Big Tech Wants Monetization to Go In Only One Direction

Apple's recent decision to charge higher fees to Patreon users marks a pattern of increasing rent-seeking from companies who have become techno feudalists.

(Photo Courtesy of Leanplum.com)

Apple’s Grasping Hands

This week, Apple, a company once known for selling quality computers to compete with Microsoft’s “a computer in every household” strategy, has of recent years become a techno feudalist. A feudalist, in the European Middle Ages, was someone who owned property and, instead of working the property himself, instead had other people work for him. He then reaped the benefits of his ownership deed without planting crops, tilling the soil, chasing away predators, or feeding animals.

Today’s feudalists, who have departed from the capitalist ideal of trading value for value entirely, operate on a technological level. The underlying scheme, however, is the same. Because Apple, Google, Sony, Microsoft, and similar companies own digital storefronts, they don’t actually have to make the products that go into those stores. When Apple charges a fee for every transaction made on one of its devices through its store, it most often didn’t make the digital asset purchased in the store. The most work the company did was to provide a place where goods and services can be sold.

At first glance, this might not seem any different than a brick-and-mortar retail store, which sells items from a variety of companies, most of which it didn’t make itself. The difference: quite a lot of work goes into keeping a retail store successful, other than simply sitting on an ownership title and keeping an app from crashing. Vehicles have to deliver products to the store. Once there, employees have to stock them. Once stocked, cashiers (or self-service machine monitors) ensure the products are purchased legally. Customer service representatives, in smaller stores this is the owner, troubleshoot problems a customer might have. Maintenance staff have to clean the facility. The value a physical retail store provides is the environment people create in which easy transactions can be made.

Far less work is required to keep a digital storefront open. Once measures are put in place to secure user information (at least from outside threats, not always from internal threats), the store is a license to print money- just as the feudal farm was centuries ago.

Feudalists, history teaches us, aren’t really interested in anything except earning money and increasing the ability to earn more. For them, it’s a “love it or leave it” situation in which people are only given a binary choice to accept or not the conditions in front of them, rather than negotiating with the company for better conditions.

Patreon announced this week that Apple will be forcing its users to pay a 30% fee starting in November, the standard rate for transactions processing through their store. Apple feels entitled to this reward because….they own something. Apple did not make Patreon, nor does it typically make any of the services users provide in which a Patreon donation might be requested (such as a YouTube video).

The danger for Patreon is that Apple might decide to increase its fees arbritarily, if they wanted to kill it. This might happen, as an example, if Apple created their own donation service and wanted a competitor out of the market.

In response, Patreon created a tool allowing users to increase their prices only on Apple to offset the cost of increased transaction fees Apple would like to impose. In the event the tool becomes widely used, Google’s web store or an internet browser become cheaper options for people to keep paying their donation subscriptions. It’s doubtful anyone would really want to pay extra just to give Apple extra money.

Creators who don’t use the new tool will see their revenue decrease from Apple in-app purchases. Other than increasing revenue for the company, even in small ways that might not affect its balance sheets on their own, Apple’s decision echoes many other decisions from Big Tech companies who have increasingly wanted all of the pie for themselves, while leaving none for the people who actually baked it in the first place.

This article will detail several similar examples where companies or individuals were harmed because they operated through a third party with Big Tech services.

When Google Killed A Pro Wrestling Company

WhatCulture is a YouTube brand, still existing today, that often does Top 10 Lists of things, reviews of shows, and commentary on professional wrestling. In 2016, at what might be the height of an independent wrestling boom in America, WhatCulture decided to create its own wrestling company based in the U.K. They would call it WhatCulture Pro Wrestling, or WCPW.

WCPW took advantage of existing technology in a way that no other pro wrestling company had up to that point. The typical model for independent companies was to sell DVDs of their shows online or at live events to make up revenue they couldn’t get from not being on TV. Wrestling companies such as Ring of Honor, Pro Wrestling Guerrilla, and Chikara all operated this way. Since WCPW was based in England, shipping DVDs to America proved financially difficult with international shipping fees. They instead decided to use YouTube advertising revenue to fund their shows.

