1
00:00:00,000 --> 00:00:03,100
Hey, one quick thing before we get into it.

2
00:00:03,540 --> 00:00:06,200
Trust Revolution runs on value for value.

3
00:00:06,560 --> 00:00:07,900
No ads, no sponsors.

4
00:00:08,640 --> 00:00:15,180
Today's episode is about why voluntary payment rarely wins its scale, but why it still matters.

5
00:00:16,020 --> 00:00:20,680
After you hear the evidence, you'll understand why I'd be a hypocrite not to practice it.

6
00:00:21,360 --> 00:00:24,120
Fountain is how it works for me and for the show.

7
00:00:24,600 --> 00:00:28,040
Pay per episode or subscribe, lightning or card.

8
00:00:28,040 --> 00:00:31,340
You get something from the show, you can send something back.

9
00:00:31,820 --> 00:00:33,300
No guilt, no gimmicks.

10
00:00:33,520 --> 00:00:35,480
Go to trustrevolution.co.

11
00:00:35,680 --> 00:00:37,640
That's trustrevolution.co.

12
00:00:38,120 --> 00:00:39,460
Okay, let's get into it.

13
00:00:43,280 --> 00:00:47,200
There's an idea I find deeply compelling and have for many, many years.

14
00:00:47,860 --> 00:00:51,400
What if you could pay creators directly instead of watching ads?

15
00:00:51,900 --> 00:00:56,080
What if the money currently flowing to big tech through your attention and data

16
00:00:56,080 --> 00:00:59,240
went to the people actually making the things you value.

17
00:01:00,100 --> 00:01:02,560
This is the promise behind Value for Value,

18
00:01:03,060 --> 00:01:06,000
a model where you voluntarily pay for content

19
00:01:06,000 --> 00:01:08,580
instead of being monetized through surveillance.

20
00:01:09,420 --> 00:01:12,120
It's the philosophy behind Bitcoin micropayments,

21
00:01:12,740 --> 00:01:16,040
podcasting 2.0, and platforms like Noster.

22
00:01:16,940 --> 00:01:17,960
The idea is simple.

23
00:01:18,520 --> 00:01:20,080
If you're paying, you're the customer.

24
00:01:20,660 --> 00:01:22,420
If you're not, you're the product.

25
00:01:23,220 --> 00:01:26,080
Payment equals sovereignty over your own attention.

26
00:01:26,900 --> 00:01:29,740
I host this podcast on a V4V platform.

27
00:01:30,300 --> 00:01:31,460
I accept these payments.

28
00:01:31,720 --> 00:01:33,440
I want this model to work.

29
00:01:34,120 --> 00:01:37,080
But wanting something to work isn't the same thing as it working.

30
00:01:37,540 --> 00:01:41,180
And I think anyone exploring alternatives to the extraction economy

31
00:01:41,180 --> 00:01:45,240
deserves an honest look at the results, not just the philosophy.

32
00:01:46,000 --> 00:01:51,320
Companies like Google and Meta capture roughly $670 a year

33
00:01:51,320 --> 00:01:54,580
from the average American through attention and data.

34
00:01:55,280 --> 00:01:58,800
That's serious money, even if you never see it leave your pocket.

35
00:01:59,520 --> 00:02:04,240
The question is whether voluntary payment can redirect even a fraction of that

36
00:02:04,240 --> 00:02:10,640
and whether it can do so at a scale that actually sustains creators and platforms independently.

37
00:02:11,200 --> 00:02:14,940
I want to find out, does voluntary payment work at scale,

38
00:02:15,300 --> 00:02:17,860
or does it only work for a small, committed group?

39
00:02:18,720 --> 00:02:20,220
This isn't a new question.

40
00:02:20,220 --> 00:02:25,880
People have been trying voluntary payment for decades in contexts far removed from tech.

41
00:02:26,540 --> 00:02:31,360
Street performers, public radio, pay-what-you-wish restaurants, museums.

42
00:02:31,900 --> 00:02:37,040
The data is actually in on what happens when you let people decide what to pay.

