Announcing user governance: Toward a community-led future for books

At Laterpress, our mission is to create the kind of platform that we’re excited to publish and read on. 

We wanted a platform that made it easy to publish directly to our readers, so that’s what we built. We wanted authors to control how they price and paywall their fiction, so we created flexible payment options. Direct epub sales, instant audiobooks, user commenting – these features are all on our roadmap because we love storytelling and we want to build the best platform for it. 

But creating the platform we want to publish and read on goes beyond building the right product. It’s about building the right way.

How to build a creator platform the wrong way

The best way to understand what it means to build the right way is to consider what building the wrong way looks like. 

The story typically goes something like this: 

A company launches a great new platform for creators, and at first, the company does everything in its power to support those creators. The company offers low transaction fees, discovery based on merit, responsive customer service – anything to get more creators to join.

But then the platform gets bigger, even more creators join, and suddenly… things change. Those low transaction fees jump up and up. Merit-based discovery morphs into pay-to-play promotion. Customer service becomes non-existent.

If this story sounds familiar, that’s because it’s the same one that has played out again and again for creators. The question is: why? Why does it seem like every creator platform is destined to go from supporting to commoditizing creators just as the company gets big?

The structural problem with creator platforms

Let’s rule out one possibility right away: it’s not because people who found startups are especially sneaky or conniving. If anything, it’s the opposite. A lot of the people who found creator platforms are hardworking and well-intentioned, and just want to build awesome tools for people.

That truth makes the history of creator platform disappointments even more worrisome. It means the reasons for this pattern go deep – down to the very roots of how these platforms are created and operated. 

Consider a creator platform about which all of the following is true:

1. The platform is extremely useful. Creators and audiences love it, and they get more and more value from it every year.
2. The company is profitable. It generates $10 million a year in revenues, with a healthy 40% margin.
3. The employees of the company are happy. Everyone is well-paid and work-life balance is great.
4. The company has reached its natural size. Its user growth is still going strong but its revenues have plateaued at the rate of inflation.

What would most people call a company like this?

A wild success.

What would the people funding this company call it?

A huge failure.

There’s even a word venture capitalists use for this kind of company: zombie.

This example illustrates a central truth about creator platforms: once these platforms stop growing revenue, while the rest of us may see a sustainable company, outside investors see a portfolio-eating undead monster.

And that’s where we get back to the structural issue with creator platforms. The people who control these platforms (especially once they are big and have raised a lot of money to get there) are usually outside investors.¹

Making vs taking value

The reason who controls the platform matters is because it determines how the platform reacts when revenue stops growing.

If users and employees control the platform when revenues plateau, they can react with a big shrug. In the example we gave above, the company is sustainable with healthy profits. It’s producing a valuable externality for the world that grows day by day. Its employees love their jobs. What’s not to like?

But if the company is publicly traded or controlled by venture firms when revenues plateau, the company has an obligation to outside investors to keep revenues growing… somehow. Turns out there is a playbook for this. When you can’t grow revenue by making value, you do it by taking value.

A classic example of taking value is when a company introduces an ads program to what was once an ad-free discovery platform. As it happens, a certain major online bookstore recently doubled down on just that.

This may be good for the small subset of authors who are especially savvy at running ad campaigns, but it’s a massive net negative for the platform’s users overall. 

For authors, it means that to get your book discovered on the platform, it’s no longer enough to write great, compelling books; it’s about paying for clicks. For readers, it means you are constantly bombarded with the best advertised books, not the best quality ones. 

The only stakeholders who benefit from this change are investors. Their bottomline grows as the ads program squeezes every last ounce of profit from author pocketbooks.

This is just one example of how platforms take value; there are dozens of other tactics.

Platforms can raise their fees once they’ve locked you into their proprietary payment system. They can change their algorithms to prioritize addictive content. They can promise creators they’ll be a faceless publisher that supports each creator’s brand – and then forcibly aggregate the audiences of those creators into one audience under the platform’s own brand.

Unfortunately, when the taking starts, it’s usually too late for creators to leave.

The corollary of this truth is that creator platforms never start out by taking value. If the platform tried, creators wouldn’t touch it with a ten-foot pole. The pivot only happens when the platform gets bigger, innovation gets harder, and creators are locked in. 

Add all this up and it leads to a simple, inescapable truth: Companies that want to avoid disappointing their users need to put users in control from the very beginning… while they still can. Just like Ulysses knew there was no way to resist the siren’s song, at Laterpress we know there’s no way to avoid the structural problems of creator platforms. 

