Thanks for the questions!
Regarding Q1:
We actually feel the system we are going with is the fairest possible way to do things. If we only charged a fixed fee, then potentially valuable "real estate" would be locked up by users for essentially pennies on the dollar. This way, if more than one person wants a particular niche, they can compete for it fairly, using a market-driven approach. It's true that no one (not even us) knows the true value of these niches prior to the launch of the complete platform and that's why this approach is fair. A user should only bid what they think is fair value.
In addition, keep in mind that ultimately it is the community that benefits because all revenue from the niche ownership fees goes into network rewards, to be returned to network participants.
Finally, because we are limiting the number of niches that any one user can own or bid on at any time, we expect that to reduce the amount of wild speculation. If I already own 3 niches, I can only have active bids on two niches, since there is a limit of 5 niches per user (owned or bidding on).
Thus, I would argue that the bidding system we have enacted is completely fair and ultimately beneficial for the network as a whole. If one person thinks a niche is worth $1,000 (in tokens), as opposed to the base rate of $75 (in tokens), for example, that entire fee goes into the community pot for redistribution, leading to more revenue for all participants.
Regarding Q2:
We call it ownership because you essentially earn royalties based on the content contained in your niche. It's kind of like home ownership with a recurring mortgage payment, I suppose.
We like the term "owner" because of the obvious benefits you receive, whereas a lease does not usually convey such benefits.
You said that the "Narrative Organization" gets to auction off non renewed niches, but that is a misstatement. The organization has no role in this process. And the revenue collected from the niches- for new niches and for renewals- goes into the Network Rewards pool, which is distributed to all network participants, like all network revenue is.
Regarding Q3:
It is still TBD as to whether or how a re-approval process might work, but obviously if the community later rejects a previously approved niche prior to launch, the niche fee would be returned to the owner. It is likely that very little work would have been put in by the owner, since this would presumably happen before the launch of the network. But again, this is not even something that has not been decided yet; we simply mentioned it as something that is still under consideration. Also keep in mind that the community can revoke any niche, even after approval through an appeal system... in fact, if we do not require a re-approval on the early niches, then we will likely just rely on that mechanism. We also do not expect a high rate of rejected niches in either case.
Regarding Q4:
We like the model we have in place, for the reasons I gave above. I don't see that changing for Chaucer. We will always consider feedback during the alpha period, of course... and ultimately the Narrative Committee that will be put into place (comprised of community members and narrative staff) will have the power to make structural changes to the way things work, if it is deemed necessary.
I also want to reiterate again, since you have mentioned it here too... these fees are NOT PAID TO THE NARRATIVE ORGANIZATION. They are paid to NETWORK REWARDS and distributed to everyone who qualifies based on the network rewards payout formula. The organization receives only 15% of that revenue, while 85% is returned to the network users.
Thanks for the feedback... I hope it helped. And please feel free to keep that feedback coming!
Truly awesome response - and I'm really grateful for it coming in so fast.
So this goes a long way towards addressing the more serious concerns I had, which is great.
I apologise for not realising the niche fees would become part of the revenue stream that gets distributed to the community - perhaps that was not entirely clear in the white paper or perhaps I missed it. And yes, it stands to reason that the limit on how many niches people bid on might limit speculation.
I still find the 'owner' term very misleading: it is not like home ownership with a recurring mortgage payment. Niches do not allow for capital gains. Home ownership, even with mortgage payments, allows for capital gains through both appreciation and adding improvements to the home - this is central to one of my concerns and I'll elaborate further on it here.
The ability for the owner to auction their own niches and potentially make capital gains from those sales seems to have far greater advantages than downsides (from my admittedly limited perspective since I do not know the full scope of your algorithms).
On the downside, the pre-owned niches that get auctioned every year might add a few pennies in everyone's pocket if the proceeds are distributed to the community, and each member would lose these pennies via my suggested route. I'd be surprised if anyone noticed much of a difference though?
On the plus side, the added incentive for owners to grow and maintain the niches at peak activity seems far more valuable as this goes to the core of the lifeblood of the content economy and could potentially make a noticeable difference to everyone's bottom line? I'll outline to you what my thoughts might be as a niche owner who after three years decides he might want a change of lifestyle, and after four years, gives up his niches.
Phase 1:I set out to develop some great niches.
Phase 2:A couple of years in, after the initial spurt of effort has passed and I am still devoting energy to the niches but perhaps a little less than at the beginning, it occurs to me that if I ever decide to stop owning the niches, none of the hard work behind me, or going forward, will reward me when the niches change hands. Psychologically, this creates a diffuse demoralising effect that would reduce my appetite for pouring quite so much effort into them. Every time the impulse to approach folks for new content arises, that thought will be somewhere in the back of my mind and will have an inhibiting effect. How strong an effect? Maybe 10-20%, maybe less, maybe much more, depending on my temperament.
