Hey, one quick thing before we get into it.
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Today's episode is about why voluntary payment rarely wins its scale, but why it still matters.
After you hear the evidence, you'll understand why I'd be a hypocrite not to practice it.
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Okay, let's get into it.
There's an idea I find deeply compelling and have for many, many years.
What if you could pay creators directly instead of watching ads?
What if the money currently flowing to big tech through your attention and data
went to the people actually making the things you value.
This is the promise behind Value for Value,
a model where you voluntarily pay for content
instead of being monetized through surveillance.
It's the philosophy behind Bitcoin micropayments,
podcasting 2.0, and platforms like Noster.
The idea is simple.
If you're paying, you're the customer.
If you're not, you're the product.
Payment equals sovereignty over your own attention.
I host this podcast on a V4V platform.
I accept these payments.
I want this model to work.
But wanting something to work isn't the same thing as it working.
And I think anyone exploring alternatives to the extraction economy
deserves an honest look at the results, not just the philosophy.
Companies like Google and Meta capture roughly $670 a year
from the average American through attention and data.
That's serious money, even if you never see it leave your pocket.
The question is whether voluntary payment can redirect even a fraction of that
and whether it can do so at a scale that actually sustains creators and platforms independently.
I want to find out, does voluntary payment work at scale,
or does it only work for a small, committed group?
This isn't a new question.
People have been trying voluntary payment for decades in contexts far removed from tech.
Street performers, public radio, pay-what-you-wish restaurants, museums.
The data is actually in on what happens when you let people decide what to pay.
And the numbers cluster around the same range, whether you're talking about NPR pledge drives or Bitcoin micropayments.
There are real reasons to believe that it can work.
That $670 a year big tech captures from you,
it's derived from their quarterly earnings reports.
That alone pulls $68 per quarter from U.S. and Canadian users.
Google's ad revenue, divided by their user base,
adds another $400 plus for Americans specifically.
Real money.
You don't see it leaving because it never arrives as cash.
Again, it flows through your attention and data.
Currencies you don't track, but companies absolutely do.
So the opportunity for an alternative is real.
If even a fraction of that $670 could go directly to creators and services you actually use, the math works.
And some people will pay.
Patreon has proven that 1 to 5% of an audience will voluntarily support creators they value.
The top podcasts on Patreon, Matt and Shane's secret podcast, Chapo Trap House, generate hundreds of thousands of dollars monthly from voluntary subscriptions.
No ads, just listeners who decided the content was worth paying for.
The technology that makes this possible works too.
Bitcoin's Lightning Network routes payments in milliseconds.
The fees are fractions of a cent.
Platforms like Nostra enable censorship-resistant communications.
We've covered this on many other episodes.
The technical barriers that make micropayments impractical for decades are largely solved.
And there's one other piece of evidence that's genuinely encouraging.
Apple's app tracking transparency rollout.
Before, about 73% of users allowed tracking because it was the default.
After Apple switched to opt-in, that number collapsed to 18%.
Same users, same phones, and the same apps.
But a 55% point swing from a single design change.
People aren't actively choosing surveillance.
They're just not actively rejecting it.
So we change the default and behavior changes with it.
There's also Spotify, which complicates the narrative in an interesting way.
About 40% of Spotify users pay for premium, much higher than the 9% we see with YouTube premium.
It sounds like evidence that people will pay when the value proposition is clear, but let's look closer.
Spotify launched as a freemium service in 2008.
The premium tier was baked in from the very start.
Users who came in expecting to pay were more likely to pay.
And crucially, Spotify's free tier has always been meaningfully worse.
Shuffle only on mobile for years.
Aggressive ad interruptions, limited skips.
The friction of not paying was designed to be high.
YouTube, by contrast, was free for over a decade before premium existed.
Users formed expectations about an ad-supported model.
Asking them to pay now feels like asking them to pay for something they already had So maybe direct payment models just need better defaults and less friction
Make paying as easy as being monetized and the economic shift.
That's the optimistic case.
There is evidence that complicates it.
When people are offered an explicit choice between paying and being the product,
they tend to choose ads consistently.
YouTube Premium has been available for years.
It removes ads, offers background play, includes YouTube music.
Google has promoted it aggressively.
And after all that, only about 9% of U.S. users pay.
The other 91% accept advertising.
