In which we update you about our lawsuits, and welcome a wave of new friends!

[denise]

As usual, I looked around and realized that the news update I just wrote was actually months and months ago, so I thought I'd take a few moments and update you all on the progress we've been making recently with Netchoice in our fight against the wave of terrible and unconstitutional social media bills that have been sweeping the country. (And if you live in the US and you have a moment, please call your Representative and tell them to oppose KOSA, the "Kids' Online Safety Act": it passed the Senate, but there's still time to stop it in the House. It's the national version of all these state laws we've been fighting, and if you've been around for a while, you know why they're a problem, but if you're new, the EFF has a great short overview of why it's a problem.)

First, though, I'd like to offer a warm welcome to our new dwenizens from Cohost, which is sadly shutting down at the end of the month. You can check out our tips for new users that we posted when we had an influx of folks joining us from Reddit; to that, I'd add that you should check out the beta features. You can ignore the "Temporarily revert updated journal page components" beta (we have that lingering around to help people who were having trouble with some elements of the design updates) and the "Two-Factor Authentication" beta will let you add your 2FA provider but not actually issue 2FA tokens yet (we keep finding more and more legacy methods of "log in while you're doing a task" that we have to figure out the 2FA workflow on), but the New Create Entries beta and the New Inbox beta are both (we think) a much superior version of those pages. We'll be enabling them for all users sometime relatively soon (okay, 'soon' by our standards), so we want to hear your feedback now, especially if you use assistive technology! If you're coming to us from Cohost and are looking for other Cohosters, feel free to matchmake in the comments. If you're looking for new friends, the unofficial community addme is a good start, and browsing dw_community_promo will let you find (or promote!) communities on all sorts of topics.

Anyway, since we last spoke, Dreamwidth has joined on to two more of Netchoice's lawsuits challenging unconstitutional deanonymization and mandated censorship bills. In addition to the two we've already let you know about, Netchoice, LLC v Bonta in California and Netchoice, LLC v Yost in Ohio, we've added Netchoice, LLC v. Fitch in Mississippi and NetChoice LLC v. Reyes in Utah. (That last one was originally filed before we became members, but Utah pulled a fast one where they pinky swore to the court right before the deadline that they were going to repeal and replace the law with a much improved version, and then the version they replaced it with actually made things worse and affected a lot more sites, so we were thrilled to join on the revised lawsuit.)

The July Supreme Court opinion in Netchoice v Moody (consolidated with Netchoice v Paxton) made it clear that sites' content moderation decisions are protected by the First Amendment, and there's an upcoming case this term (Free Speech Coalition v Paxton) that will tee up the constitutionality of "age verification" requirements. (The scarequotes there are because there's no conclusive way to "verify" the age of the person who's using an account at any given moment: at most you can approximate it at account creation.) Until then, remember: there's no way for a site to treat adults and minors differently unless they're able to conclusively identify who's an adult and who's a minor, and the only way for a site to conclusively do that is to deanonymize every single vistor and require you to upload your government ID in order to make an account. As I keep saying over and over in our declarations in support of these lawsuits: we don't want to ask you for that data, and we know you don't want to give it to us.

There's a whole heap of other issues with these bills, too: for instance, it's getting more and more common for states to throw in "parental consent" clauses, whereby a parent can write in to a site and demand access to or control of their under-18 kid's account to various degrees. That's also impossible for a site to establish: we have no way of telling who's the parent of one of our users at all, much less establishing whether they're the parent with legal decisionmaking authority, and there are dozens of scenarios where that ends incredibly badly. (I usually cover so many of them in my declarations that the outside lawyers Netchoice is working with have to politely ask me to pare them down a bit!) Most of these bills also include an obligation to restrict access to "content harmful to minors", and the definition of "harmful to minors" is always, always politicized: you probably all can sing along with the refrain by now because of how often I climb up on this soapbox, but there's well-established evidence that content by creators from historically marginalized groups, and especially content by queer creators, is judged "harmful to minors" at a much higher rate than functionally identical content by creators from groups that aren't historically marginalized. Each of the states that have included a "harmful to minors" clause has had a different range of what's considered "harmful to minors", but there's no doubt all of them sweep up a broad range of speech that can be helpful to at least some minors who would be denied access to that content.

I don't want to talk your ears off about all of the problems in all of these laws, because we'd be here all day -- my declarations in Netchoice v Reyes and Netchoice v Fitch cover a lot of the problems, but there's even more I didn't have time to address. (And that's with my declaration in Netchoice v Fitch running 23 pages!) Fortunately, there's good news: judges, and even appellate courts, across the country have been agreeing with us that these bills are unconstitutional, and it's not even close. Here's our win record so far:

• Netchoice, LLC v Bonta (5:22-cv-08861) N.D. California: Judge Beth Labson Freeman granted the preliminary injunction preventing the law from going into effect on 18 Sept 2023.
  
