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xiphiasSo I've been thinking about the proposed new design of the User Info page, and what it implies about the future of SixApart and of LiveJournal. And I'm trying to figure out how to write a letter to SixApart to let them know of my concerns.
Dear SixApart team;
I'm very concerned about the business model you appear to be following with LiveJournal, both as a user of LiveJournal, and as an observer of the technology sector. I perceive a number of potentially fatal weaknesses in your current apparent plans, which I hope that you will consider and address.
I understand why LiveJournal appeared so attractive initially. It has a massive user base, great name recognition, and is a strong brand. Yet its funding was always marginal at best, so it clearly looked like a property which had great untapped potential. And, obviously, you now want to tap that potential. But it appears to me that the ways you are going about it are going to kill LiveJournal as a valuable brand while not gaining any significant benefit.
I perceive in your current strategy several of the classic business model errors to which tech sector business are especially vulnerable. The most significant of these are:
On a first glance, it appears that LiveJournal, like many other social networking sites, is used primarily by teenagers, and that that should be your target market. If you look at pure number of accounts, the distribution of age is a standard bell curve with a tail, peaking in the mid-teen years. And, from that simple chart, it would appear that the focus of LiveJournal should be those mid-teen users.
But that's deceptive. The primary fallacy is that that chart is only the number of users who chose to give their age in their profile. As you may suspect, those who are in their thirties, forties, and older tend not to give their age. If you look at actual usage, the heavy users of LiveJournal tend to skew older. Part of this is historical: as you know, LiveJournal started as a closed community, which you could only join if you knew someone who was already a member. This gave the early adopters a strong sense of community and a strong attachment to the LiveJournal.
Very few of those people are in their mid-teens any more -- although many of them were when they joined, they are now older.
Your most dedicated users are those who have been using LiveJournal for many years -- and simple logic shows that, if people tend to join as teenagers and then maintain their membership for years, they will, at some point, no longer be teenagers.
LiveJournal is social and interactive. It differs from other blogging and journaling sites in that it facilitates conversation. Therefore, you tend to get communities of users -- and if you look at those communities, they are often communities of writers, artists, academicians, political activists, parents, erotica writers. . . relatively few of whom are under eighteen. And those heavy users of LiveJournal who are under eighteen often have chosen LiveJournal over their other options because they prefer the more mature style that has developed.
It now appears that your strategy is to create a new service, Vox, which will cater to this group, while redesigning LiveJournal to be a more direct competitor to such social networking sites as MySpace.
This is a poor strategy.
The users who have the most loyalty to LiveJournal and highest stability are precisely those users for whom you are designing Vox, while those users who have the most mobility and are more likely to change services are the ones whom you are attempting to retain.
It makes a certain amount of sense to attempt to address the different needs of different user populations with different services. But you are going about it backward.
Younger users who intend to use a service primarily as a social networking tool have no great barriers to changing services. They will maintain multiple services, and use the ones which their friends most prominently use. Older users who tend to use the service as a journaling site have a greater barrier to change, as they wish to maintain continuity of writing.
This might therefore suggest that you ought to do precisely what you are doing -- attempt to attract the one population while relying on the inertia and the barriers to change of the other. And that will work for a while -- it currently is -- but it is not sustainable in the long-term. This fact relates to both of the other points.
In the 1500 comments to the proposed changes to the User Profile screen, one of the most often repeated is, "If I wanted a MySpace account, I'd have a MySpace account."
This is a vitally important point to remember.
It is not possible to gain market share by cloning an established player, unless that player makes a grave strategic error. Especially if, in doing so, you dilute your own brand.
MySpace already does MySpace better than you can ever hope to do MySpace. Currently, you do LiveJournal better than anyone else can ever hope to do LiveJournal. But, if you begin to attempt to do MySpace, you will do LiveJournal less well -- and, eventually, some other player will manage to out LiveJournal LiveJournal.
And THAT is the moment at which you will lose all the users whom you were relying on barriers to change to retain.
LiveJournal is an intensely recognizable brand which has never been as profitable as you'd expect for its visibility. Therefore, it appears that some other form of revenue stream ought to make it a more successful company. This is, obviously, the idea behind the Sponsored+ accounts.
But what happens when you look at that in the context of the other three points we've mentioned?
The attempt to move to a more advertisement-based funding strategy compounds the problems in each of the other three areas.
LiveJournal's pre-SixApart strategy of just barely making ends meet through sale of paid accounts, permanent accounts, and LiveJournal branded merchandise may have been as good a strategy as was possible. Switching to the ad-served economy alienates the core market and reduces distinction between LiveJournal and its competitors.
It seems to me that, long-term, LiveJournal's brand is more valuable than its eyeballs, and that increasing the marketing of LiveJournal branded merchandise may be a less destructive to the brand method of increasing revenue. It's marginal, but I think that LiveJournal will always be marginal financially. Its great strength is that it gives SixApart a great deal of visibility which helps launch other products.