Also this effect might kick in much sooner than after 2 years - again, depending on the individual.
Phase 3:Three years or so have passed. I've decided the time is approaching for a change of lifestyle. Maybe I want to head for the hills, grow vegetables, and spend less time in front of screens. Or maybe I've found another activity that requires 110% of my energy to get off the ground, like a great startup with lots of potential, or volunteer work that is profoundly meaningful to me in a way nothing else has been before.
It is going to take perhaps a year of preparation to enact these lifestyle changes or shifts in activity, and during that year, I have to multitask between work, maybe selling a home and buying a different property, shifting all other aspects of my personal economy, slaving towards the startup if that's what the new intended activity is etc... In that crowded timetable, the time devoted to adding value to my niches comes under much closer scrutiny.
I ask myself: if I put in a lot of effort to my niches in this final year of ownership, how will it benefit me? The niche revenue will increase, but all benefit ceases when I stop ownership, so it only represents a short term and probably small to moderate spike in income.
By contrast, whether it is a startup or moving to the hills that I'm heading towards, my efforts today will reverberate into greater gains or lifestyle improvements in the future. If its passionate volunteer work I'm moving towards, then the moderate financial reward from bigger efforts on the niches that year probably don't feature strongly in the equation. So in all three cases, no real contest.
Also at this stage, with the prospect of no longer owning the niches far more prominent than the passing thought in Phase 2, the thought of the unfairness of 3 years of value-adding resulting in zero capital gain at the end of the run - will be much more demoralizing. Before it was theoretical as I still intended to keep the niches. Now it is becoming a certainty, and I'm thinking: if this were a house or a business I had bought, I'd be seeing healthy capital gains from my value-adding, as well as potential appreciation on my initial investment. Combined with my now constricted schedule, how much would these effects depress my efforts towards the niches? 40-70 percent? For some, maybe less. For others - I wouldn't be surprised if they stopped all efforts at that stage.
Phase 4:The niches then spend perhaps a year in relative neglect and perform less, and when they are sold by the platform, not only do they command less of an auction price for the community (than the motivated owner would have received if the bigger proceeds went to him), but it will require some weeks or months for the new owner to hopefully bring the niches back into full swing.
The alternative:The alternative to this scenario, is a niche owner who remains motivated to the very end to have his niches operating optimally. In fact knowing a niche will be auctioned for their benefit would not only provide the natural care-taking impulses true ownership conveys throughout the period of ownership: it would also arguably cause efforts to increase further in the run-up towards a sale in many cases, so that the niches have the best metrics and command the best sale price.
On the buyer side of the equation, niche ownership is more attractive for this reason also: do I want to bid more on something that will bring me capital gains as well as regular income, or on something that brings me only regular income?
On the community side of the equation, all these niches whose owners start to contemplate a change, instead of seeing a slump in activity, could see a boost.
What is the gap between the slump of the current plan for when niches enter a phase when they will soon change hands, and the boost of what I am proposing? Difficult to say, but if we imagine a 50% decrease in efforts in the demotivated soon-to-be ex owner, a 20% boost in that owners efforts if they are seeking to maximise capital gains, and a 10% boost to niche buying enthusiasm (which should translate into higher quality ownership), we could be looking at benefits to the niches owner-initiated activities of around 80% during that period.
Perhaps my numbers are way off, but I think they do make the point that the effect would be tangible on the actual quality of Narrative's content, and to me that is far more important than community revenues being augmented by a few cents per member, or even a few dollars.
If you want to look for analogous situations in other industries, you might find some worthy thoughts.
For instance, car services that must choose between providing the cars to their drivers, or having drivers maintain their own fully-owned cars.
Owner/operators take inherently better care of their vehicles and in so doing drive more carefully, providing a better maintained vehicle to the customer, and a smoother ride. The company that supplies the vehicles and keeps ownership of them ends up with large maintenance bills, a lower customer experience, and cars that are inherently less valued when it comes time to sell them to renew the fleet.
Last of all, if for some reason it is desirable for the community to receive revenue from an owner's niches changing hands, and I'm simply not in a position to appreciate that reason, I'd imagine you could set up a hybrid process where the owner receives the lion's share of the proceeds, but the network takes something equivalent to a real estate agents fee (anywhere between 3 and 5 percent), and pours that into the community revenue stream. This would preserve the all-important care-taking factor of real ownership and the powerful motivation of capital gains.
Please give this some thought, and here's to a fantastic public sale!
M
