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Twitch subscriptions and Patreon has shown, that if you bind a website/project to a creator, and you get benefits for donating/subscribing, that you can have a

Twitch subscriptions and Patreon has shown, that if you bind a website/project to a creator, and you get benefits for donating/subscribing, that you can have a very viable business model. Both as a creator, and as a platform to facilitate it. Most websites, and indeed open source projects are pretty faceless, and require limited interaction with it's creator. I believe, if you somehow "solve" that problem first, people will beg to donate/subscribe.

Ygg2 3y ago
Isn't Twitch very much a net loss?
- jmyeet 3y ago
  Twitch loses money because Amazon has decided to make Twitch lose money. Why? Because Amazon is charging themselves for the infrastructure Twitch uses (ie AWS). It does that to justify cutting revenue splits (of subscriptions and ads) and increasing ad density. The minimum ad density now is generally 4 minutes per hour. Example: say I'm Pottery Barn and I sell furniture in the US. I sell a table for $500. It costs $100 to make in China, $50 to ship to the US and $150 in store costs (eg utilities, staffing, rent, amortized capex, etc). You might say I've made $200 profit. But let's say my corporate structure is to have 2 subsidiaries: PB Manufacturing and PB Retail. The first makes the table. The second manages the stores and sells the table. If PBM charges PBR $150 for the table then PBM makes $50 in profit and PBR makes $150. If PBM charges $300 for the table then PBM makes $200 in profit and PBR breaks even. This is what I mean when I say Twitch's profitability is a chosen narrative. There are many reasons to do this. Tax is a big one. Maybe you pay less tax in China so you prefer to take profit there. Maybe you want to argue stores aren't profitable to resist demands for higher wages or higher rents. The above is an example of "transfer pricing" or "profit shifting". What's the difference? Transfer pricing is illegal. Profit shifting isn't (within limits; it technically has to be "at arm's length" and other requirements).
  - snapcaster 3y ago
    Can you expand on this? You're saying Twitch is only unprofitable in an accounting sense but would be a viable business if on its own? Saying their AWS costs are $0 seems like it would be even more "fake"
    - deleted 3y ago
      [deleted]
    - fkyoureadthedoc 3y ago
      So Twitch is only a viable business model once you own enough data centers.
    - wongarsu 3y ago
      A video streaming platform isn't a natural fit for a hosting service famous for charging outrageous rates for outgoing traffic. If they were neither owned by Amazon nor had a special deal with AWS (like Netflix presumably has) they wouldn't be using AWS for anything touching actual videos.
  - plorkyeran 3y ago
    Twitch runs its own data centers and does not use AWS for the video streaming platform. There are probably some incidental expenses which are actually Amazon profits, but they’re much smaller than you’re making them out to be.
    - Quarrel 3y ago
      Say what? https://aws.amazon.com/ivs/ https://aws.amazon.com/ivs/ "Use the same live streaming technology and global infrastructure that powers Twitch." Did IVS grow out of Twitch? Sure. That core is now a piece of AWS infra though, even though the team was initially built at Twitch. (Obviously these things are weird to talk about in a vacuum, because all the pieces are 100% owned by the same parent. The splits we see can be changed with the wave of a CFOs pen, usually when they want to change how we view some overarching piece of the business.)
    - 3y ago
- PurpleRamen 3y ago
  Yes and no. They jump around the profit-point. They made some profit in 2019 or so, but the pandemia peaked them, not just in views and income, but also costs. The thing is, Twitch's business-model is very frail. A streamer with too many viewers can cost them more money than it brings them money. Similar, are there millions of small streamers who barely make them a dollar. And then are there also too many side-costs, like South-Korea's network-fee recently, or the too many law cases where come cranky person sues them for some nonsical reason. And we don't know for real how much Amazon is charging them. Rumors are going, Amazon is charging them a hefty amount for servers, while other says AWS is irrelevant for their Service, so nobody knows for real, officially. But the recent move to a different handling of video-streams is supposed to change this, as it reduce the costs on Twitch's side, and lets the Streamers pay for it themself. By which I mean AV1(?), where the streamer is encoding all streams in all resolutions, and only sends it to Twitch which then acts as a relay. Claim is, Video-Encoding was the biggest cost for them, after employees, which seems kinda strange.. But maybe it will change their game in the next years, we will see.
