Groundbreaking social network LiveJournal is no longer allowing new users to sign up for Basic level accounts, which traded a pared-down feature set for an ad and cost free user profile.
SUP, the Russian company that recently acquired LiveJournal, angered a substantial number of its users last week by instituting the policy before discussing it publicly and going against the advice of at least two members of the company's new high profile advisory committee.
LJ's pricing structure has long been unique among major social networks; none of its competitors allow users to avoid ads or pay for an ad-free and feature-rich account. It appears that the company has given up on that unique approach and chosen the ubiquitous ad-centric path to monetization, itself of questionable effectiveness in monetizing some social networking platforms.
LiveJournal is no stranger to controversy, it seems some fight between users and site administrators breaks out every month. It makes user relations at Facebook seem like a never-ending honeymoon. A "content strike" by LiveJournal users last week doesn't appear to have made an appreciable impact on site traffic due to being scheduled on the Friday before a major holiday.
The new feature comparison page shows only Plus and Paid options; you can view the old feature comparison page, which details the now unavailable Basic accounts, via the Internet Archive. Current basic accounts will go unchanged but new users can no longer sign up for them.
Advisory Committee Reactions
The most recent policy change has angered at least two of the new advisory board members, however, including LiveJournal creator Brad Fitzpatrick. Fitzpatrick is now at Google and leads the cross-site platform effort OpenSocial works on Social Graph technologies there.
"The free users, while not paying, were extremely valuable because they produced the content that the paying users were there to consume," Fitzpatrick wrote in a LiveJournal entry last week. "You know, the whole network effect thing?...I advised against this (when I heard a rumor about it awhile back). I hadn't heard anything recently about it...SUP apparently sees no value in freeloaders not looking at ads, not paying, and oh wait... producing most the content for other members to read, other members who are looking at ads and paying for their accounts. Let's hope my permanent account is grandfathered."
Advisory board member and youth social networking scholar danah boyd reacted thusly in her own LJ entry: 
"While offline this week, I learned that LJ has changed its account levels. Needless to say, Brad's pissed. I'm pissed. Not only because we both vehemently disagree with this change, but because they made such a change without consulting us. Or rather, we were both at a lunch a while back where they asked us what we thought and we both told them that this was the worst idea ever, although for different reasons. I had thought it had been tabled until I learned of this. After it had been posted...I pay for my account (and have for years), but most of my friends who read what I write have Basic Accounts. They produce very little but I would produce absolutely nothing if they weren't reading what I wrote. And then I wouldn't pay. And that's how it gets all entangled."
Those seem like strong and compelling arguments made by ostensibly trusted advisors to the company. boyd further asks her readers how they would suggest that SUP can further growth and monetization at LiveJournal if not by taking steps like this.
Advisor Esther Dyson has said publicly only that "I was not consulted about this in advance... and yes, I think I should have been."
Monetization is Hard
As analyst firm Gartner said in a recent report on AOL's acquisition of Bebo, the social networking landscape is one where "formerly explosive growth rates have slowed and monetization remains a challenge. But to the extent a social site is a platform, it has value." That Platform value seems unproven, however. MySpace seems to be printing money with display ads, despite Google's recent complaints that its search ads haven't been monetizing well on the site.
LiveJournal had served as an interesting alternative to dominant theories about monetizing social networking. Now that example is only half of what it was - it's still interesting that users are offered paid accounts ($20/year) in exchange for an ad free experience. Apparently the original LJ model wasn't monetizing well enough for SUP. That's a shame, because it sure was interesting.
