Twitch does a chokepoint capitalism
“Amazon is charging Amazon so much money to run the business via Amazon that it has no choice but to take more money from streamers.”
When Amazon bought Twitch, the story was that the new conglomerate would be more efficient and that would benefit everyone — streamers and audiences. That’s the story we hear about every anticompetitive merger, and it’s always a lie.
One major efficiency that the Amazon-Twitch merger was supposed to produce? Lower bandwidth costs. That’s one of the largest expenses associated with running a streaming service, after all, and Amazon Web Services is the 800lb gorilla of cloud computing. They’ve bought or built tons of infrastructure, and even for parts of the stack they don’t own, they are so big they can demand preferential treatment.
Hypothetically, cheaper bandwidth leaves more money on the table for the creative workers whose labor generates Twitch’s revenue, but that’s not how it’s played out. In incredible blog post explaining why Twitch is unilaterally canceling its highest-tier royalties, company president Dan Clancy blames the change on the cost of bandwidth:
With most streamers, Twitch takes half the money they earn. That’s a big chunk, which Clancy justifies by citing “continuous investments in the products and people that make your growth possible.” He describes some new features that have increased the revenue per audience member since Amazon’s 2014 acquisition of Twitch.
But for Twitch’s most valuable streamers — the ones it courted most aggressively — there’s a better revenue split: 70/30 (the worker gets 70%, while Amazon takes 30%). These are the deals that Clancy is unilaterally cancelling.
Clancy says it’s not fair that the company’s favored streamers should be earning more than the majority of streamers, which is a pretty good point. What he doesn’t explain is why the solution to that unfairness isn’t to just give all the streamers a 70/30 split — especially in light of all the new revenue he boasts about.