43
00:02:37,800 --> 00:02:44,700
And the numbers cluster around the same range, whether you're talking about NPR pledge drives or Bitcoin micropayments.

44
00:02:45,720 --> 00:02:49,120
There are real reasons to believe that it can work.

45
00:02:49,860 --> 00:02:53,320
That $670 a year big tech captures from you,

46
00:02:53,780 --> 00:02:56,340
it's derived from their quarterly earnings reports.

47
00:02:57,320 --> 00:03:02,160
That alone pulls $68 per quarter from U.S. and Canadian users.

48
00:03:02,920 --> 00:03:06,380
Google's ad revenue, divided by their user base,

49
00:03:06,860 --> 00:03:11,080
adds another $400 plus for Americans specifically.

50
00:03:12,180 --> 00:03:13,120
Real money.

51
00:03:13,360 --> 00:03:17,340
You don't see it leaving because it never arrives as cash.

52
00:03:18,140 --> 00:03:20,560
Again, it flows through your attention and data.

53
00:03:21,080 --> 00:03:24,380
Currencies you don't track, but companies absolutely do.

54
00:03:25,060 --> 00:03:27,240
So the opportunity for an alternative is real.

55
00:03:27,660 --> 00:03:34,780
If even a fraction of that $670 could go directly to creators and services you actually use, the math works.

56
00:03:35,400 --> 00:03:37,180
And some people will pay.

57
00:03:37,820 --> 00:03:43,420
Patreon has proven that 1 to 5% of an audience will voluntarily support creators they value.

58
00:03:43,420 --> 00:03:55,040
The top podcasts on Patreon, Matt and Shane's secret podcast, Chapo Trap House, generate hundreds of thousands of dollars monthly from voluntary subscriptions.

59
00:03:55,680 --> 00:03:59,660
No ads, just listeners who decided the content was worth paying for.

60
00:04:00,340 --> 00:04:04,500
The technology that makes this possible works too.

61
00:04:05,260 --> 00:04:08,220
Bitcoin's Lightning Network routes payments in milliseconds.

62
00:04:08,660 --> 00:04:11,160
The fees are fractions of a cent.

63
00:04:11,980 --> 00:04:15,180
Platforms like Nostra enable censorship-resistant communications.

64
00:04:15,600 --> 00:04:17,380
We've covered this on many other episodes.

65
00:04:18,220 --> 00:04:23,140
The technical barriers that make micropayments impractical for decades are largely solved.

66
00:04:23,740 --> 00:04:27,220
And there's one other piece of evidence that's genuinely encouraging.

67
00:04:28,220 --> 00:04:30,840
Apple's app tracking transparency rollout.

68
00:04:31,680 --> 00:04:37,800
Before, about 73% of users allowed tracking because it was the default.

69
00:04:38,500 --> 00:04:43,180
After Apple switched to opt-in, that number collapsed to 18%.

70
00:04:43,180 --> 00:04:46,620
Same users, same phones, and the same apps.

71
00:04:46,760 --> 00:04:52,620
But a 55% point swing from a single design change.

72
00:04:53,120 --> 00:04:56,020
People aren't actively choosing surveillance.

73
00:04:56,420 --> 00:04:58,380
They're just not actively rejecting it.

74
00:04:58,680 --> 00:05:01,980
So we change the default and behavior changes with it.

75
00:05:02,640 --> 00:05:06,860
There's also Spotify, which complicates the narrative in an interesting way.

76
00:05:07,620 --> 00:05:14,380
About 40% of Spotify users pay for premium, much higher than the 9% we see with YouTube premium.

77
00:05:15,080 --> 00:05:20,720
It sounds like evidence that people will pay when the value proposition is clear, but let's look closer.

78
00:05:21,520 --> 00:05:24,720
Spotify launched as a freemium service in 2008.

79
00:05:25,040 --> 00:05:27,300
The premium tier was baked in from the very start.

80
00:05:28,260 --> 00:05:31,780
Users who came in expecting to pay were more likely to pay.

81
00:05:31,780 --> 00:05:36,920
And crucially, Spotify's free tier has always been meaningfully worse.