I hope that you will consider these points;
Sincerely,
Ian Osmond -- LJ user "Xiphias"
Dear SixApart team;
I'm very concerned about the business model you appear to be following with LiveJournal, both as a user of LiveJournal, and as an observer of the technology sector. I perceive a number of potentially fatal weaknesses in your current apparent plans, which I hope that you will consider and address.
I understand why LiveJournal appeared so attractive initially. It has a massive user base, great name recognition, and is a strong brand. Yet its funding was always marginal at best, so it clearly looked like a property which had great untapped potential. And, obviously, you now want to tap that potential. But it appears to me that the ways you are going about it are going to kill LiveJournal as a valuable brand while not gaining any significant benefit.
I perceive in your current strategy several of the classic business model errors to which tech sector business are especially vulnerable. The most significant of these are:
- Misidentification of core market
- The mobility of rock; the stability of water
- Attempting to out-[COMPETITOR] the [COMPETITOR]
- Revenue stream
Misidentification of core market
On a first glance, it appears that LiveJournal, like many other social networking sites, is used primarily by teenagers, and that that should be your target market. If you look at pure number of accounts, the distribution of age is a standard bell curve with a tail, peaking in the mid-teen years. And, from that simple chart, it would appear that the focus of LiveJournal should be those mid-teen users.
But that's deceptive. The primary fallacy is that that chart is only the number of users who chose to give their age in their profile. As you may suspect, those who are in their thirties, forties, and older tend not to give their age. If you look at actual usage, the heavy users of LiveJournal tend to skew older. Part of this is historical: as you know, LiveJournal started as a closed community, which you could only join if you knew someone who was already a member. This gave the early adopters a strong sense of community and a strong attachment to the LiveJournal.
Very few of those people are in their mid-teens any more -- although many of them were when they joined, they are now older.
Your most dedicated users are those who have been using LiveJournal for many years -- and simple logic shows that, if people tend to join as teenagers and then maintain their membership for years, they will, at some point, no longer be teenagers.
LiveJournal is social and interactive. It differs from other blogging and journaling sites in that it facilitates conversation. Therefore, you tend to get communities of users -- and if you look at those communities, they are often communities of writers, artists, academicians, political activists, parents, erotica writers. . . relatively few of whom are under eighteen. And those heavy users of LiveJournal who are under eighteen often have chosen LiveJournal over their other options because they prefer the more mature style that has developed.
The mobility of rock, the stability of water
It now appears that your strategy is to create a new service, Vox, which will cater to this group, while redesigning LiveJournal to be a more direct competitor to such social networking sites as MySpace.
This is a poor strategy.
The users who have the most loyalty to LiveJournal and highest stability are precisely those users for whom you are designing Vox, while those users who have the most mobility and are more likely to change services are the ones whom you are attempting to retain.
It makes a certain amount of sense to attempt to address the different needs of different user populations with different services. But you are going about it backward.
Younger users who intend to use a service primarily as a social networking tool have no great barriers to changing services. They will maintain multiple services, and use the ones which their friends most prominently use. Older users who tend to use the service as a journaling site have a greater barrier to change, as they wish to maintain continuity of writing.
This might therefore suggest that you ought to do precisely what you are doing -- attempt to attract the one population while relying on the inertia and the barriers to change of the other. And that will work for a while -- it currently is -- but it is not sustainable in the long-term. This fact relates to both of the other points.
Attempting to out-[COMPETITOR] the [COMPETITOR]
In the 1500 comments to the proposed changes to the User Profile screen, one of the most often repeated is, "If I wanted a MySpace account, I'd have a MySpace account."
This is a vitally important point to remember.
It is not possible to gain market share by cloning an established player, unless that player makes a grave strategic error. Especially if, in doing so, you dilute your own brand.
MySpace already does MySpace better than you can ever hope to do MySpace. Currently, you do LiveJournal better than anyone else can ever hope to do LiveJournal. But, if you begin to attempt to do MySpace, you will do LiveJournal less well -- and, eventually, some other player will manage to out LiveJournal LiveJournal.
And THAT is the moment at which you will lose all the users whom you were relying on barriers to change to retain.
Revenue Stream
LiveJournal is an intensely recognizable brand which has never been as profitable as you'd expect for its visibility. Therefore, it appears that some other form of revenue stream ought to make it a more successful company. This is, obviously, the idea behind the Sponsored+ accounts.
But what happens when you look at that in the context of the other three points we've mentioned?
The attempt to move to a more advertisement-based funding strategy compounds the problems in each of the other three areas.
LiveJournal's pre-SixApart strategy of just barely making ends meet through sale of paid accounts, permanent accounts, and LiveJournal branded merchandise may have been as good a strategy as was possible. Switching to the ad-served economy alienates the core market and reduces distinction between LiveJournal and its competitors.