• California appealed: NetChoice, LLC v. Bonta (23-2969), 9th Circuit. About a month ago, on 16 August 2024, the 9th Circuit affirmed the district court for the most part and kept the injunction in place. The case now returns to the district court for further development.
  
• Netchoice, LLC v Yost (2:24-cv-00047) S.D. Ohio: Judge Algenon Marbley granted the preliminary injunction on 12 Feb 2024. To Ohio's (tiny bit of) credit, they didn't bother dragging out an appeal of the preliminary injunction: we have now moved on to the motions for summary judgement, in which both sides make their arguments to the judge on why the other side doesn't have a possible case, and are awaiting the judge's ruling on those.
  
• Netchoice, LLC v. Fitch (1:24-cv-00170) S.D. Mississippi: Judge Halil Suleyman Ozerden granted the preliminary injunction preventing the law from going into effect on 1 July 2024. (This is good, because the law was passed on 30 Apr 2024 and set to take effect 1 July: I could not believe how fast Netchoice and their outside counsel got that turned around!)
  
• Mississippi appealed: NetChoice v. Fitch (24-60341), 5th Circuit. We're still waiting for a ruling on that one, and the Fifth Circuit is known as the "Fifth Circus" for very good reason: I would not be surprised to see this one make it all the way up to the Supreme Court, too, because nobody trusts the Fifth Circus to be sensible. (Of course, nobody trusts the Supreme Court to be sensible, either, sigh.)
  
• NetChoice LLC v. Reyes (2:23-cv-00911) D. Utah: This is the one that made me realize "oh, I haven't updated everyone on things in ages"! Judge Robert Shelby granted the preliminary injunction preventing the law from going into effect on 10 Sept 2024. (Check out page 31: our declarations have been cited in the other decisions, but this one devoted nearly an entire paragraph to judge-speak for "hey, uh, you claim this law is narrowly tailored, but Dreamwidth easily disproves that". This one is especially funny because Utah governor Spencer Cox spent a lot of time loudly yelling at first amendment attorneys on Twitter about how of course the court would agree with him! The court really, really did not agree with him.)

I always struggle with trying to figure out how much of an update on our advocacy work is significant enough to deserve a full dw_news post, because I know there are folks who want to stay informed, but having sitewide announcements for every little thing would quickly get annoying. To solve this problem, we've started dw_advocacy, an announcements community in which we'll post announcements of wins, announcements of new cases we're participating in, and (if I have time!) deep dives into the legal issues that show up frequently in these challenges and the cases that keep getting cited over and over again. Subscribe to the community for everything from my glee at getting to scratch another state off the "I helped sue you!" list to my "hopefully reasonably okay for a non-lawyer" explanations of landmark cases that show why the latest state to pull some shenanigans should already know why their shenanigans are unconstitutional!

As always, our deepest gratitude to Netchoice for picking these fights and for inviting us along for them. We don't always agree with every lawsuit they choose to file, but that's precisely why Netchoice member companies don't have control over which fights Netchoice decides to pick, only which lawsuits we'll choose to give evidence for. Even when we disagree with them, the folks at the litigation center are extremely passionate about digital civil liberties, and they're a delight to work with. My main contact at the litigation center always tells me how heartening and inspiring he finds it to see how absolutely enthusiastic our users are about these issues and how much you all care that we're fighting (and winning!) these battles!

And one last announcement: if you didn't see our notice in dw_maintenance, we've switched our offsite downtime notification/status page away from Twitter (excuse me, "X") because of their sharp decline in Trust & Safety standards, the inability for people to see posts or timelines without being logged in to a site account, and the general ongoing instability of the service. Our new offsite downtime notification/status page can be found at dreamwidth.org on Bluesky. Please bookmark that page! In the event we can't reach dw_maintenance to let you know of any issues, we'll post there.

As always, thank you all for using and supporting Dreamwidth. We have the freedom to be so passionate about these fights for online civil liberties because we don't have to worry about keeping our advertisers or investors happy: the fact we're 100% user-supported gives us so much more leeway to give states the finger when they want us to compromise your privacy for the sake of "protecting the children" efforts that will do nothing to actually protect children online. (Isn't it so interesting that Senator Wyden's Invest In Child Safety Act, which would actually make a meaningful difference in protecting kids online, has gone nowhere? Why, it's almost like none of this is about protecting children at all.)

