Lovers and Leavers

In one of the most memorable scenes in Trainspotting, Mark Renton finally gets to spend a night with a girl. Rolling on his side in Diane's bed, he exclaims: "Phew! I haven't felt that good since Archie Gemmill scored against Holland in 1978!"

Sex and soccer have a lot in common. They appeal to our primitive urges. They are personal but often enjoyed with others. At best, they allow us to transcend our daily worries and partake in something greater than ourselves. At worse, both sex and soccer underpin industries in which human beings are traded, exploited, and objectified.

Both of these industries are undergoing a revolution. The history of one can inform the other, and the evolution of both can guide practitioners and entrepreneurs in different industries.

As the New York Times reports:

"Late on Sunday night, 12 of the world's biggest soccer clubs unveiled a plan to launch what they called the Super League, a closed competition in which they (and their invited guests) would compete against one another."

The new league would enable the world's most famous clubs to play against each other on an ongoing basis, attracting more viewers, and avoiding dozens of qualifying games against lesser-known opponents. The result would be a financial bonanza for a small number of world-renowned teams:

"The clubs believe that selling the broadcast rights for the Super League, as well as the commercial income, will be worth billions. And it will all go to them, rather than being redistributed to smaller clubs and lesser leagues."

The world's biggest clubs are trying to tilt the balance of power away from soccer's powerful governing bodies, FIFA and UEFA. Both organizations have been embroiled in various controversies. They are seen as inefficient middlemen that distribute too much of the game's income to smaller clubs and leagues. Or worse, as corrupt bureaucrats who are skimming off the top.

The proposed Super League sparked outrage among incumbents. The president of UEFA called club leaders "snakes" and "liars." FIFA said players who participate in the new league could be banned from representing their countries in the World Cup. Prince William, who serves as the president of the English Football Association, said in a statement that he shares "the concerns of fans about the proposed Super League and the damage it risks causing to the game we love."

Teams were originally dependent on local fans. Soccer is not a game you can play remotely. The players had to be present, and so did the audience. But the audience no longer does. More accurately, the internet diminished the importance of those at the stadium relative to those cheering (and paying) from afar.

Growing Up

A similar dynamic played out in the world of adult entertainment. That industry has always been a leading indicator of where online businesses are headed. It pioneered and popularized many of the technologies and business models that power the internet as we know it, including advanced video compression, online payments, affiliate marketing, and personalized recommendations.

The adult world is already two steps ahead of what's happening in global soccer. And it offers important lessons. Initially, the internet helped concentrate power around a handful of websites and production companies. As The Economist explains, adult stars were paid by the day or by the hour to create content; that content was then distributed by relatively small number of intermediaries who took home most of the profits.

But the internet didn't stop there. Producing and sharing content became so cheap that even the biggest middlemen were suddenly under pressure. Customers were less inclined to pay for something they could easily get for free on hundreds of websites.  Meanwhile, the performers themselves realized that they could reach their fans directly.

This dynamic is epitomized by the rise of OnlyFans, a website that lets individuals broadcast themselves directly. According to The Economist, OnlyFans "users pay a subscription to follow - and view - their favourite content creators who typically charge fans around £5-15 a month, with more for extras."

The extras are where it gets interesting — from a business perspective. The fans don't pay to watch; instead, they pay for personalized messages from their idols, for videos that mention their name, and for having a say on what happens next.

It's not a passive act of mass consumption; it's a relationship. As one anonymous analyst put it, OnlyFans provides a "middle-ground between porn and a girlfriend." Like Starbucks, OnlyFans is a third place, something between a business and a home. You pay for the coffee, but someone takes the trouble to write your name on it and call you when it's ready.

The Economist brings more evidence in support of this view:

"Porchia Watson, a 32-year-old creator who joined the platform a year ago and now makes around £10,000 a month on it, feels that she provides companionship as much as provoking lust."

Watson is rationalizing, but she is not lying. And she's an early example of how many of us will make a living in the future.

Hitting the Fan

The first phase of the internet empowered the business models of the old world: It made it cheaper for big middlemen to distribute mass-produced content to a mass audience, and it intensified the competition between these middlemen. But ultimately, new business models emerged to make the old middlemen redundant and address what only the internet can deliver: a relationship between individuals and their fans, at scale. The internet is not a cheaper television; it's a matching engine for personal connections.

The new European Super League is an example of the first phase. It allows one group of powerful middlemen to wrestle power away from another group of powerful middlemen. It also helps some soccer stars make more money, but it does not liberate them.

This is a temporary phase. What comes next?

The stars will realize that even the new middlemen are far less necessary than they seem. If you're playing on a global stage, do you really need the umbrella of "Liverpool" or "Barcelona" to attract viewers? Leo Messi and Neymar are big enough on their own, and, for that matter, so are Lebron James and Steph Curry. Yes, soccer and basketball are team sports, but if location no longer matters, there's no reason for a team to be based around a specific city and enrich the people who happened to own that city's original club.

But it will not end there. As the power shift towards individual superstars and consumption shifts online, the format of the game itself might change. Why sit for 90 minutes to watch a few minutes of actual action? Why have 11 players on a giant arena if you no longer have to provide seating for tens of thousands of people? Why have anyone own the team if the fans themselves can own it using NFTs or other emerging financial technologies?

The games can be shorter, with fewer players and a smaller pitch, and the whole notion of "owning" a team can be redefined.  I don't know how it will happen, but I have no doubt the medium will change the message. The economics of the internet will reconfigure the game itself.

But that, too, will not be the end of it. Ultimately, stars will have to find a way to create a more personal relationship with fans, at scale. Technology allows them to do more with their limited time, but it is be impossible for them to message or "call out" every person who needs attention. To do that, many new stars will have to emerge.

OnlyFans did not simply enable adult professionals to make more money. It empowered a class of non-professionals who make money by catering to a smaller niche. Over time, these non-professionals will eclipse the industry's original superstars.

More on this next week.

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