That’s why, like Ulysses, we’re going to bind ourselves to the mast.²

Binding Laterpress to the mast

Binding Laterpress to the proverbial mast, alas, isn’t as simple as tying some rope. It requires a comprehensive strategy that takes into account the technical, financial, and cultural aspects of user control. 

Thankfully, we didn’t have to develop a strategy for all of this on our own. There’s a growing movement across the technology industry that’s calling into question the one-size-fits-all tactics of venture-funded startups: Maybe some startups should stay small³ instead of blitzscaling? Maybe they should raise less money or no money at all? Maybe they should give users a vote instead of ruling by fiat?

One of the leading thinkers from this movement, Li Jin, even developed a framework for understanding how platforms like Laterpress can go about putting creators in control. The framework certainly isn’t the only way we’re thinking about user control but it introduces the primary tactics we’re considering — and it’s to that framework we now turn.⁴

1. “Ownership and portability”

When authors publish on platforms like Amazon Kindle, Wattpad, and Patreon, those platforms own the relationship with the reader. The e-reader, app, or website readers use to read each author’s book is branded to those companies, and those companies have near total control over the experience, including how (or even if) readers are charged, and what authors earn. By owning the reader relationship, these platforms make portability nearly impossible: an author leaving their platform risks losing an audience they spent years building. 

We’ve engineered Laterpress to do the reverse: authors own the reader relationship and can leave whenever they want. We do this by letting authors publish books directly to their own website and collect payments using their own Stripe account. When readers sign up to read on an author’s website, it’s the author’s mailing list readers are prompted to join, not ours. Giving authors ownership also makes it easy for authors to stop using Laterpress without risking their audience. Authors can literally take their books, mailing list, and payments with them whenever they want.⁵

By making it easy for authors to “vote with their feet” and leave with minimal friction, it keeps us honest as a platform. Put more bluntly: even if we wanted to listen to the siren song of “taking value” from our users, we’d have to think twice before doing so.

2. “Creator-friendly business model”

The best way for a platform to ensure its business model is creator-friendly is to create alignment between the business of the platform and the creator. At Laterpress, the primary way we make money is via transaction fees on payments from readers to authors. That means we make money when authors make money

Compare that to creator platforms where incentives are misaligned: for example, TikTok primarily makes money on ads. That means it has little incentive to make sure people creating videos get paid for that work; in fact, it's just the opposite. The less TikTok can pay video creators, the more margin it makes on its ads.

Aligning the incentives of authors and Laterpress is a necessary first step toward a creator-friendly business model, but it's not sufficient. Even when business models align, there is a fundamental question of fairness. If a reader pays $10 to read a book, how much should the author get? How much should Laterpress?

We think what's fair is keeping our fees low, but enough to provide the funds we need to operate and improve the platform (Currently, 0% on direct sales and 15% on referral sales). Of course, that sounds great in theory, but what's to keep Laterpress from going the way of most creator platforms and raising fees once we get big?

The answer is to avoid getting big in the first place. Raising lots of venture capital sets the expectation that we'll be a huge company that delivers investors outsized returns. But not every problem requires a $10 billion company and 1,000 employees to solve it.

That's why we don't strive to be big at Laterpress; we strive to be the right size. That means Laterpress is committed to two things for the foreseeable future:

1. Keep the team small: We're planning to keep our team size at twenty employees or less for as long as possible. Companies like Instagram, Whatsapp, and Notion all served tens of millions of people with small teams -- and those companies were started years ago when building software was much, much harder than it is today.

2. Founder funded: As the founder of Laterpress, I was fortunate enough to successfully build and sell a software company once before. That means Laterpress already has the funds it needs to operate for years and -- we strongly believe -- reach sustainability without taking a dime from outside investors.

Is that all to say Laterpress will never consider hiring a 21st employee or raising funds? No. We can't predict the future. But our goal now and into the future is to stay the right size for the problem we're solving -- and we think the guidelines above will keep us that way.

3. “Creator interdependence and solidarity”

There are two ways to design a creator platform: "zero sum" or "positive sum".

With a zero-sum design, a platform pits creator against creator to extract as much business value as possible. An example of this I've already mentioned is when a platform layers advertising into its discovery functionality.

Ads networks like Kindle’s -- where authors bid against authors to promote their books -- transfer as much money from authors to Amazon as possible. Bidding naturally drives up the price of discovery until authors are barely breaking even or, worse, paying for their passion.