We remain committed to keeping Dreamwidth 100% free of advertising, venture capital, and outside investment, no matter what it takes. People ask us all the time whether we can raise the limits on some of our restrictions like image hosting and icons (two of the most expensive features we offer), and we would love to be able to, but our costs keep rising and inflation has outpaced the advances in disk space and transfer costs in the last few years. Your support is still covering our costs of operation, but the fact we've been in business for 15 years and our prices have remained the same has been nibbling away at the leeway we have. We aren't in any danger, but we've been starting to have the extremely difficult internal conversations about raising our prices that were first set in 2009 so they better reflect 2024 costs and the 2024 value of the dollar in order to make absolutely certain that remains true. Right now, we're still in the very early stages of that discussion (and we'd love to hear your thoughts!) and it's too soon to say what we'll end up deciding, but in the meantime, if you have a few dollars to spare, please consider buying some paid time, for your account, for a friend, or for a random active user. The financial support of those of you who choose to pay us is what allows us to keep offering the site for everybody, and we're incredibly grateful to those of you who keep offering that support!

Comments

(frozen comment)

[paserbyp]

soc_puppet just replayed with ban of me. So, it is sarcasm? No, it is something else. Doesn't want my reply? Go to ban...

[denise]

You haven't been banned from dw_news, and we can't (and wouldn't) control whether individual people ban you: banning someone on DW means you can't reply to their comments in communities as well as not being able to reply to their comments in their own journal, so when someone bans you, you won't be able to reply to them elsewhere, either.

soc_puppet was right, though, it wasn't sarcasm! I genuinely do encourage people to experiment with other forms of funding, structure, etc, etc, for small platforms, because the internet needs more small platforms with a coherent guiding vision and a well-thought-out business plan that reflects the reality of running a service, and the Dreamwidth code is a really strong starting point for that kind of experiment because, compared to other build-your-own-service packages that are out there, our code is extremely performance-tuned and can run very cheaply, comparatively speaking. Our business principles are linked in the footer of every site page: whenever we need to make a decision, that's what we go back to, because Mark and I decided in spring of 2008 when we were first having the conversations that would eventually lead to Dreamwidth existing that we were very willing to gamble that people would pay for a small, steady service that put user needs first, was built on the premise of sustainability and self-sufficiency, and didn't have any outside pressure from investors or venture capitalists to produce a massive rate of return (or to eventually IPO or sell to Google).

Every decision we've made since then has gone back to that original vision. It's worked for 15 years, and it's still working today: our upgrade rate has stayed extremely steady (and astonishingly high: seriously, I'm not joking when I say that I tell people in the industry our conversion statistics and they think I'm making it up until I show them our stats page). About 20% of our active users at any given time have a paid or seed account! (As of last night when the stats last ran, to be precise, it's 21.128%.) That's unheard of. The rule of thumb for freemium services like ours is that you should plan for no more than a 1% conversion rate, ever, and if you achieve more than that, it's a miracle. For instance, YouTube Premium is considered one of the most successful freemium models in the industry, ever, and they have about 100 million Premium subscribers for 2.7 billion monthly unique users: 3.704%.

If our prices had been keeping pace with inflation all along, we'd be doing just fine. We are still doing mostly fine! Our goal is to have six months of "runway", aka operating costs, in the bank at all times. I keep a careful eye on the financials, though, and the last few years have started to drift into the scenario where, even though the whole-year figures remain in the positive, and even though our actual income is overall steady or even increasing, the income is not increasing as fast as the costs are and we wind up pulling from our runway fund to cover some individual months out of the year. (This is because our income is a little burst-ish: we get spikes in May and December, May because of all the wonderful people who have been steadily renewing their 12-month paid accounts every year like clockwork since we first opened in 2009, and December because of the extra income from our traditional end-of-year holiday sale where you get a 10% points rebate on all purchases for future spending.)

We always make it up again by the end of the year and finish the year with positive income, but the fact that individual months are starting to drop below the baseline amortized income we need for it to stay that way is something we need to address before it becomes a long-term problem. The issue is not the amount of income we have, it's that for the first ten or so years of DW existing, the increases in our income kept up with the increase in costs caused by inflation. That's changed in the last few years. The way we originally set our prices was under the assumption that each individual paid user would be subsidizing about ten free users' use of the site, with a little bit of padding to ensure long-term stability, and the increase in cost-per-user without a corresponding increase in prices means that the ratio has slipped quite a lot over time. Raising prices to account for inflation so that we go back to the original model of 1:10 instead of the current ratio (which I haven't done the exact calculations on for a while, but I did the quick approximation for 2023 and it works out to something like 1:35) would put us back to where we were when we first launched.

