The Price of Freemium
The alcohol industry pushes the myth of the moderate drinker. The idea is that most people drink a glass of wine with dinner a few days a week. Were that the case, the entire industry would go belly up.
The vast majority of alcohol consumption, and thus profits, come from the top drinkers in a Pareto distribution:
The top 10 percent of American drinkers - 24 million adults over age 18 - consume, on average, 74 alcoholic drinks per week. That works out to a little more than four-and-a-half 750 ml bottles of Jack Daniels, 18 bottles of wine, or three 24-can cases of beer. In one week.
Or, if you prefer, 10 drinks per day.
The freemium software model is based on this principle: keep a product free for most people who will only lightly use it while monetizing the top 20% or so of users. For products like GitHub, AWS and Cloudinary this is a great marketing strategy: get developers to use your products on hobby projects so that they become the ones lobbying for your product at work.
Things start to get weird when freemium is used with products that play on supernormal stimuli. For all of Apple’s claims to running a clean and ethical App Store, the company makes millions of dollars off of “free” games with in-app purchases, such as a slot machines that don’t let people actually win.
It gets even more curious with porn. My Stepdad’s Huge Data Set is a fascinating read:
This “consumer” vs. “customer” division is key to understanding the use of data to perpetuate categories that seem peculiar to many people both inside and outside the industry. “We started partitioning this idea of consumers and customers a few years ago,” Adam Grayson, CFO of the legacy studio Evil Angel, told AVN. “It used to be a perfect one-to-one in our business, right? If somebody consumed your stuff, they paid for it. But now it’s probably 10,000 to one, or something.”
Porn companies, when trying to figure out what people want, focus on the customers who convert. It’s their tastes that set the tone for professionally produced content and the industry as a whole.
Porn performers tend to roll their eyes at some of these orders, but they don’t have much choice. I have been on sets where performers crack up at some of the messages that are coming “from above,” particularly concerning a repetitive obsession with scenes of “family roleplay” (incest-themed material that uses words like “stepmother,” “stepfather,” and “stepdaughter”) or what the industry calls “IR” (which stands for “interracial”.
That’s why the front page of Pornhub is filled incredibly niche genres: mainstream consumers (that won’t convert to customers) will go ahead and watch a step-sister video, while more vanilla genres don’t appeal to paying customers. Thus powerful minorities influence mainstream culture.
This is a problem beyond pearl-clutching prudishness. More extreme pornography affect people in real life: porn addiction (check out some of the stories on r/nofap), broken relationships and an ever increasing need for more extreme genres due to the hedonic cycle.
The same phenomenon is affecting US politics. To continue:
There’s an analogy to be made with US politics: political analysts refer to “what the people want,” when in fact a fraction of “the people” are registered voters, and of those, only a percentage show up and vote. Candidates often try to cater to that subset of “likely voters”— regardless of what the majority of the people want. In porn, it’s similar. You have the people (the consumers), the registered voters (the customers), and the actual people who vote (the customers who result in a conversion—a specific payment for a website subscription, a movie, or a scene).
Ad-driven industries such as cable news and talk radio have the same issue. Content has to continually become more extreme in order to increase engagement. The result is a broken national discourse and political stagnation. For a deeper look at how optimizing political news to audience taste has polarized the US, Ezra Klein’s Why We’re Polarized hits the nail on the head.
The Other Model
The model behind this is oft repeated in the tech world: get a lot of viewers, readers or people otherwise engaged as a loss leader and then somehow monetize them.
There’s another option though: the minimum viable audience. Small companies and independent creatives can be profitable with thousands, even hundreds of paying subscribers or customers. After the crazy 2010s that worshipped scale, the 2020s look like they could be about smaller, higher-quality and paid content.
It’s not just me: journalists are moving to Substack and Discord communities are redefining the web. As for porn, it looks like OnlyFans is better for viewers and creators alike.
In practical terms this means I’m careful about the “free” services I use. If it’s the free tier of a tool that’s well removed from the dopamine reward system, fair enough. If it’s content, I’d rather pay for small bits of high-quality material than get all of my entertainment and information for free. Anything close to a supernormal stimulus merits extreme caution.