Steemit’s New Business Model Shows How Compensation by Micro Contributions Works

[s.matthew.english]

When you post something on a popular microblogging service and it generates a high degree of positive feedback by some metric, for instance “likes,” you have just created value for that company.

When you issue a query to an Internet search engine and click through to a result, you have just created value for that company.

When you post a photo of your handsome face to a certain service, and many people share it across the Web... you probably get the picture.

#$%! you, pay me

This altruistic contribution to the bottom line of Silicon Valley-based behemoth corporations is at the crux of how an organization, with a scant few bean bag chair laden offices, can create value for millions upon millions of customers.

British evolutionary biologist Richard Dawkins argues that at the core of seemingly altruistic exchanges is often a latent horse-trading process.

For instance, your parents take care of you because you share half of their genes and you are hopefully* an efficient and natural gene propagation mechanism. Then why do so many people while away their days improving the product offering of faceless social media companies?

The reason is that they do in fact derive some value from this interaction in the form of recognition from their network connections. Some people thrive on this attention. For better or worse I personally know a few of them.

But is this remuneration sufficient? Could we create a better model for such services?

More than hot air

Steemit is a news service website which combines blogging and social networking.

Frankly, that sounds like a bunch of hot air. However, Steemit has added a new dynamic to this well-worn paradigm in the form of compensation for users based on the popularity of their contributions in the form of a platform-centric cryptocurrency known as Steem.

The facility with which one can disseminate small payments across the Internet using cryptocurrencies is what makes this service possible.

Jump ship

Once in awhile, it’s interesting to look for something online using a second tier search engine, just to remind oneself of how abysmal they are.

But what if that company were able to offer you a superior value proposition in the form of direct compensation? Imagine a world wherein a scrappy newcomer to the search game could bootstrap their data acquisition process by paying users to issue queries on its site.

This business model sounds completely unsustainable - and it is - but with adequate financial backing it could enable them to harness the initial “information capital” needed to make a run at the entrenched market players. Recall that PayPal started out by paying people $25.00 a piece to try out their service.

Next level

How does mining work within the Steemit economy? How do they prevent inflation? What would happen if the value of Steemit greatly exceeded the value of an individual post? How will they adjust the rate of compensation?

Obviously, there are a few questions to work out to create a fully viable system based on this model, however, Steemit represents a laudable first effort. Personally, I commend them on the penetrating insight and considerable chutzpah it must have taken to conceive and implement this concept. If I were to design this system under the prevailing economic conditions I would use Bitcoin to motivate contributors, it strikes me as a simpler model.

Nevertheless, it will be interesting to see how Steemit and platforms of a similar nature will develop going forward.

Good news?

In the modern economy, people are being made redundant and laid off in droves,  hordes of young people are unable to find employment and the competitiveness of the now global labor market have increased. Perhaps compensating people for incremental micro-contributions to online platforms will create for them a new sustainable career path.

*The fact that you’re reading this article greatly increases the probability that you fall into this category.



That text comes from my latest article on CoinTelegraph, you can see the original post here:

https://cointelegraph.com/news/steemits-new-business-model-shows-how-compensation-by-micro-contributions-works

[Kprawn]

I would just love it, if micro payments could somehow be incorporated into social media and forums. You could pre-fund your account, and

then "tip" constructive content. The downfall of ChangeTip was that people needed to register for their service to use their service. If this

could be built into the software {plugin} and managed automatically.. then this would go viral. Using it now on Bitcoin, would simple not work,

but the LN will make this viable in the future. 

[chesatochi]

I created an account this week on Steemit, so far I don't understand everything on the website and the how you get paid. I found amazing the idea behind this business model that you can get a reward by creating content and interacting with the users of the website.

I plan to post my first contribution today.

[QuestionAuthority]

Didn't we already neuter Bitcoin from making micro (dust) payments? Are you talking about sending a penny to someone and paying three cents to send it?

[iamnotback]

When you post something on a popular microblogging service and it generates a high degree of positive feedback by some metric, for instance “likes,” you have just created value for that company.

When you issue a query to an Internet search engine and click through to a result, you have just created value for that company.

When you post a photo of your handsome face to a certain service, and many people share it across the Web... you probably get the picture.

...

Good news?

In the modern economy, people are being made redundant and laid off in droves,  hordes of young people are unable to find employment and the competitiveness of the now global labor market have increased. Perhaps compensating people for incremental micro-contributions to online platforms will create for them a new sustainable career path.

*The fact that you’re reading this article greatly increases the probability that you fall into this category.

That text comes from my latest article on CoinTelegraph, you can see the original post here:

https://cointelegraph.com/news/steemits-new-business-model-shows-how-compensation-by-micro-contributions-works

Congrats. You are repeating what I wrote about on Nov 7, which is something I've been writing about since 2013 with proof as linked in the following self-quote:

This is the Bitcoin killer.

Actually maybe not true. Because my design makes the most improvements for microtransactions.

I do believe my design is a Bitcoin killer any way, in the sense that I think microtransactions are the big enchilada of the near future despite them being maligned up until now:

http://hackingdistributed.com/2014/12/17/changetip-must-die/

It is necessary to eliminate the cognitive load of each microtransaction with automation.

The reason is that most of what people do online is for fun. And the earnings that some companies make now online derives typically in the pennies per user. When you've only got to extract a few pennies from each user, the users don't care what it cost especially if they don't have to do a damn thing to pay. The low hanging fruit for crypto-currency is not replacing high valued transactions, since everyone already has a well entrenched option for that called fiat.

I think we are moving to a collaborative economy (e.g. open source) where we want to throw a few pennies towards each thing we use each day, then these get aggregated (funneled in) on projects and fan back out as salaries and commissions in morsels that enable people to pay rent, buy food, etc.. I don't think the majority of our Knowledge Age economy will be large ticket item sales, because most of what we will be producing will not be one-off creations with high effort for one user/customer (we may have customization per user but it will be automated). Economies-of-scale will continue to increase (as they did for factories in the Industrial Age), although customizability will also increase due to technological innovation, e.g. 3D printers and software (which was not possible in one-size-fits-all factories).

This is sort of the economy I have envisioned ever since I wrote the seminal essays that appear in the OP of the Economic Devastation thread.

[alyssa85]

I would just love it, if micro payments could somehow be incorporated into social media and forums. You could pre-fund your account, and

then "tip" constructive content. The downfall of ChangeTip was that people needed to register for their service to use their service. If this

could be built into the software {plugin} and managed automatically.. then this would go viral. Using it now on Bitcoin, would simple not work,

but the LN will make this viable in the future. 

Reddit tried that with both Changetip, and with Dogecoin. Doge had better success in that people were willing to tip a few doge which were worth less than a cent.

Steem's genius is that when you up vote, you arn't transferring from your own wallet, you are allocating newly minted steem from the next 24 hours to whoever you have upvoted. The tipping thing on reddit failed because people are basically cheap, and as soon as btc started to rise in price, people would rather hoard than give. Giving out pooled money from the next 24 hours minting doesn't feel like you are hurting yourself, and of course tyhe voter/curator gets a payment too.

[iamnotback]

Steem's genius is that when you up vote, you arn't transferring from your own wallet, you are allocating newly minted steem from the next 24 hours to whoever you have upvoted.

That is Steem's major flaw, not its genius.

As I will soon teach by example...

Don't forget that I explained mathematically that awarding minted tokens via voting can't be distributed to anyone but who the whales choose, i.e. you can never rid yourself of the whale oppression in that voting system:

https://steemit.com/steem/@anonymint/blog-rewards-can-t-be-widely-distributed