The company created a weekly wrestling show on YouTube called Loaded, which was streamed live and could be played back later. They also uploaded PPVs, such as Exit Wounds from 2017. At the time of writing, it has 201,000+ views on YouTube. The WhatCulture Wrestling YouTube channel has 2.1 million subscribers.

In May 2017, YouTube changed its rules regarding advertisers. One of those rules affected wrestling companies. At issue were concerns that wrestling was too violent. Today, content considered mature is given a rating of 18+. Users must sign in to their Google on YouTube in order to access those videos. Mature content is demonitized; creators don’t receive a share of ad revenue, even if there are ads present anyway.

In light of the decision, WCPW was forced to cancel its upcoming events and put its weekly show on hiatus. The company was soon rebranded as Defiant Wrestling, which folded two years later.

While the promotion would not have existed without YouTube’s revenue and platform, they found themselves cut off at the legs from a decision that, in retrospect, appears designed to kill the company entirely. As a company that has a monopoly on community-created web content, there was no other outlet WCPW could have used which would have made sufficient money, especially since they regularly flew in big name stars such as Kurt Angle and Rey Mysterio Jr.

The Consequences of Monopoly (Not the Board Game)

This past week, Google was found in court to be operating an illegal monopoly. The company partnered with Meta to carve out between themselves advertising revenue on the internet. While anyone who owns a website can put their own advertising in without using Google AdSense, there are few options to connect advertisers and those looking to have advertisements (those hated pernicious demons of modern society) on their internet space.

Having been found to be a monopoly, Google may elect to do what other companies such as IBM have done before: they can wait out the clock while government tries to apply a remedy until a conservative becomes president, in which case the whole thing might be dropped. It seems unlikely they will give away their own profits for the sake of appearing to do the right thing.

Other than being a monopoly, Google behaves illegally by acting as a private surveillance firm, as many other American tech companies do. Regulators thus far haven’t been able to hold large companies to account for doing what National Security Agency agents might land in hot water for (though perhaps not face legal consequences).

The entire purpose of Google’s surveillance system is to determine whether advertising had any effect on a person’s decision to buy a product. To put it in simple terms, they’re trying to crack the code to figure out how to brainwash people into buying whatever their advertisers would like to be purchased. So far, they’ve only managed to use predictive computing to send out creepy messages suggesting the purchase of an item a person looked at and ignored (a common practice for eBay).

In one sense, advertising budgets are often more about putting the company brand name out there rather than convincing people to buy a product. Internet ads, which may only be seen for five seconds until someone hits the skip button, has to get their point across quick. There’s no time for persuasion in that brief window.

Television advertisements can be long. On ESPN, a countdown clock appears on the screen telling people how long the advertising block will last. It’s often as long as five minutes, during which time I imagine people get up to do anything else, press the mute button, change the channel, or fall asleep.

Google and Meta would both like to continue monopolizing the advertising market. Doing so allows them to focus the cash flow upwards, to themselves and no one else. With few competitors, if any, they can dictate the fees applied, the type of content that is seen and how often. A company dependent on, or at least addicted to, advertising revenue must allow their content to be influenced by advertiser preferences.

Google likes their advertisers so much they have struggled to disable ad-blockers in browsers so ads in YouTube videos, the same ones that get skipped so easily, appear instead of being blocked. So far, it’s been a back and forth struggle between programmers on both sides. Google’s own browser, Chrome, has often been subject to disabling of add-ons that block ads while lesser-known browsers such as Vivaldi have ad-blockers included as standard features for the program.

At times, YouTube functionality has prevented videos from being seen if an adblocker is detected. This leads to fewer subscriptions and fewer likes- the two most meaningless engagement metrics YouTube wants creators to ask their audience for. People who came to watch a video but can’t watch it are unlikely to get engaged with anything the creator is doing.

This stifles the content creator- the very people Google sometimes tries to lure away from other platforms with cash- from making the type of content they’d prefer. Following an exodus of talent in recent years, most often coupled with a “Goodbye YouTube” video, Google has begun to expand creator monetization for more regions.