82
00:05:37,640 --> 00:05:39,940
Shuffle only on mobile for years.

83
00:05:40,780 --> 00:05:43,280
Aggressive ad interruptions, limited skips.

84
00:05:44,120 --> 00:05:46,880
The friction of not paying was designed to be high.

85
00:05:47,920 --> 00:05:51,880
YouTube, by contrast, was free for over a decade before premium existed.

86
00:05:52,640 --> 00:05:56,580
Users formed expectations about an ad-supported model.

87
00:05:57,040 --> 00:06:06,455
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

88
00:06:07,355 --> 00:06:11,375
Make paying as easy as being monetized and the economic shift.

89
00:06:12,135 --> 00:06:13,655
That's the optimistic case.

90
00:06:14,295 --> 00:06:16,155
There is evidence that complicates it.

91
00:06:17,055 --> 00:06:21,555
When people are offered an explicit choice between paying and being the product,

92
00:06:21,975 --> 00:06:24,195
they tend to choose ads consistently.

93
00:06:25,195 --> 00:06:27,495
YouTube Premium has been available for years.

94
00:06:27,915 --> 00:06:32,015
It removes ads, offers background play, includes YouTube music.

95
00:06:32,955 --> 00:06:34,495
Google has promoted it aggressively.

96
00:06:35,175 --> 00:06:39,835
And after all that, only about 9% of U.S. users pay.

97
00:06:40,495 --> 00:06:43,195
The other 91% accept advertising.

98
00:06:43,655 --> 00:06:44,755
I am part of that 91%.

99
00:06:45,915 --> 00:06:51,755
Netflix introduced an ad-supported tier, and it captured over 55% of new signups.

100
00:06:52,555 --> 00:06:58,735
Amazon Prime Video made ads the default, and 85% of users stayed on it rather than pay extra.

101
00:06:59,075 --> 00:07:00,555
Again, I'm in that category.

102
00:07:01,215 --> 00:07:04,335
When Meta was forced to offer ad-free subscriptions in Europe,

103
00:07:04,675 --> 00:07:09,535
they priced it at roughly what they pull in in ad revenue, and most users didn't switch.

104
00:07:10,195 --> 00:07:12,675
So the pattern here is consistent.

105
00:07:13,215 --> 00:07:17,255
When given a choice, most people choose free with ads over pay without.

106
00:07:17,255 --> 00:07:25,755
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.

107
00:07:26,375 --> 00:07:27,415
Maybe it's the case.

108
00:07:28,035 --> 00:07:33,875
But then let's look at Nostr, a social platform built entirely around voluntary payment.

109
00:07:34,595 --> 00:07:36,735
Sending Bitcoin micropayments is built in.

110
00:07:37,295 --> 00:07:45,295
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.

111
00:07:45,295 --> 00:07:49,295
The participation rate is around one-half of 1%.

112
00:07:50,315 --> 00:07:52,855
Nostra has millions of registered accounts.

113
00:07:53,415 --> 00:07:57,735
Of those, roughly 165,000 have ever sent a payment.

114
00:07:58,275 --> 00:07:58,495
Ever.

115
00:07:58,735 --> 00:08:05,455
Even if you only count active users with real profiles, participation tops out at around 17%.

116
00:08:05,455 --> 00:08:14,175
Meanwhile, Jack Dorsey and others have put over $30 million into the Nostra ecosystem through OpenSats and direct grants.

117
00:08:14,175 --> 00:08:15,975
These are crucial, and I'm grateful.

118
00:08:16,855 --> 00:08:23,355
The subsidy from a handful of wealthy believers dwarfs the organic value exchange happening at least so far.

119
00:08:24,355 --> 00:08:25,635
Twitch tells a similar story.

120
00:08:26,455 --> 00:08:33,775
It has 30 million daily unique viewers, but streamers typically see only 5 to 15 percent of their audiences subscribe.

121
00:08:34,675 --> 00:08:37,135
And that's for streamers who built dedicated communities.

122
00:08:37,135 --> 00:08:44,615
The top 6% of streamers, the celebrity tier with real followings, hold nearly 60% of all subscribers.