  - nicolas_17 3y ago
    You do know Amazon owns Twitch? I'm sure they aren't using normal AWS billing...
    - PurpleRamen 3y ago
      Owning does not mean receiving benefits. Twitch is still a Company of their own, not a department of Amazon. It's well known that Twitch gets no big benefits from Amazon and is used as a Cash-Cow.
    - dcist 3y ago
      Yeah, I've wondered if Amazon is using Twitch's AWS fees as paper losses to lower taxes. I.e., Twitch is actually making profits but Amazon wants the AWS fees on its books so that Twitch isn't recording profits (and therefore taxes) and Amazon profits off the AWS fees.
jmyeet 3y ago
Twitch did successfully push a subscription model for creators that allowed a lot of small creators to make an income. For anyone unfamiliar, Twitch subscriptions are $5-25/month (viewer's choice) and give access to emote, subscription badges in the chat and, perhaps most importantly, give you an ad free experience with that creator. One cannot understate how important Amazon Prime (as Twitch Prime) is to the Twitch subscription ecosystem. IIRC roughly half of all Twitch subscriptions are Twitch Prime. Twitch is aupser aggressive with ads. Youtube has skippable pre-roll ads. Twitch does not and might have 4+ pre-roll ads plus in-stream ads every 30-60 minutes. The ad density Twitch aims for is 4+ minutes per hour. But Twitch doesn't like the subscription model anymore. They've cut the revenue split. Previously many creators got a 70/30% split, now almost everyone gets a 50/50% split. The big problem is that ad revenue scales in a way that subscriptions don't. Ad CPMs can go up, you can increase ad desnity easily (to a point) and ad revenue scales with view count in a way that subscriptions don't (eg a creator with 100K concurrent viewers won't have 100 times the subscriptions of someone with 1000 CVC). You're seeing the same trend with streaming services. Netflix killed their basic tier and wants you to watch ads because it's more profitable than the subscription. Prime Video has thinly veiled a price hike by adding an extra ad-free monthly fee. My point is that subscriptions, or any form of voluntary payment, is icnredibly hard to make work and even the most successful examples, like Twtich, require great effort and a supporting ecosystem like Amazon Prime.
bot347851834 3y ago
I agree with your general point: people generally donate/buy/subscribe much more if there's a benefit tied to it. On the other hand, I'd like to point out that Twitch is still losing money so I wouldn't really call their business model "very viable". I'd say it's viable for the content creators, because there's very little risk in trying out Twitch streaming, sure the chances of making it big are insanely small but the worst case scenario is losing time and a relatively small amount of money on a PC setup + microphone and camera. Patreon is a different beast but there's a caveat here as well. I don't have numbers so this is just my PoV but I'd guess that the vast majority of creators that use Patreon aren't hosting, sharing or creating mainly on Patreon. They're called YouTubers, streamers, bloggers for a reason. Sure they may share BtS or some other kind of additional content but it's not their main platform. So while the Patreon business model works it's not really comparable to Twitch or any other platform where you actually start and continue to create content and also get paid by.
- jerrre 3y ago
  It's important to make the distinction between: - Twitch is losing money because the costs of running the platform are higher then the revenue - Twitch is losing money because they're aggressively investing in growth if you want to know about the viability of the concept, I'm not sure which one it is, video streaming and small payment processing could both be quite costly
supriyo-biswas 3y ago
