Moo Harder!

LiveJournal entertains me, and not only because so many of users throw fits of hysteria at the drop of a hat. For a very long time, it survived entirely on selling subscriptions to about 5% of its users, upgrading their accounts for extra avatars, picture upload space, and a few spiffy (if rarely-used) extra features. Every so often, it sells permanent upgrades, typically for $150.

This five percent is, by definition, LiveJournal’s most profitable five percent of users. Out of these five percent, permanent accounts are, I suspect, the best deal… for LiveJournal’s coffers. $150 buys five years of upgraded service, not counting the interest earned by not paying up-front. I suspect that a Permanent account actually stays profitable more or less forever - on a commercial scale, a gigabyte of bandwidth costs about fifteen cents, a gigabyte of storage about the same - but they get less so if they’re active for more than five years. For comparison, LiveJournal has only existed at all for nine years this March, and as a paid service for eight this September.

Unfortunately, once a user buys a permanent upgrade, that user immediately and forever-after becomes deadweight to the company, an expense that has no hope of bringing in future revenue. Let me repeat that - permanent account holders are not LiveJournal’s customers. LiveJournal has precious little incentive to care what they think. Customers write checks. Once LiveJournal cashes the user’s check, a permament account is a liability, pure and simple.

In 2006, though, they found a way around this problem, which recently became the default for new users: the ad-supported upgrade. I think this was a brilliant decision, in this twirling-moustache, corporate-Machiavelli kind of way. The advertising program means that permament and basic accounts, which ordinarily generate no revenue, are still financially valuable - LiveJournalers (LiveJournalists?) maintain extensive lists of interests and associations in their profiles. This giant database can be mined, and the interests and demographic information mined to target advertising to their friends.

I suspect that people willing to pay $20/year or more for LiveJournal are probably pretty good at keeping their profiles up-to-date, people willing to pay $150 up-front even more so. That’s good, and very important in this business model. Targetting is money in advertising-land.

I have a point in this long and rather unwieldy setup, a reason for this little Gedankenexercise.

Cheater

Rio started… happening, I guess… in my life, a few times a week, sometimes with Jacqueline, sometimes alone. Maybe he’d always been there, curled up in that particular way of his, and I’d only just started noticing. Either way I was always happy to see him, and he always had some new, unpredictably wonderful fascination to share.

One night at Pilades, he slid up beside me and took a seat on the edge of my table, smiling just a little too much. I tried to ignore it, but he tugged insistently at the top of my newspaper, like a kitten who’s done something endearingly naughty and very much wants you to know. “Hello again,” he said, practically singing with happiness. “The Times? That’s a very good paper. I approve. And I have something to show you.”

“Rio, you are a strange, strange human being.” I folded my paper back together, shaking my head. “What do you want?”

Still smiling, he stuck out his tongue at me, then nodded over to the pinball machine. “I think she likes me.” The Billionaire’s Club listings began to scroll, glowing orange in the dim corner of the room.

I ran over to look.