It honestly astounds me that things have worked out for us financially without a price increase for 15 years, and that's partially down to the passion of our users in wanting to support a business that isn't out to screw them over, and partially down to the solidity of our calculations when we launched! (It helped that we had LiveJournal's model to look at: we based our original calculations on the assumptions that a lot of our costs would work out differently, but the reference was very useful.) But there's only so much you can do when the relative purchasing power of your prices has decreased by about 35% in 15 years.

[denise]

I should also add, because I forgot to make this point explicit: there are two types of costs any service has, fixed costs and usage-dependent costs. Fixed costs are "you're going to have to pay this no matter how much usage you have", usage-dependent costs vary based on how much, well, usage you have.

To some extent, it's difficult to fully categorize some costs as fixed or dependent: salary is the usual example of a fixed cost (ideally, you will be paying your people every month no matter how much usage you have), while server power is the usual example of a usage-dependent cost (because how much server power you need to make the site go depends on how active the site is and how many people are using it), but "how many people you need to get the necessary work done" increases with increased usage and there's a baseline level of server power you need no matter how much usage you have. Also, there's fixed "make the site go, technically" costs like domain registration, SSL certificates, minimum spend requirements in order to get the prices you get from your various service providers, the amortized costs of upgrading the equipment we use at home to work, etc, and other costs that are only indirectly usage-dependent: the exact percentage of the federal and state taxes we pay depends on the amount of money we make every year because the US has, on both a state and federal level, a progressive system of taxation where different buckets of income are taxed at different levels, which means that the business taxation is an indirectly usage-dependent cost. (For non-US folks whose tax system works differently: I wrote an explanation of marginal tax rates in my personal journal a while back, because it's a really misunderstood concept even here in the US.)

But even with the difficulty of categorizing some costs as purely fixed or purely usage-dependent, another of the issues that we've been seeing is that our fixed costs are rising at a faster rate than our usage-dependent costs. The professional services we need to pay for no matter how much usage we have at any given time have gotten a lot more expensive, and I have quite a few things that are in the "we should do this sometime in the next five years or so" bucket that I've been postponing because they do require professional services that we'd have to pay for and they're not cheap. For instance, the global legal and regulatory landscape has changed considerably in the last 15 years, and there are a few minor tweaks we need to make to our Terms of Service and Privacy Policy in order to protect everybody, both us and you, better -- not to change any of the conditions of you using the service, but to make sure the phrasing complies with changes to various laws, etc. (I'm also a little grumpy about a few of the clauses not being restrictive enough about what we can do with your data! We would never do any of those things, but like, I want an actual clause in the ToS saying that we can never sell access to even public data to anyone for commercial purposes. Not because we ever would, ever, not in a million years, but because it reassures people to look at a Terms of Service and see "not only don't we sell your data, but the legal agreement we have with you says that we can't".) But lawyers' time is expensive, and so I've been putting it off, because it's not necessary (our existing ToS is "good enough") and it's a cost that we don't urgently need to pay. That sort of thing.

The part of our hosting costs that are fixed costs (ie, we would need to pay those costs every year no matter if we had 10 active users or a million active users) have also been rising faster than the part of our hosting costs that are usage-dependent (ie, how many web servers we need to have running at any given time to cover the amount of traffic -- although that's been rising too, because no matter how performance-tuned our code is, the amount of garbage traffic has been on a global increase across the internet, and of course the systems that help you filter garbage traffic beyond a basic level also cost money). We run in a really, really small financial footprint, server-wise, but the cost for the incidental services that are necessary to make the site stable (a lot of which are fixed costs) have also, you guessed it, been increasing.

Basically: when we started DW, the annual fixed operating costs to usage-dependent operating costs ran around 50% to 50%; these days, it's crept up to about 75% to 25%. That means our costs are less usage-dependent, and fixed costs increases are a lot harder to absorb when your income is primarily usage-dependent the way pretty much all social media platforms' income is, whether that income is from user subscriptions or from advertising. (Which, just to be clear, we will never do.) Fixed costs are also much more inflation-influenced than usage-dependent costs, which is a major reason why we're looking at the reduced purchasing power of the basic payment unit as the primary driver of the issue here.

[nenya_kanadka]

I really enjoy all these explanations!

[denise]

I'm really glad! I don't always have the time to do them (even when it's an issue I've been thinking about for 20+ years, which is actually sometimes even harder to explain because there's even more layers to it) but I really do believe that people should be able to understand why we're doing what we're doing and what the various pressures and considerations we're taking into account are. Everything is a tradeoff, and sometimes it's really hard to figure out how to properly weight the factors in the calculations, but if nothing else, you can be assured that no matter what the issue is, I've probably been arguing with myself about it for a damn long time, heh.