The profit incentives of Couchsurfing™


The paywall

In May 2020, Couchsurfing™ abruptly implemented "the paywall": they began forcing users to pay for the service, and barred people from their accounts until they paid up.

This is a decision that was made because Couchsurfing™ is a for-profit company, and is an example of it prioritizing revenue and returns for its investors over its actual service.

Couchsurfing™ should never have been made a for-profit. There is certainly a moral question to driving profit from the hospitality of others, which is evident from the clear outrage of experienced hosts at the change. But more than this, it showcases the mismatched incentives of the platform—how the company's profit motives damage the user base. Profit-seeking has systematically caused the downfall of Couchsurfing™ as a service.

Couchsurfing™ produces nothing monetizable

As much as Silicon Valley would like to reject it, there are many ideas out there where profit would run against the incentives of making that idea successful. The practice of couch surfing is one of those ideas; you cannot successfully monetize its user base while meeting the needs of its community.

We fundamentally believe there is no way to extract monetary value out of the types of interactions that Couchsurfing™ ought to facilitate—even though they provide immense societal value.

Couchsurfing™ does not produce or facilitate any exchanges that could be monetized—at its core, it is a service for making real-world connections and messaging people. Because couch surfing is a non-transactional practice, the company cannot skim off a percentage of the monetary exchanges between its users in a way similar to AirBnB or eBay. It is impossible for the incentives to be aligned between app makers seeking a profit from app usage, and users of an app like Couchsurfing™ who are not seeking to be on the app, but rather to spend time with real humans. Facebook makes money from the time someone spends scrolling through their feed, but the point of Couchsurfing™ should be to facilitate human interactions and get them off the app as fast as possible.

Other revenue strategies have not been successful. Couchsurfing™ has committed to not selling user data; the users are (allegedly) not the product, and so cannot be sold. The last remaining streams are essentially donations (which are difficult to solicit through a for-profit company), and advertising which did not generate enough revenue to pay the team and investors.

The decrease in activity and sign ups caused by the COVID-19 pandemic further exacerbated the long-standing issue at the core of the for-profit Couchsurfing™.

The only monetizing solution: compromise the platform

As much as the people working on the platform want to optimize for a great experience for users, they are beholden to their investors. The platform needs to optimize for profit, or at the very least is constrained by profit. This notion factors into every decision made by Couchsurfing™ since it was structured as an explicit for-profit company, and is confirmed by people working inside the organization.

Given no way to sufficiently monetize Couchsurfing™ in its original format, there was no choice but to compromise on the mission to make space for profit. The company claims to have trialed over 10 monetization strategies, ranging from tailored advertising, commercial partnerships, and selling merchandise, to more egregious ones such as allowing hosts to charge surfers, charging surfers a fee to confirm a stay, and—for some reason—even starting a cryptocurrency.

They eventually arrived at a freemium verification fee model, one of their critical decisions in undermining the platform for profit. Users could choose to "verify" their profile for a one-time payment, adjusted by location. To incentivize this, a limit of 10 messages per week was imposed on unverified users, vastly changing the dynamics of the platform.

Conflicting incentives of the freemium model

Monetizing verification has been one of the key battlegrounds where the conflicting incentives of Couchsurfing™ have played out.

For the company, new users become the main way to make money. To maintain revenue targets, new users had to be pumped into the system and encouraged to buy verification. This ended the natural growth curve of Couchsurfing™, and the platform was filled with people who didn't often get properly inducted into the community. Since going for-profit, users have complained of increasing levels of users who are disengaged—only looking for free accommodation instead of cultural and interpersonal connection. The new influx of users have also included many people who take advantage of others and threaten or violate their safety.

For the users, because of the cost, most ended up not paying for verification. If someone has a verified tag next to their name, it just means they have paid for an upgraded version of Couchsurfing™, or earned it through hosting. Conversely, someone who doesn't pay cannot be verified. This has, in effect, removed verification as what it should be—a method of trust.

With limited messages, unverified surfers are more likely to message hosts who they believe will be more likely to host them ie. hosts with tons of references. Instead of a more even distribution of surfing requests throughout a city, this now caused a concentration of requests to super-hosts, disrupting the local host community.

With the monetary incentives of Couchsurfing™ focused on new users, there was now no direct monetary reason to resolve issues for existing members. Many feel now that the platform is unsafe, full of freeloaders, and technologically stagnant.

Our plan to fix it: Non-profit structure