123
00:08:45,155 --> 00:08:47,195
The long tail of creators gets scraps.

124
00:08:48,255 --> 00:08:53,775
Podcasting 2.0, where I am now sitting with this show, shows a similar pattern.

125
00:08:54,475 --> 00:08:59,015
Less than 5% of active podcasts even support value-for-value payments.

126
00:08:59,015 --> 00:09:08,435
Of those that do, Blueberry reports that participating shows average $25 to $100 per month from audience contributions.

127
00:09:09,295 --> 00:09:15,055
Meanwhile, the podcast advertising market is nearly $2 billion fee-for-V is a rounding error.

128
00:09:16,195 --> 00:09:19,235
Open source software tells the same story at larger scale.

129
00:09:19,635 --> 00:09:28,035
The software that runs the internet, and we've likely all seen the memes, Linux, OpenSSL, Log4J, creates trillions in value.

130
00:09:28,615 --> 00:09:34,235
Harvard Business School estimated $8.8 trillion in demand-side value from open-source software.

131
00:09:34,755 --> 00:09:38,535
And 60% of the maintainers who create that value are unpaid.

132
00:09:39,215 --> 00:09:45,495
When surveyed, 81% said they want predictable monthly income, not sporadic donations.

133
00:09:46,275 --> 00:09:49,235
Voluntary payment doesn't match what creators actually need.

134
00:09:49,395 --> 00:09:52,055
And it's not just audiences who prefer ads.

135
00:09:52,395 --> 00:09:53,555
Many creators do, too.

136
00:09:54,455 --> 00:09:55,915
Advertising revenue is passive.

137
00:09:55,915 --> 00:10:03,275
It doesn't require asking your audience for money, cultivating relationships, or dealing with the guilt of inconsistent support.

138
00:10:04,115 --> 00:10:07,375
A check shows up whether or not your listeners feel generous that week.

139
00:10:07,755 --> 00:10:12,835
For a lot of creators, that reliability beats the philosophical appeal of direct payment.

140
00:10:13,935 --> 00:10:17,115
What's striking is that these numbers aren't unique to digital platforms.

141
00:10:17,375 --> 00:10:22,075
They echo patterns we've seen for decades in contexts that have nothing to do with technology.

142
00:10:23,015 --> 00:10:27,095
Voluntary payment isn't a new idea, and it's never worked at scale.

143
00:10:27,795 --> 00:10:30,975
Public radio has been running on this model since the 1970s.

144
00:10:31,535 --> 00:10:38,555
NPR stations survive on listener donations, supplemented at least until recently by large federal grants and underwriting.

145
00:10:39,255 --> 00:10:41,715
About 6 to 12 percent of listeners actually donate.

146
00:10:42,415 --> 00:10:45,575
Industry consultants put the average at around 8 to 10 percent.

147
00:10:45,975 --> 00:10:47,495
That's been the number for decades.

148
00:10:48,375 --> 00:10:55,515
Public radio has had 50 years to optimize pledge drives, refine messaging, build loyalty, and make donations easy.

149
00:10:56,055 --> 00:10:58,455
The participation rate hasn't moved.

150
00:10:58,955 --> 00:11:05,435
The same audiences who say they love NPR, who listen every morning, who tell their friends, 90% of them don't pay.

151
00:11:06,135 --> 00:11:13,175
Setting aside, of course, the fact that radio is arguably on the decline, the numbers have held steady during radio's greatest years.

152
00:11:14,535 --> 00:11:15,995
Wikipedia sees similar numbers.

153
00:11:15,995 --> 00:11:20,535
They run annual fundraising campaigns with increasingly urgent banner messages.

154
00:11:21,255 --> 00:11:24,555
Their own materials say fewer than 1% of readers give.

155
00:11:25,135 --> 00:11:29,995
They have 16 billion monthly page views and about 7.5 million annual donors.

156
00:11:30,635 --> 00:11:33,195
The average donation is around $11.

157
00:11:33,855 --> 00:11:37,335
The people who use Wikipedia most still don't pay for it.