> Twitch subscriptions and Patreon has shown, that if you bind a website/project to a creator > Most websites, and indeed open source projects are pretty faceless, and require limited interaction with it's creator This is ultimately a polite way of saying that the "author" (which can be a content creator, a OSS maintainer) needs to establish a parasocial relationship, use a self-aggrandizing approach, and create drama to entertain its users. This does work for content creators on Youtube, Patreon or Onlyfans, but ultimately detracts from the mission of delivering quality content that is useful or positively entertaining for the consumers of said content. The fans created in this way can go on to defend your failings or can be taken advantage of in a weakness, as can be seen in the case of the LTT sexual harassment allegation case and the health situation of Physics Girl. However, I see no way for this to work in an open-source project, because users of an open source project mostly care about the functionality provided. Creating a parasocial relationship is mostly not viable in this space due to limited interaction, as you pointed out. I've seen a few instances of OSS project maintainers using a chest-thumping, holier-than-thou approach to create drama, and said projects have either mostly become irrelevant over time or the open source project has continued to get attention only because the character of the maintainer has been buried and not well known to most.
- PurpleRamen 3y ago
  > and create drama to entertain its users. You don't need Drama, but you should indeed communicate and deliver something worth the peoples' money. I mean, there are many big and small creators who just steadily and silently deliver their work and have usually no drama at all. Drama is just popular because it's cheap, fast, and any idiot can create it. So people who have nothing else of worth, tend to live from this.
- bawolff 3y ago
  Sometimes i feel like people make too much of the "parasocial" buzzword, as if its new. Entertainers have been doing the pass the hat thing for hundreds of years. It is not a new phenomenom. Historically, it has generally worked for entertainers, and i guess religion. I don't think there are historical paralells to open source really. Maybe it just doesn't work for that sort of thing.
amadeuspagel 3y ago
But I don't want to solve that problem. I don't want to have a parasocial relationship with the author of every blogpost that I read.
- k__ 3y ago
  To quote something I literally read 5 minutes ago in "Perhaps the Stars": "everyone has relationships with people far away, who inspire, entertain, role models, and also the people we work so hard for: fans, viewers, the next generation, kids somewhere, posterity. I think those asymmetrical relationships are part of what it means to be human, part of the teamwork. Humanity is teamwork. And the asymmetry doesn’t for a second make those relationships any less valid, or less important, or less real"
  - mh- 3y ago
    I don't know the book beyond the quick google I just did, but I disagree with: >And the asymmetry doesn’t for a second make those relationships any less valid, or less important, or less real. I think that people developing these so-called parasocial relationships is probably not harmful until it becomes a substitute for them developing "real" ones. But I see that growing rapidly, and I think it's a problem in the future.
    - Aerbil313 3y ago
      Just because you can magically send some digits to someone thousands miles away you never saw IRL doesn’t mean your brain is designed for it nor is able to handle it without disruptions to its operation. Whether you believe in creation or evolution. Nobody lived like this.
  - throwawayq3423 3y ago
    >And the asymmetry doesn’t for a second make those relationships any less valid, or less important, or less real. Not in a author/reader sense, no. But in a social media age where influencers use specific language to appear friendly and familiar? At the very least it's blurring the lines.
xeromal 3y ago
In his comments, he points to this not working for ephemeral websites. Twitter subs and patreon are just the opposite
Mc91 3y ago
I donate monthly to five Patreons. One of them is LineageOS ( https://www.patreon.com/LineageOS https://www.patreon.com/LineageOS ). Two of them are community spaces. Two are podcasts, only one of which I listen to. I really only get Patreon benefits from one of the five (I get each podcast). Some tech-related, some not. I subscribe to one Twitch feed. Actually the main Twitch feed I watch is one I do not subscribe to. I also sometimes watch other Twitch feeds, like John Romero's, or notch, or another random programmer who livestream codes. Again, some tech-related, some not. Generally I subscribe on Patreon and Twitch more to be supportive than to get something, although I do appreciate I get podcasts from one of the podcasts I subscribe to.