Google’s message through all of this fairly unambiguous: they want as much money as possible from each human interaction with their products as they can get. It’s not the creators or the viewers who are important to them: it’s the advertisers.

oDesk Buys Out Competition, Then Increases Fees

Until 2013, freelancing companies oDesk and Elance competed for customers. Each site was a place where an employer could offer a job to a freelancer. The freelancer could take the money or not. I worked at oDesk and Elance, and then Upwork, until the situation became untenable. I got into journalism rather than putting up with what I saw as an untenable situation.

Between the two companies, Elance always seemed more professional, more capable. oDesk was the sort of place where bottom of the barrel jobs went to bottom of the barrel workers. Freelancers who needed money were always underbidding one another, leading to a race to the bottom in compensation. Navigating the hundreds of crap jobs, sometimes obvious and deliberate scams, proved difficult. Security or quality wasn’t much of a concern as long the money kept rolling in for the owners.

When oDesk bought out its competitor, and later rebranded itself as Upwork in 2015, there was at least a moment of hope things would get better. The website got an overhaul. Things improved- briefly.

Upwork then introduced connects, a points system that would only allow for so many job applications per month. Users who wanted to apply for more than the standard allowable jobs would have to buy more- buying the ability to apply for a job is probably the most capitalist thing any company’s ever done. In theory, this would stop bots and scam posts towards employers. In practice, it meant fewer job applications from real people, since everyone looking for work would have to search for the one ideal job that fit them just right. They couldn’t apply for any old thing anymore.

Then, Upwork increased the fees they took away from freelancers. Freelancers who earned money on the platform would see less of their paycheck than before- in addition to the yearly taxes they would have to pay out of pocket for whatever country they lived in. Upwork did not withhold taxes from anyone.

The take home pay for most jobs was already abysmal. The race to the bottom couldn’t find a floor. Employers had no obligation to pay in a timely manner; they could reject work presented and refuse to pay entirely. Upwork, which defined itself as an escrow company rather than an employment company, did nothing to stem the tide of abuse from employer to freelancer.

Their goal was to keep the fees coming and avoid legal liability as much as possible along the way. What brought all of this back to mind was an email from a do not reply address saying my Upwork account would be closed soon. The email included a link saying “contact us” with questions and concerns. When I clicked on it, I got a page with the header “Trust, Safety, and Security.”

That told me all I needed to know about where Upwork was as a company since I left. Their primary concern is making money for their executives, owners, and shareholders. Employers and freelancers only matter to the extent they can increase company profit.

An Exploiter Exploits the Exploited, Again

Amazon’s Mechanical Turk service, another freelancing platform, is far worse than Upwork. As a company which forces employees to urinate in bottles, has seen countless workers get injured or die in their warehouses during long 12-hour shifts, it was no surprise to discover that Amazon offered a worse deal than a company which already treated their freelancers like dirt.

Amazon utilizes unusual terminology for its website. An employer is called a “Requester.” A job is called a Human Intelligence Task (HIT). A human who completes tasks intelligently is called a Worker (instead of the more obvious term freelancer, which implies someone who has no worker’s rights at all).

Amazon takes 20% off the top for each meeting of the minds between a Requester and a Worker- and another 20% if a task requires ten HITs or more. Mechanical Turk specializes in micro tasks- which are most allocated with micro pay- on the theory that businesses would prefer to outsource (code for refusing to pay benefits and give raises) for whatever task might need completing.

The site is clearly designed to exploit those in the poorest of the world’s poor third world countries, those who have no other choice but to take whatever little money they can get so they can survive. Pay rates are hidden behind a splash screen; in order to become a Worker, users must request an account.

A report from careerkarma.com suggested Workers on Mechanical Turk make $1 to $6 dollars an hour there. Amazon does not suggest a minimum pay below $0.01 on its site. The entire operation comes off as an enormous waste of time, and a scam. At minimum, Requesters on the site should be required to pay the minimum wage of whatever country, state, or region the user is logging in from. This could be easily accomplished by scraping a user’s data, something Amazon does on a regular basis anyway.

Instead, they, like Upwork, participate in a race to the bottom in which honest pay for honest work is a forgotten principle. Monetization for them, and for other companies, is only really meant to move in a single direction.

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