158
00:11:38,235 --> 00:11:42,655
Street performers, or buskers, have been testing voluntary payment literally for centuries.

159
00:11:43,395 --> 00:11:48,895
Modern studies put average earnings at $20 to $50 per hour in good locations, but the

160
00:11:48,895 --> 00:11:49,715
variance is enormous.

161
00:11:50,535 --> 00:11:56,655
A world-famous violinist, Joshua Bell, once played in a D.C. metro station and made $32.

162
00:11:57,355 --> 00:12:10,689
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

163
00:12:11,489 --> 00:12:15,709
And for everyone who thinks pay what you want might work if you just positioned it right,

164
00:12:16,529 --> 00:12:24,089
Nara tried. From 2010 to 2019, they operated five Panera Cares locations where customers could pay

165
00:12:24,089 --> 00:12:31,529
whatever they wanted for their meals. The target was 60% paying full price, 20% paying more, and 20%

166
00:12:31,529 --> 00:12:38,729
paying less or nothing. The reality is that revenue covered only 60 to 70% of operating costs.

167
00:12:39,309 --> 00:12:47,409
The stores couldn't sustain themselves. By 2019, all five had closed. Researchers found that customers

168
00:12:47,409 --> 00:12:53,569
paid more right after the store opened than paid progressively less on return visits. The goodwill

169
00:12:53,569 --> 00:13:00,189
dried up. Even Radiohead's famous in Rainbows experiment, and it is a fantastic album, where

170
00:13:00,189 --> 00:13:06,329
they let fans name their price for the album, saw similar results. 38% of downloaders paid something,

171
00:13:06,509 --> 00:13:14,249
62% paid nothing. The average payment, including freeloaders, was $2.26. The band made money,

172
00:13:14,389 --> 00:13:19,389
but they were Radiohead, one of the biggest bands in the world with 15 years of major label marketing

173
00:13:19,389 --> 00:13:24,809
behind them. For anyone starting from scratch, those numbers would be unsustainable. Museums

174
00:13:24,809 --> 00:13:29,949
have been grappling with this for years. The Metropolitan Museum in New York operated on

175
00:13:29,949 --> 00:13:35,229
so-called suggested admission for decades. Pay what you wish. Too many visitors, particularly

176
00:13:35,229 --> 00:13:41,209
tourists, paid little or nothing. In 2018, the Met moved to mandatory admission for out-of-state

177
00:13:41,209 --> 00:13:47,449
visitors. The Brooklyn Museum, the American Museum of Natural History, the Philadelphia Art Museum,

178
00:13:47,449 --> 00:13:51,089
they've all restricted pay-what-you-wish to local residents only.

179
00:13:51,549 --> 00:13:54,769
The trend is away from voluntary payment, not toward it.

180
00:13:55,649 --> 00:13:59,389
The numbers cluster together around all these contexts.

181
00:13:59,729 --> 00:14:03,649
1% for Wikipedia, 5 to 15 for Twitch and Patreon,

182
00:14:04,469 --> 00:14:09,309
8 to 10 for public radio, 38% for Radiohead's passionate fans.

183
00:14:09,969 --> 00:14:12,869
The ceiling appears to be somewhere between 5 and 40%,

184
00:14:12,869 --> 00:14:15,369
depending on how captured the loyal audience is.

185
00:14:15,949 --> 00:14:20,709
And getting to 40% requires decades of brand building that most creators don't have.

186
00:14:20,969 --> 00:14:23,249
You could argue these comparisons aren't fair.

187
00:14:23,669 --> 00:14:32,789
YouTube Premium and Netflix ad tiers are asking for extra payment on top of services people already use, not offering something fundamentally different.

188
00:14:33,269 --> 00:14:35,929
So maybe value for value hasn't failed.

189
00:14:36,429 --> 00:14:38,749
Maybe nobody's built something compelling enough yet.

190
00:14:39,349 --> 00:14:39,569
Maybe.

191
00:14:40,369 --> 00:14:43,129
But the Nostra numbers are harder to explain away.