Ygg2 3y ago

Isn't Twitch very much a net loss?

jmyeet 3y ago
Twitch loses money because Amazon has decided to make Twitch lose money. Why? Because Amazon is charging themselves for the infrastructure Twitch uses (ie AWS). It does that to justify cutting revenue splits (of subscriptions and ads) and increasing ad density. The minimum ad density now is generally 4 minutes per hour. Example: say I'm Pottery Barn and I sell furniture in the US. I sell a table for $500. It costs $100 to make in China, $50 to ship to the US and $150 in store costs (eg utilities, staffing, rent, amortized capex, etc). You might say I've made $200 profit. But let's say my corporate structure is to have 2 subsidiaries: PB Manufacturing and PB Retail. The first makes the table. The second manages the stores and sells the table. If PBM charges PBR $150 for the table then PBM makes $50 in profit and PBR makes $150. If PBM charges $300 for the table then PBM makes $200 in profit and PBR breaks even. This is what I mean when I say Twitch's profitability is a chosen narrative. There are many reasons to do this. Tax is a big one. Maybe you pay less tax in China so you prefer to take profit there. Maybe you want to argue stores aren't profitable to resist demands for higher wages or higher rents. The above is an example of "transfer pricing" or "profit shifting". What's the difference? Transfer pricing is illegal. Profit shifting isn't (within limits; it technically has to be "at arm's length" and other requirements).
- snapcaster 3y ago
  Can you expand on this? You're saying Twitch is only unprofitable in an accounting sense but would be a viable business if on its own? Saying their AWS costs are $0 seems like it would be even more "fake"
  - deleted 3y ago
    [deleted]
  - fkyoureadthedoc 3y ago
    So Twitch is only a viable business model once you own enough data centers.
  - wongarsu 3y ago
    A video streaming platform isn't a natural fit for a hosting service famous for charging outrageous rates for outgoing traffic. If they were neither owned by Amazon nor had a special deal with AWS (like Netflix presumably has) they wouldn't be using AWS for anything touching actual videos.
- plorkyeran 3y ago
  Twitch runs its own data centers and does not use AWS for the video streaming platform. There are probably some incidental expenses which are actually Amazon profits, but they’re much smaller than you’re making them out to be.
  - Quarrel 3y ago
    Say what? https://aws.amazon.com/ivs/ https://aws.amazon.com/ivs/ "Use the same live streaming technology and global infrastructure that powers Twitch." Did IVS grow out of Twitch? Sure. That core is now a piece of AWS infra though, even though the team was initially built at Twitch. (Obviously these things are weird to talk about in a vacuum, because all the pieces are 100% owned by the same parent. The splits we see can be changed with the wave of a CFOs pen, usually when they want to change how we view some overarching piece of the business.)
  - 3y ago
PurpleRamen 3y ago
Yes and no. They jump around the profit-point. They made some profit in 2019 or so, but the pandemia peaked them, not just in views and income, but also costs. The thing is, Twitch's business-model is very frail. A streamer with too many viewers can cost them more money than it brings them money. Similar, are there millions of small streamers who barely make them a dollar. And then are there also too many side-costs, like South-Korea's network-fee recently, or the too many law cases where come cranky person sues them for some nonsical reason. And we don't know for real how much Amazon is charging them. Rumors are going, Amazon is charging them a hefty amount for servers, while other says AWS is irrelevant for their Service, so nobody knows for real, officially. But the recent move to a different handling of video-streams is supposed to change this, as it reduce the costs on Twitch's side, and lets the Streamers pay for it themself. By which I mean AV1(?), where the streamer is encoding all streams in all resolutions, and only sends it to Twitch which then acts as a relay. Claim is, Video-Encoding was the biggest cost for them, after employees, which seems kinda strange.. But maybe it will change their game in the next years, we will see.
- nicolas_17 3y ago
  You do know Amazon owns Twitch? I'm sure they aren't using normal AWS billing...
  - PurpleRamen 3y ago
    Owning does not mean receiving benefits. Twitch is still a Company of their own, not a department of Amazon. It's well known that Twitch gets no big benefits from Amazon and is used as a Cash-Cow.
  - dcist 3y ago
    Yeah, I've wondered if Amazon is using Twitch's AWS fees as paper losses to lower taxes. I.e., Twitch is actually making profits but Amazon wants the AWS fees on its books so that Twitch isn't recording profits (and therefore taxes) and Amazon profits off the AWS fees.

jmyeet 3y ago

Twitch did successfully push a subscription model for creators that allowed a lot of small creators to make an income. For anyone unfamiliar, Twitch subscriptions are $5-25/month (viewer's choice) and give access to emote, subscription badges in the chat and, perhaps most importantly, give you an ad free experience with that creator. One cannot understate how important Amazon Prime (as Twitch Prime) is to the Twitch subscription ecosystem. IIRC roughly half of all Twitch subscriptions are Twitch Prime. Twitch is aupser aggressive with ads. Youtube has skippable pre-roll ads. Twitch does not and might have 4+ pre-roll ads plus in-stream ads every 30-60 minutes. The ad density Twitch aims for is 4+ minutes per hour. But Twitch doesn't like the subscription model anymore. They've cut the revenue split. Previously many creators got a 70/30% split, now almost everyone gets a 50/50% split. The big problem is that ad revenue scales in a way that subscriptions don't. Ad CPMs can go up, you can increase ad desnity easily (to a point) and ad revenue scales with view count in a way that subscriptions don't (eg a creator with 100K concurrent viewers won't have 100 times the subscriptions of someone with 1000 CVC). You're seeing the same trend with streaming services. Netflix killed their basic tier and wants you to watch ads because it's more profitable than the subscription. Prime Video has thinly veiled a price hike by adding an extra ad-free monthly fee. My point is that subscriptions, or any form of voluntary payment, is icnredibly hard to make work and even the most successful examples, like Twtich, require great effort and a supporting ecosystem like Amazon Prime.

bot347851834 3y ago

I agree with your general point: people generally donate/buy/subscribe much more if there's a benefit tied to it. On the other hand, I'd like to point out that Twitch is still losing money so I wouldn't really call their business model "very viable". I'd say it's viable for the content creators, because there's very little risk in trying out Twitch streaming, sure the chances of making it big are insanely small but the worst case scenario is losing time and a relatively small amount of money on a PC setup + microphone and camera. Patreon is a different beast but there's a caveat here as well. I don't have numbers so this is just my PoV but I'd guess that the vast majority of creators that use Patreon aren't hosting, sharing or creating mainly on Patreon. They're called YouTubers, streamers, bloggers for a reason. Sure they may share BtS or some other kind of additional content but it's not their main platform. So while the Patreon business model works it's not really comparable to Twitch or any other platform where you actually start and continue to create content and also get paid by.

