Apparently, the common word for “blogging” in Russian translates to “LiveJournal.” SUP also breaks down a statistic for us: of LiveJournal’s accounts, 5.2 million are in Russia, and 523,000 of those are active. That means 30% of the active LJs are Russian. Getting the picture?

Given what we saw above about the active userbase gradually declining, from a business standpoint, all of the growth opportunity is in Russia. Not to put too fine a point on it: for SUP LiveJournal is friggin’ MySpace and Facebook combined.

If you look at the Russian LiveJournal landing page, if you’re like me your first thought will be: I can’t read any of this. But your second thought will be: this looks like a completely different site. It looks a lot more professional, for one thing. It has (somewhat) different content. And it has an ad for Renault, in the place where the “original” LJ.com has an ad for “Free* IQ Test!” (I presume the asterisk goes to a footnote on their web site reading “*not really.”)

Pop quiz: which one of those ads do you think LiveJournal charges more for?

So now we can see why basic accounts had to go. SUP is, bluntly, the first owner for LiveJournal that’s really serious about making money from it. They want to make a lot of money from it. And if you are not a Russian user, you are not who they expect to make that money from.

Where to go

So is LiveJournal doomed, at least for non-Russian users? I’ve asked the Magic 8-Ball™ three times and keep getting replies like “Better not tell you now” and “Ask again later.”

The outrage of the moment (well, I haven’t checked in eight hours, so it may have passed now) is an interview at Izbrannoe with Anton Nossik, who Google Translations informs us is “director of blogs company Soup.” You can find several better translations of this going about now; see darkrosetiger’s and furiosity’s. (darkrosetiger’s is commentary that includes a translation by russianswinga.)

However. The guy who wrote this actually (a) writes English himself and (b) is on LiveJournal. anton_nossik wrote his own response. He clarifies that his title is not director of anything, but rather “Social Media Evangelist,” and that he makes no decisions at SUP. Nossik does a fairly good job of convincing me that furiosity is mostly correct when he writes,

Translating a Russian interview into English directly will make pretty much any Russian sound like a complete dickwad, because cultural expectations are completely different. It just really frustrates me that people are not taking into account that we’re dealing with a different culture here, not just a different company. Business and economics are built on pretty much the same principles the world over, but they are never divorced from culture.

Mostly correct, but not completely. Nossik’s attempted clarification shows why better than the interview does. He defends his assertion that paid accounts were only about “just asking money to avoid showing banners,” but the Wayback Machine page that he links as proof actually proves the opposite: it lists extra paid-only features like customization and text messaging—and the “fast servers” and the poll creator are added by September 2001. He continues to describe Danga as “donation-backed,” which is wrong; as Brad Fitzpatrick wrote when 6A bought Danga, “Everybody should understand that LiveJournal was never a non-profit volunteer organization. Danga has always been a for-profit company.” And, Nossik uses the word freeloader more than once when describing basic account holders.

To Nossik, pre-SUP LiveJournal’s business practices deserve no respect. While he asserts we shouldn’t construe his opinion as an official message of SUP or its management but merely as that of a “veteran Russian LJ blogger,” well, sorry, Anton. You work for the company that owns LiveJournal, your job description at LinkedIn is “development, promotion and cross-platform integration of social media such as LiveJournal,” and oh yes, you’re giving an interview to a journalist about LiveJournal. If you don’t understand what context that places your words in, perhaps corporate evangelism isn’t your true calling. (Given your attitude toward users, I suggest Unix system administration.) In fact, I suspect Nossik’s attitude does reflect SUP’s; they’re just not going to tell the 1.2 million non-Russian users that while their money is certainly welcome, they’re just not a big concern anymore, thanks.

So. How ’bout that content strike? I’m going to be blunt about this, folks: SUP doesn’t get paid for your posts, nor for your reads. They get paid either by you directly or by you responding to ads. In other words, if you’re a basic account holder or a paid/permanent account holder, your use of the system is completely orthogonal to SUP’s revenue. If you’re a basic account holder, they’d really you rather switch to a “Plus” account or drop into the sea. And if you’re a paid account holder, participating in the content strike is like boycotting your gym by continuing to pay for your membership but not using it. For one day. That’ll show ’em!

The only effective “boycott” is leaving LiveJournal. And that opens up a whole new can of worms, because those most likely to be annoyed with perceived changes in policy are those most likely to have been around a while, ones like me who are in the top quartile of connections. (A 2004 analysis estimated the median number of friends a LiveJournal user has at 30; a similar analysis I did this morning put it at 39.) In other words, the people most likely to be enjoying great benefits from the network effect—and thus, the people with the most to lose, socially, by leaving the site. It sounds great in theory to say, “Just move to (Greatest|Insane)Journal!” but in practice, GJ has 114,406 active users and IJ has 69,309, or just over 6% and under 4% of the userbase that LJ does, respectively. Your peeps just ain’t there, and no peeps, no point.

Look, it’s possible—okay, probable—okay, all but inevitable that something else will come along that displaces LiveJournal in a sufficient number of hearts to get us to move there. And I suspect SUP will, intentionally or not, be pushing us along. Maybe this is short-sighted of them, maybe it’s just pragmatic; their growth market is very clearly in Russia, and those of us who’ve been around long enough to remember invite codes are what’s euphemistically referred to as “legacy users.” There’s little value for LiveJournal to keep competing with MySpace and FaceBook for the 18-24 crowd in the West; that battle’s pretty much already over.

But I don’t think this “post-LJ service” is here yet. I don’t know what it’ll look like, but I don’t think it’ll use the LJ code base. (Please.) Instead of catering to the 18-24 crowd, it’s going to consciously skew older, because it won’t want to be in direct competition with Facebook and MySpace, either. What new features will appeal to older users? You tell me.

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