192
00:14:43,129 --> 00:14:46,889
a platform built from the ground up around voluntary payment,

193
00:14:47,329 --> 00:14:49,829
attracting people who actively believe in the model.

194
00:14:50,769 --> 00:14:52,669
If it was going to work anywhere, it would work there.

195
00:14:53,269 --> 00:14:57,029
And the participation rate is still under 1%.

196
00:14:57,029 --> 00:15:02,009
And when you add the historical data, decades of evidence from public radios,

197
00:15:02,149 --> 00:15:06,309
museums, street performers, pay-what-you-want restaurants, the picture gets clearer.

198
00:15:06,809 --> 00:15:08,469
But technology isn't the problem.

199
00:15:09,069 --> 00:15:11,929
Neither, as I often argue, is the user experience.

200
00:15:11,929 --> 00:15:18,369
human behavior is. We have to take seriously the possibility that voluntary payment at scale may

201
00:15:18,369 --> 00:15:24,229
not work, not because people are bad or cheap or don't care, but because revealed preference

202
00:15:24,229 --> 00:15:29,709
is overwhelming. When given a choice, most people choose free with ads over payment.

203
00:15:31,289 --> 00:15:36,829
Remember that 1 to 5% Patreon figure I mentioned as evidence? Look at it differently. That's been

204
00:15:36,829 --> 00:15:42,389
the rate for over a decade. It hasn't grown. Platforms have gotten easier, payment friction

205
00:15:42,389 --> 00:15:49,329
has dropped, and the percentage stays the same. The 1 to 5% who pay on Patreon, the half a percent

206
00:15:49,329 --> 00:15:55,429
who pay on Nostra, the 9% who subscribe to YouTube Premium, the 10% who donate to NPR,

207
00:15:56,269 --> 00:16:00,429
maybe that's not a floor we're still approaching. Maybe that is, in fact, the ceiling.

208
00:16:01,029 --> 00:16:04,329
If that's true, what does it mean for anyone looking at these alternatives?

209
00:16:05,289 --> 00:16:09,549
Maybe these models only work for a committed minority, and that's okay.

210
00:16:10,189 --> 00:16:15,209
If you're in the 5% who actively want to support creators directly, the infrastructure exists.

211
00:16:15,549 --> 00:16:16,209
You can do it.

212
00:16:16,769 --> 00:16:19,329
But expecting mass adoption may be unrealistic.

213
00:16:20,409 --> 00:16:21,649
Who are these 5%?

214
00:16:22,109 --> 00:16:25,769
They tend to be people who've already thought about the attention economy,

215
00:16:25,769 --> 00:16:32,189
who understand the trade-offs, who have the disposable income and the ideological motivation to act on it.

216
00:16:32,189 --> 00:16:36,529
They're not typical users. They're early adopters with convictions.

217
00:16:37,489 --> 00:16:41,329
And the gap between them and everyone else may not be a friction problem.

218
00:16:41,669 --> 00:16:45,189
It may be a values problem that Better UX can't solve.

219
00:16:45,949 --> 00:16:51,309
Or maybe voluntary tipping is the wrong model, even if voluntary subscriptions can work.

220
00:16:52,169 --> 00:16:57,189
Patreon succeeds because it's recurring commitment, not one-time generosity.

221
00:16:57,869 --> 00:17:02,869
Pay what you want when you want is philosophically pure, but it is economically fragile.

222
00:17:03,729 --> 00:17:05,489
Predictable beats spontaneous.

223
00:17:06,389 --> 00:17:08,109
There's another way to look at this.

224
00:17:08,629 --> 00:17:11,249
Choice might be the wrong frame entirely.

225
00:17:12,129 --> 00:17:17,749
The Apple data that we discussed earlier shows that defaults determine behavior more than decisions do.

226
00:17:18,849 --> 00:17:20,869
People don't consciously choose surveillance.

227
00:17:21,189 --> 00:17:22,909
They just don't actively reject it.

228
00:17:23,349 --> 00:17:24,349
Same with direct payment.

229
00:17:24,609 --> 00:17:25,569
They don't reject it.

230
00:17:25,569 --> 00:17:27,229
They just don't actively choose it.