I am part of that 91%.
Netflix introduced an ad-supported tier, and it captured over 55% of new signups.
Amazon Prime Video made ads the default, and 85% of users stayed on it rather than pay extra.
Again, I'm in that category.
When Meta was forced to offer ad-free subscriptions in Europe,
they priced it at roughly what they pull in in ad revenue, and most users didn't switch.
So the pattern here is consistent.
When given a choice, most people choose free with ads over pay without.
You might say that's because the paid options aren't compelling enough or the friction is too high or people don't understand what they're giving up.
Maybe it's the case.
But then let's look at Nostr, a social platform built entirely around voluntary payment.
Sending Bitcoin micropayments is built in.
The friction is as low as it's ever been for this kind of transaction if you allow for the fact that you use an app or client that makes it easy.
The participation rate is around one-half of 1%.
Nostra has millions of registered accounts.
Of those, roughly 165,000 have ever sent a payment.
Ever.
Even if you only count active users with real profiles, participation tops out at around 17%.
Meanwhile, Jack Dorsey and others have put over $30 million into the Nostra ecosystem through OpenSats and direct grants.
These are crucial, and I'm grateful.
The subsidy from a handful of wealthy believers dwarfs the organic value exchange happening at least so far.
Twitch tells a similar story.
It has 30 million daily unique viewers, but streamers typically see only 5 to 15 percent of their audiences subscribe.
And that's for streamers who built dedicated communities.
The top 6% of streamers, the celebrity tier with real followings, hold nearly 60% of all subscribers.
The long tail of creators gets scraps.
Podcasting 2.0, where I am now sitting with this show, shows a similar pattern.
Less than 5% of active podcasts even support value-for-value payments.
Of those that do, Blueberry reports that participating shows average $25 to $100 per month from audience contributions.
Meanwhile, the podcast advertising market is nearly $2 billion fee-for-V is a rounding error.
Open source software tells the same story at larger scale.
The software that runs the internet, and we've likely all seen the memes, Linux, OpenSSL, Log4J, creates trillions in value.
Harvard Business School estimated $8.8 trillion in demand-side value from open-source software.
And 60% of the maintainers who create that value are unpaid.
When surveyed, 81% said they want predictable monthly income, not sporadic donations.
Voluntary payment doesn't match what creators actually need.
And it's not just audiences who prefer ads.
Many creators do, too.
Advertising revenue is passive.
It doesn't require asking your audience for money, cultivating relationships, or dealing with the guilt of inconsistent support.
A check shows up whether or not your listeners feel generous that week.
For a lot of creators, that reliability beats the philosophical appeal of direct payment.
What's striking is that these numbers aren't unique to digital platforms.
They echo patterns we've seen for decades in contexts that have nothing to do with technology.
Voluntary payment isn't a new idea, and it's never worked at scale.
Public radio has been running on this model since the 1970s.
NPR stations survive on listener donations, supplemented at least until recently by large federal grants and underwriting.
About 6 to 12 percent of listeners actually donate.
Industry consultants put the average at around 8 to 10 percent.
That's been the number for decades.
Public radio has had 50 years to optimize pledge drives, refine messaging, build loyalty, and make donations easy.
The participation rate hasn't moved.
The same audiences who say they love NPR, who listen every morning, who tell their friends, 90% of them don't pay.
Setting aside, of course, the fact that radio is arguably on the decline, the numbers have held steady during radio's greatest years.
Wikipedia sees similar numbers.
They run annual fundraising campaigns with increasingly urgent banner messages.
Their own materials say fewer than 1% of readers give.
They have 16 billion monthly page views and about 7.5 million annual donors.
The average donation is around $11.
The people who use Wikipedia most still don't pay for it.
Street performers, or buskers, have been testing voluntary payment literally for centuries.
Modern studies put average earnings at $20 to $50 per hour in good locations, but the
variance is enormous.
A world-famous violinist, Joshua Bell, once played in a D.C. metro station and made $32.
Talent doesn determine a busker income Location does Timing does Luck The audience isn evaluating value They making snap decisions about whether to drop a dollar in a case as they walk by
And for everyone who thinks pay what you want might work if you just positioned it right,
Nara tried. From 2010 to 2019, they operated five Panera Cares locations where customers could pay
whatever they wanted for their meals. The target was 60% paying full price, 20% paying more, and 20%
paying less or nothing. The reality is that revenue covered only 60 to 70% of operating costs.
