Brad Fitzpatrick (bradfitz) wrote in lj_biz,
Brad Fitzpatrick

Cost of Commercials

It's not LiveJournal policy to talk about money in detail, and let me explain why: once we start talking specific dollar figures, people inevitably start saying things like, "What!? You wasted $nnnn?!? I could've done it or bought it for only half that!"

And then the discussion ends up with us saying, "Perhaps, but including feature X and feature Y?"

Then we hear, "Oh, no, but those aren't important features." But we're the ones that know what features we need. (Best example: people telling us how much disk space costs, without considering IDE vs. SCSI and RAID)

Or, people saying "But $nnnn is so much money! What a waste!", without thinking about what the revenue is, and what a small percentage of the revenue $nnnn actually is.

And the funniest: "As you can clearly see from the stats page, LiveJournal has 70,000 paid users. Because all users pay $2.50 per month, that's $2,084,820 that Brad personally makes each year, and wastes on hookers and blow." (yes, we've seriously gotten that!) But that ignores bandwidth, servers, taxes, employees, office rental, etc. Of course, then people try to figure out all those costs too, basing it on their home desktop computer costs and their monthly DSL/Cable bills, and figure I personally make only $2M/year, which is still incredibly wrong and incredibly crazy.

This happened a lot in the early days when we were buying servers and talking about details in public/IRC/etc, but it's just as applicable today, especially that last paragraph.

As such, we won't say how much the commercials cost to make, outside of saying it wasn't much. Angel Valley made them at cost to expand their portfolio (previously they'd never done any tech commercials). It was less than what we pay in bandwidth each month. We've bought a single server before that cost twice as much. Sure, the commercials probably cost more money than a lot of people make in a month, and a lot of people probably find the cost ridiculous, but relative to everything else financially, it wasn't much.

That's not to say we're having fun wasting LiveJournal's money, because we're actually super paranoid about all expenditures. We'd never had a commercial made before, and all the other LJ employees and I thought it'd be fun, so we did it. And I'm glad we did: most people seem to be enjoying them. We got some airtime included in the package, but hardly any. I'm not sure we'll ever even air them past that.... maybe if we get some uber-cheap deals from fellow LJ users that work at studios. In any case, it was all fun to make. And next time we're at a conference, we can have the LJ commercials playing behind our booth.

I've also heard complaints like, "If LiveJournal has the money for commercials now, what's the point of getting a paid account? LiveJournal must have enough money." And I guess that's an understandable viewpoint, if you think commercials were a lot of money. But really, it still costs a lot of money to run this site (much more than commercials). And as the number of users go up, so does the cost. We're constantly buying new servers, and we just spilled into our fourth cabinet.

The final complaint I wanted to address was, "LiveJournal is wasting all their time with commercials when they could've been making the site better." We didn't actually spend any time with commercials, short of Lisa putting up a BitTorrent server. (which is just plain cool.... we like pushing cool open source technologies, like .ogg instead of .mp3) In reality, we spent most this past year just working on things like our DB/server architecture and memcached, which other sites you probably visit are also using. When you see things like PhonePost or commercials, things that seem off-topic, realize that not every single employee can be working on server performance and code optimization and reliability stuff. Not everybody here knows the entire codebase. So everybody works on what they can. My primary focus, along with Whitaker, Avva, Nick, and Lisa is performance and reliability. When Evan was here, he did PhonePost because he was best at that sort of stuff. Mahlon and David have been doing lots of misc projects as they learn the codebase better.

Anyway, I'm rambling.

Please, though, if you're going to trust us holding your data and protected journal entries, trust us with your money too. Or, if you don't, simply don't pay us. That's fine too. We only want your money if you respect what we're doing. Maybe we lost some of your respect by doing commercials, and that's unfortunate, but hopefully not everybody's. In any case, your money goes towards extra developers working on open source, and that alone should be a good reason to help us out.

Please share this post with others. I'll try to follow all the comments in this thread and make an update or new post to address common questions...
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