At Laterpress, we believe in positive sum design. Our goal is that as more authors join our platform, the value of the platform increases for authors as a whole, not just for us.

That's why we're committed to keeping Laterpress ads free forever. That's right:

No ads. Ever.

Building a truly positive sum platform is about more than what we don't do. It means intentionally designing Laterpress to create positive-sum interactions that build solidarity and interdependence among authors. In the next few weeks, we'll be debuting functionality that does just that: our Laterpress Community.

With Laterpress Community features, anytime the reader of one author discovers another author via the first author's "Recommended" section, the first author makes money on any subsequent purchase. Compare this to Amazon Kindle where the "Also Bought" sections of popular authors are driving tons of discovery -- and referring authors are receiving no compensation whatsoever.⁶

This is the heart of positive sum design: creating loops of user interactions that benefit everyone involved. 

4. “Neutral creator mechanisms”

The most important mechanisms that govern creator platforms sit at opposite ends of the content spectrum. Moderation mechanisms govern what content is allowed on a platform, and recommendation mechanisms govern what content is promoted on a platform. 

Traditionally, control over these mechanisms has been highly centralized and extremely opaque. At Laterpress, we’re working toward a future where the platform’s moderation and recommendation mechanisms are truly open and neutral. 

The first pillar of our commitment to neutral mechanisms is our strong policy in favor of letting authors write what they want to write. Laterpress is fundamentally a platform designed to empower authors to publish directly to their own audiences, and we won’t be in the business of unilaterally censoring those direct relationships.⁷

However, when an author opts into our Laterpress Community features, the platform does more than simply facilitate a direct connection between the author and their existing readers. Laterpress – and the other authors participating in the Community – actually help promote an author’s stories to new readers. 

This means the stories that readers discover through the Laterpress Community reflect not just on the author who wrote them but also indirectly on all other participating authors. For this reason, we believe it is critical that Community content policies are designed and controlled by our community itself – authors, readers, and employees together.

This may seem like a radical departure from how many platforms approach these important mechanisms – but we think it’s a more equitable approach than concentrating all the power to end someone’s career (via a platform ban) or play kingmaker (via playing favorites with recommendations) into the hands of a few.

What’s next for user governance at Laterpress

This brings us to our last and most important announcement: 

Laterpress will be officially user-governed by the beginning of next year.

What exactly do we mean by “user governed”? 

Over the coming months, we’ll be working alongside our User Working Group to draft a platform constitution that embeds five of the core user rights we’ve mentioned:

1. We won’t raise fees on sales.
2. Community features will always be optional.
3. No ads. Ever.
4. Minimal moderation of direct publishing.
5. User control of the moderation and recommendation mechanisms of community publishing.

We believe the five user rights outlined above are a great starting point but look forward to engaging with our community to give detail to those rights and to consider the inclusion of others. 

Once the platform’s constitution is drafted and in place, the next step is to hold our first user vote to determine the delegates to guide Laterpress in 2023 and beyond. 

Today’s announcement is a small but important first step toward a better future for storytelling. There is a lot of work ahead of us in the coming months and years but we look forward to doing it as a community of people who love stories.

Want to chat with our team or get involved in building that better future? Reach out to us on Discord or apply to join our Working Group.

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Footnotes

1. By the way, there is nothing wrong with outside investors! Investment is the fuel of innovation and many of the biggest leaps in science and software would’ve been impossible without it. The point is simply that investors have their own obligations (for example, to their investors) and those external obligations are very important to consider before a company takes on lots of outside capital.
2. If you don’t understand this reference, you should read this amazing book ;-)
3. Even the galactic emperor of venture himself, Sam Altman, has written about the advantages of companies that are designed to stay small.
4. Li Jin’s primary focus is on the intersection of user governance and web3 but the principles of user governance are generally applicable. To be crystal clear: Laterpress is not a web3 company nor are we planning to use crypto for user governance. When we were first founded, we briefly explored the idea but the more we learned about the web3 space, the more our reservations grew. It’s a promising technology – but it still feels many, many years away from being generally useful for mainstream purposes.
5. Technically, the way you migrate your subscriptions from one Stripe account to another requires first moving your customer and payment data between accounts, and then recreating your subscriptions.
6. These Community features are completely optional. Authors who just want to use Laterpress to sell direct can always do so.
7. While we will always have a bias in favor of letting authors publish directly to their own audience, we prohibit illegal, threatening, or purely pornographic content. In large part, we must have these minimal safeguards in order to keep providing our services to authors. For example, most payment processors will refuse to process payments for sites that host pornographic content.