The stores couldn't sustain themselves. By 2019, all five had closed. Researchers found that customers
paid more right after the store opened than paid progressively less on return visits. The goodwill
dried up. Even Radiohead's famous in Rainbows experiment, and it is a fantastic album, where
they let fans name their price for the album, saw similar results. 38% of downloaders paid something,
62% paid nothing. The average payment, including freeloaders, was $2.26. The band made money,
but they were Radiohead, one of the biggest bands in the world with 15 years of major label marketing
behind them. For anyone starting from scratch, those numbers would be unsustainable. Museums
have been grappling with this for years. The Metropolitan Museum in New York operated on
so-called suggested admission for decades. Pay what you wish. Too many visitors, particularly
tourists, paid little or nothing. In 2018, the Met moved to mandatory admission for out-of-state
visitors. The Brooklyn Museum, the American Museum of Natural History, the Philadelphia Art Museum,
they've all restricted pay-what-you-wish to local residents only.
The trend is away from voluntary payment, not toward it.
The numbers cluster together around all these contexts.
1% for Wikipedia, 5 to 15 for Twitch and Patreon,
8 to 10 for public radio, 38% for Radiohead's passionate fans.
The ceiling appears to be somewhere between 5 and 40%,
depending on how captured the loyal audience is.
And getting to 40% requires decades of brand building that most creators don't have.
You could argue these comparisons aren't fair.
YouTube Premium and Netflix ad tiers are asking for extra payment on top of services people already use, not offering something fundamentally different.
So maybe value for value hasn't failed.
Maybe nobody's built something compelling enough yet.
Maybe.
But the Nostra numbers are harder to explain away.
a platform built from the ground up around voluntary payment,
attracting people who actively believe in the model.
If it was going to work anywhere, it would work there.
And the participation rate is still under 1%.
And when you add the historical data, decades of evidence from public radios,
museums, street performers, pay-what-you-want restaurants, the picture gets clearer.
But technology isn't the problem.
Neither, as I often argue, is the user experience.
human behavior is. We have to take seriously the possibility that voluntary payment at scale may
not work, not because people are bad or cheap or don't care, but because revealed preference
is overwhelming. When given a choice, most people choose free with ads over payment.
Remember that 1 to 5% Patreon figure I mentioned as evidence? Look at it differently. That's been
the rate for over a decade. It hasn't grown. Platforms have gotten easier, payment friction
has dropped, and the percentage stays the same. The 1 to 5% who pay on Patreon, the half a percent
who pay on Nostra, the 9% who subscribe to YouTube Premium, the 10% who donate to NPR,
maybe that's not a floor we're still approaching. Maybe that is, in fact, the ceiling.
If that's true, what does it mean for anyone looking at these alternatives?
Maybe these models only work for a committed minority, and that's okay.
If you're in the 5% who actively want to support creators directly, the infrastructure exists.
You can do it.
But expecting mass adoption may be unrealistic.
Who are these 5%?
They tend to be people who've already thought about the attention economy,
who understand the trade-offs, who have the disposable income and the ideological motivation to act on it.
They're not typical users. They're early adopters with convictions.
And the gap between them and everyone else may not be a friction problem.
It may be a values problem that Better UX can't solve.
Or maybe voluntary tipping is the wrong model, even if voluntary subscriptions can work.
Patreon succeeds because it's recurring commitment, not one-time generosity.
Pay what you want when you want is philosophically pure, but it is economically fragile.
Predictable beats spontaneous.
There's another way to look at this.
Choice might be the wrong frame entirely.
The Apple data that we discussed earlier shows that defaults determine behavior more than decisions do.
People don't consciously choose surveillance.
They just don't actively reject it.
Same with direct payment.
They don't reject it.
They just don't actively choose it.
If that's the dynamic, then the path forward isn't convincing more people to pay.
It's changing what the default experience looks like, building systems where you're not having your attention harvested unless you opt into it.
But who changes the defaults?
Apple did it with tracking.
Could platform designers do it with payments?
That's a different problem than the one voluntary payment is currently designed to solve.
Okay, so I've just given you 18 minutes of a funeral for an idea.