It seems to me that, long-term, LiveJournal's brand is more valuable than its eyeballs, and that increasing the marketing of LiveJournal branded merchandise may be a less destructive to the brand method of increasing revenue. It's marginal, but I think that LiveJournal will always be marginal financially. Its great strength is that it gives SixApart a great deal of visibility which helps launch other products.
I hope that you will consider these points;
Sincerely,
Ian Osmond -- LJ user "Xiphias"
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(no subject)
Date: 2006-06-17 01:39 pm (UTC)What does "LiveJournal's brand is more valuable than its eyeballs" mean, please, I'm confused.
(no subject)
Date: 2006-06-17 01:41 pm (UTC)It means that the name "LiveJournal" is more valuable than selling ad space for people to look at.
(no subject)
Date: 2006-06-17 01:59 pm (UTC)I could be totally wrong on that one, but's worth double checking though.
(no subject)
Date: 2006-06-17 02:51 pm (UTC)Also, you might do well to name a competing service that dissatisfied customers are liekly to jump to, rather than asserting that someone might eventually create one. Right now, it looks rather like the market you identify (mature users) will be unhappy with the changes, but will continue to use LJ nonetheless, for want of an alternative. Especially since changing services also entails losing years worth of accumulated archives, for most of them.
Finally, a business strategy of following one generation as it ages is doomed to eventual failure. Eventually, that generation will age and die. A business needs to bring in a constant inflow of new customers - ideally capturing them before them competition does. Think about all those younger users on MySpace now. A decade from now, they won't be teenagers anymore - but they'll be reluctant to change services, because they'll have a decade's worth of archives that they don't want to lose.
(no subject)
Date: 2006-06-17 03:57 pm (UTC)Xanga comes reasonably close to LJ in terms of general functionality, and has many adult users. If I ever had to leave LJ, I think I'd go there and would try to get friends on the caravan with me.
(no subject)
Date: 2006-06-17 04:24 pm (UTC)They may think that the advertising stream they get for having lots of free accounts is good enough, I don't know.
(no subject)
Date: 2006-06-17 04:24 pm (UTC)(no subject)
Date: 2006-06-17 04:29 pm (UTC)And the problem is, "How do you manage to convert that equity into liquid assets without killing the brand?"
Of all of the online communities I've been involved with LJ reminds the most of the WELL. The user base is growing because of functionality and community, not because of a marketing plan. The user base is fractious and diffuse in its interests. The user base is unruly and openly hostile to top-down contnet management tricks.
Of course, the WELL these days is a bucolic little backwater on the net and not a revenue monster. But the users seem to like it that way.
(no subject)
Date: 2006-06-17 04:32 pm (UTC)(no subject)
Date: 2006-06-17 04:39 pm (UTC)(no subject)
Date: 2006-06-17 04:42 pm (UTC)Non sequitur, but
Date: 2006-06-17 04:57 pm (UTC)Oh, and I love you, partly for writing things like this...
(no subject)
Date: 2006-06-17 04:58 pm (UTC)What often kills a brand is the failure of management to understand that sometimes the answer to that question is, "You can't." This is especially true when part of the brand's equity is that there isn't someone trying to convert it to liquid assets. In this instance, I think Xiphias' point about LJ's value to someone like Six Apart as a vehicle for launching other applications while keeping LJ the way LJers want it is key.
(no subject)
Date: 2006-06-17 05:14 pm (UTC)Someone gets serious about competing with LJ, they'll write an archive-scraper to transfer the stuff. I don't think it would be especially difficult to do, though getting all the details right might be a little tedious.
(no subject)
Date: 2006-06-17 05:37 pm (UTC)(no subject)
Date: 2006-06-17 05:45 pm (UTC)(no subject)
Date: 2006-06-17 06:32 pm (UTC)(no subject)
Date: 2006-06-17 08:55 pm (UTC)(no subject)
Date: 2006-06-17 08:56 pm (UTC)(no subject)
Date: 2006-06-17 08:59 pm (UTC)(no subject)
Date: 2006-06-18 12:52 am (UTC)(no subject)
Date: 2006-06-18 01:11 am (UTC)(no subject)
Date: 2006-06-18 01:14 am (UTC)(no subject)
Date: 2006-06-18 02:14 am (UTC)Is this proveable?
(no subject)
Date: 2006-06-18 03:03 am (UTC)But, I think it would be better if you told them directly which design features you don't like, and why those design features have the effects you're talking about.
Kiralee
(no subject)
Date: 2006-06-18 04:05 am (UTC)Good letter.
(no subject)
Date: 2006-06-18 02:28 pm (UTC)Re: Non sequitur, but
Date: 2006-06-18 03:16 pm (UTC)(no subject)
Date: 2006-06-19 10:38 pm (UTC)(no subject)
Date: 2006-06-20 11:31 pm (UTC)2) It now appears that your strategy is to create a new service, Vox, which will cater to this group
Which "this"? Please clarify. Several groups were mentioned in your preceding paragraph.
Otherwise, looks good.