231
00:17:27,949 --> 00:17:31,889
If that's the dynamic, then the path forward isn't convincing more people to pay.

232
00:17:32,149 --> 00:17:39,769
It's changing what the default experience looks like, building systems where you're not having your attention harvested unless you opt into it.

233
00:17:40,949 --> 00:17:42,429
But who changes the defaults?

234
00:17:42,809 --> 00:17:43,809
Apple did it with tracking.

235
00:17:44,229 --> 00:17:46,169
Could platform designers do it with payments?

236
00:17:46,609 --> 00:17:51,169
That's a different problem than the one voluntary payment is currently designed to solve.

237
00:17:51,169 --> 00:17:57,789
Okay, so I've just given you 18 minutes of a funeral for an idea.

238
00:17:58,489 --> 00:18:12,344
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

239
00:18:12,344 --> 00:18:18,444
conclusion. Voluntary payment doesn't work at scale. It never has, and it probably never will.

240
00:18:19,284 --> 00:18:24,924
I left something out. It's only the end of the story if you think voluntary payment needs to

241
00:18:24,924 --> 00:18:31,424
replace extraction economics. It doesn't. I wish it were. I wish it could, but it's unlikely.

242
00:18:32,304 --> 00:18:40,004
It does need to exist as an exit. In December 2018, Patreon banned a YouTuber named Carl Benjamin,

243
00:18:40,004 --> 00:18:45,124
known online as Sargon Avakat, for something he said on a completely different platform.

244
00:18:45,684 --> 00:18:51,044
The ban wasn't for violating Patreon's terms of service. It was political, and it triggered a

245
00:18:51,044 --> 00:18:56,184
cascade. Jordan Peterson and Dave Rubin both announced they were leaving Patreon in protest.

246
00:18:56,944 --> 00:19:01,644
They started building an alternative. Thousands of creators watched their income evaporate

247
00:19:01,644 --> 00:19:09,064
as supporters canceled accounts in solidarity. Many of those creators migrated to Subscribestar,

248
00:19:09,064 --> 00:19:15,024
a Patreon competitor. Within weeks, Stripe and PayPal both cut Subscribestar off from their

249
00:19:15,024 --> 00:19:20,844
payment processing. There was no explanation. There was no opportunity for appeal. The backup

250
00:19:20,844 --> 00:19:28,004
plan got deplatformed, too. In 2021, OnlyFans announced it would ban sexually explicit content,

251
00:19:28,004 --> 00:19:33,304
the entire reason the platform exists, because banks and payment processors pressured them.

252
00:19:34,244 --> 00:19:40,924
They reversed the decision only after a massive creator revolt. But the lesson had landed. Your

253
00:19:40,924 --> 00:19:46,884
business model exists at the pleasure of Visa and MasterCard. And this goes back much further.

254
00:19:46,884 --> 00:19:54,084
In 2014, the U.S. Department of Justice ran something called Operation Chokepoint, the first of many that would follow.

255
00:19:54,904 --> 00:19:59,244
The goal was to pressure banks into cutting off legal businesses the government didn't like.

256
00:19:59,724 --> 00:20:02,524
Gun stores, payday lenders, fireworks sellers.

257
00:20:03,184 --> 00:20:07,584
No charges, no due process, just financial strangulation.

258
00:20:08,104 --> 00:20:10,464
The banks are the speech police now.

259
00:20:10,464 --> 00:20:20,364
And every creator who depends entirely on ad revenue and traditional payment rails is one phone call, one email away from discovering that.

260
00:20:21,244 --> 00:20:23,404
Voluntary payment solves this.

261
00:20:24,064 --> 00:20:32,664
Not replacing the $670 per year the average person already pays to platforms that harvest their attention, it solves the exit problem.

262
00:20:32,664 --> 00:20:44,664
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.

263
00:20:45,064 --> 00:20:58,984
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.

264
00:20:59,584 --> 00:21:00,804
You have an escape route.

265
00:21:00,804 --> 00:21:04,284
Look at how the successful creators actually operate.

266
00:21:04,684 --> 00:21:07,144
They're not choosing between ads and voluntary support.