jerrre 3y ago
It's important to make the distinction between: - Twitch is losing money because the costs of running the platform are higher then the revenue - Twitch is losing money because they're aggressively investing in growth if you want to know about the viability of the concept, I'm not sure which one it is, video streaming and small payment processing could both be quite costly

supriyo-biswas 3y ago

> Twitch subscriptions and Patreon has shown, that if you bind a website/project to a creator > Most websites, and indeed open source projects are pretty faceless, and require limited interaction with it's creator This is ultimately a polite way of saying that the "author" (which can be a content creator, a OSS maintainer) needs to establish a parasocial relationship, use a self-aggrandizing approach, and create drama to entertain its users. This does work for content creators on Youtube, Patreon or Onlyfans, but ultimately detracts from the mission of delivering quality content that is useful or positively entertaining for the consumers of said content. The fans created in this way can go on to defend your failings or can be taken advantage of in a weakness, as can be seen in the case of the LTT sexual harassment allegation case and the health situation of Physics Girl. However, I see no way for this to work in an open-source project, because users of an open source project mostly care about the functionality provided. Creating a parasocial relationship is mostly not viable in this space due to limited interaction, as you pointed out. I've seen a few instances of OSS project maintainers using a chest-thumping, holier-than-thou approach to create drama, and said projects have either mostly become irrelevant over time or the open source project has continued to get attention only because the character of the maintainer has been buried and not well known to most.

PurpleRamen 3y ago
> and create drama to entertain its users. You don't need Drama, but you should indeed communicate and deliver something worth the peoples' money. I mean, there are many big and small creators who just steadily and silently deliver their work and have usually no drama at all. Drama is just popular because it's cheap, fast, and any idiot can create it. So people who have nothing else of worth, tend to live from this.
bawolff 3y ago
Sometimes i feel like people make too much of the "parasocial" buzzword, as if its new. Entertainers have been doing the pass the hat thing for hundreds of years. It is not a new phenomenom. Historically, it has generally worked for entertainers, and i guess religion. I don't think there are historical paralells to open source really. Maybe it just doesn't work for that sort of thing.

amadeuspagel 3y ago

But I don't want to solve that problem. I don't want to have a parasocial relationship with the author of every blogpost that I read.

k__ 3y ago
To quote something I literally read 5 minutes ago in "Perhaps the Stars": "everyone has relationships with people far away, who inspire, entertain, role models, and also the people we work so hard for: fans, viewers, the next generation, kids somewhere, posterity. I think those asymmetrical relationships are part of what it means to be human, part of the teamwork. Humanity is teamwork. And the asymmetry doesn’t for a second make those relationships any less valid, or less important, or less real"
- mh- 3y ago
  I don't know the book beyond the quick google I just did, but I disagree with: >And the asymmetry doesn’t for a second make those relationships any less valid, or less important, or less real. I think that people developing these so-called parasocial relationships is probably not harmful until it becomes a substitute for them developing "real" ones. But I see that growing rapidly, and I think it's a problem in the future.
  - Aerbil313 3y ago
    Just because you can magically send some digits to someone thousands miles away you never saw IRL doesn’t mean your brain is designed for it nor is able to handle it without disruptions to its operation. Whether you believe in creation or evolution. Nobody lived like this.
- throwawayq3423 3y ago
  >And the asymmetry doesn’t for a second make those relationships any less valid, or less important, or less real. Not in a author/reader sense, no. But in a social media age where influencers use specific language to appear friendly and familiar? At the very least it's blurring the lines.

xeromal 3y ago

In his comments, he points to this not working for ephemeral websites. Twitter subs and patreon are just the opposite

Mc91 3y ago

I donate monthly to five Patreons. One of them is LineageOS ( https://www.patreon.com/LineageOS https://www.patreon.com/LineageOS ). Two of them are community spaces. Two are podcasts, only one of which I listen to. I really only get Patreon benefits from one of the five (I get each podcast). Some tech-related, some not. I subscribe to one Twitch feed. Actually the main Twitch feed I watch is one I do not subscribe to. I also sometimes watch other Twitch feeds, like John Romero's, or notch, or another random programmer who livestream codes. Again, some tech-related, some not. Generally I subscribe on Patreon and Twitch more to be supportive than to get something, although I do appreciate I get podcasts from one of the podcasts I subscribe to.