50 years of data NPR Wikipedia Radiohead Panera Twitch Patreon the numbers we talked about The ceiling is structural not technological And I been building toward what feels like an inevitable
conclusion. Voluntary payment doesn't work at scale. It never has, and it probably never will.
I left something out. It's only the end of the story if you think voluntary payment needs to
replace extraction economics. It doesn't. I wish it were. I wish it could, but it's unlikely.
It does need to exist as an exit. In December 2018, Patreon banned a YouTuber named Carl Benjamin,
known online as Sargon Avakat, for something he said on a completely different platform.
The ban wasn't for violating Patreon's terms of service. It was political, and it triggered a
cascade. Jordan Peterson and Dave Rubin both announced they were leaving Patreon in protest.
They started building an alternative. Thousands of creators watched their income evaporate
as supporters canceled accounts in solidarity. Many of those creators migrated to Subscribestar,
a Patreon competitor. Within weeks, Stripe and PayPal both cut Subscribestar off from their
payment processing. There was no explanation. There was no opportunity for appeal. The backup
plan got deplatformed, too. In 2021, OnlyFans announced it would ban sexually explicit content,
the entire reason the platform exists, because banks and payment processors pressured them.
They reversed the decision only after a massive creator revolt. But the lesson had landed. Your
business model exists at the pleasure of Visa and MasterCard. And this goes back much further.
In 2014, the U.S. Department of Justice ran something called Operation Chokepoint, the first of many that would follow.
The goal was to pressure banks into cutting off legal businesses the government didn't like.
Gun stores, payday lenders, fireworks sellers.
No charges, no due process, just financial strangulation.
The banks are the speech police now.
And every creator who depends entirely on ad revenue and traditional payment rails is one phone call, one email away from discovering that.
Voluntary payment solves this.
Not replacing the $670 per year the average person already pays to platforms that harvest their attention, it solves the exit problem.
When Patreon bans you, when PayPal freezes your account, when YouTube demonetizes your channel, when your bank decides your business doesn't align with their values, most creators have no backup plan.
But if you've spent years building a direct relationship with even 5% of your audience on Patreon, on Value for Value, using lightning payments on whatever permissionless rails exists, you have something priceless.
You have an escape route.
Look at how the successful creators actually operate.
They're not choosing between ads and voluntary support.
They're using both.
Epo Trap House makes $140,000 a month on Patreon from a single $5 tier.
They also have sponsors.
Slate runs their podcast Slow Burn with eight free ad-supported episodes plus bonus content for paying members.
The Tim Dillon Show pulls in over $200K per month from Patreon subscribers while also running ads.
The hybrid model works because it matches how humans actually behave.
Most people won't pay. Ads cover them.
But the ones who will pay become your insurance, an uncancellable base that doesn't depend on any platform's good graces.
That data that I shared with you earlier, the 2% to 5% conversion rate from free listeners to paid supporters,
that's not a failure in my mind, but the size of your lifeboat.
So what do we do with this?
For creators, maybe you build both rails.
Your ad revenue pays the bills.
Your voluntary supporters are your insurance policy.
Don't wait until you get deplatformed to discover you have no direct relationship with your audience.
Set up that escape route now while everything is fine.
And when we pitch it to our audience, we don't ask them to support the show.
We ask them to make us uncancellable because that is the product.
At least this is the lesson that I'm taking away.
For listeners, stop thinking about voluntary payment as charity.
Think about it as investing in creators you can't afford to lose.
The ones who say things that might get them in trouble.
The ones who don't sanitize their message for brand safety.
You're not paying for content.
You're paying for them to keep existing when the platforms decide they shouldn't.
Builders working on value for value, Noster, Lightning, any of these freedom tech payment rails.
Selling this as the future of monetization will continue to be a hell of an uphill battle.
It's not going to replace ads at scale.
50 years of data says so.
But maybe we sell it as the escape route when the future goes wrong.
Sell it as the thing that exists when Patreon doesn't want you, when PayPal cuts you off,
when your bank decides you're too risky, when some executive you've never met decides your
perfectly legal speech doesn't align with their values. It's not a niche use case. It's everyone,
eventually. Voluntary payment can't dominate. Defaults always beat choice. Human nature doesn't
really change, but it can exist at a scale that makes it viable. Can enough people build and use
and fund these rails so that when you need an exit, there's somewhere to go? This is about worth making.
you