267
00:21:07,444 --> 00:21:08,684
They're using both.

268
00:21:09,504 --> 00:21:15,244
Epo Trap House makes $140,000 a month on Patreon from a single $5 tier.

269
00:21:15,784 --> 00:21:16,844
They also have sponsors.

270
00:21:17,664 --> 00:21:24,084
Slate runs their podcast Slow Burn with eight free ad-supported episodes plus bonus content for paying members.

271
00:21:24,744 --> 00:21:31,244
The Tim Dillon Show pulls in over $200K per month from Patreon subscribers while also running ads.

272
00:21:31,664 --> 00:21:35,684
The hybrid model works because it matches how humans actually behave.

273
00:21:36,304 --> 00:21:38,704
Most people won't pay. Ads cover them.

274
00:21:39,564 --> 00:21:46,984
But the ones who will pay become your insurance, an uncancellable base that doesn't depend on any platform's good graces.

275
00:21:47,684 --> 00:21:54,084
That data that I shared with you earlier, the 2% to 5% conversion rate from free listeners to paid supporters,

276
00:21:54,504 --> 00:21:58,324
that's not a failure in my mind, but the size of your lifeboat.

277
00:21:59,344 --> 00:22:00,744
So what do we do with this?

278
00:22:01,444 --> 00:22:04,184
For creators, maybe you build both rails.

279
00:22:04,804 --> 00:22:06,424
Your ad revenue pays the bills.

280
00:22:06,724 --> 00:22:09,264
Your voluntary supporters are your insurance policy.

281
00:22:09,804 --> 00:22:14,904
Don't wait until you get deplatformed to discover you have no direct relationship with your audience.

282
00:22:15,644 --> 00:22:18,384
Set up that escape route now while everything is fine.

283
00:22:19,204 --> 00:22:23,244
And when we pitch it to our audience, we don't ask them to support the show.

284
00:22:23,584 --> 00:22:27,564
We ask them to make us uncancellable because that is the product.

285
00:22:27,904 --> 00:22:30,164
At least this is the lesson that I'm taking away.

286
00:22:30,864 --> 00:22:34,644
For listeners, stop thinking about voluntary payment as charity.

287
00:22:35,224 --> 00:22:38,544
Think about it as investing in creators you can't afford to lose.

288
00:22:38,844 --> 00:22:41,104
The ones who say things that might get them in trouble.

289
00:22:41,484 --> 00:22:44,544
The ones who don't sanitize their message for brand safety.

290
00:22:44,904 --> 00:22:46,404
You're not paying for content.

291
00:22:47,064 --> 00:22:50,584
You're paying for them to keep existing when the platforms decide they shouldn't.

292
00:22:51,704 --> 00:22:57,924
Builders working on value for value, Noster, Lightning, any of these freedom tech payment rails.

293
00:22:58,664 --> 00:23:03,544
Selling this as the future of monetization will continue to be a hell of an uphill battle.

294
00:23:03,864 --> 00:23:06,144
It's not going to replace ads at scale.

295
00:23:06,604 --> 00:23:08,244
50 years of data says so.

296
00:23:08,984 --> 00:23:12,224
But maybe we sell it as the escape route when the future goes wrong.

297
00:23:13,064 --> 00:23:17,844
Sell it as the thing that exists when Patreon doesn't want you, when PayPal cuts you off,

298
00:23:18,204 --> 00:23:23,064
when your bank decides you're too risky, when some executive you've never met decides your

299
00:23:23,064 --> 00:23:29,444
perfectly legal speech doesn't align with their values. It's not a niche use case. It's everyone,

300
00:23:29,444 --> 00:23:36,604
eventually. Voluntary payment can't dominate. Defaults always beat choice. Human nature doesn't

301
00:23:36,604 --> 00:23:43,564
really change, but it can exist at a scale that makes it viable. Can enough people build and use

302
00:23:43,564 --> 00:23:50,084
and fund these rails so that when you need an exit, there's somewhere to go? This is about worth making.

303
00:24:06,604 --> 00:24:08,664
you