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RE: The Sustainability of Steem - Is Freemium Broken?
Thanks for such an in-depth response!
I agree with your point that as a curator you are betting on overperforming other curators. What you missed though in your analysis is that the curators must be weighted by their SP. If you factor that in, suddenly it's much much easier for smaller SP holders to overperform the average, because the more SP you have the harder it is to earn more curation.
Regarding your idea with adds - I think it could work. But I would prefer to just base the business model on subscriptions. The incentives would suddenly be much more aligned compared to using any adds system.
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Yes, it's easier for small SP curators have much easier time overperforming the average. But that incentivizes large SP curators to sell, creating selling pressure on the tokens.
A subscription model is one possibility. You could think of buying SP as a kind of subscription fee. One selling point of SP could be not the profit you can make but the fun of having influence over which of the content creators get rewarded and how much.
I think we need every possible incentive to purchase SP. I think commercial promotion should be made as lucrative as possible. That's because witnesses have ongoing costs that need to be covered for the network to even survive. I, for one, would love it if, say, some camera manufacturer bought a load of SP to promote its camera gear in a community of photographers on Steem. They could organize a photography contest and fund the prizes. That would be sure to generate a lot of positive attention and motivate Steemians to creating high quality content, thus increasing the value of the whole network. The camera manufacturer would benefit from increased sales. There is a lot of potential for mutually beneficial interactions with commercial actors like that.
It incentivizes curators to maintain the level of SP which is profitable to them.
Of course people will start powering down at some point, but that doesn't mean they will power down everything. The more SP you have, the more responsibility you get and the short term profits shouldn't matter so much to you, you have to care about the community more and about the health of the whole ecosystem, as this will be more profitable to you as your stake increases.
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The average of which is negative. Nearly all high SP users have gained most of their SP by mining it in the spring and summer of 2016. We are talking also about why anyone would buy large amounts of SP and not just not power down if they have a lot of SP.
Without speculative bubbles there are no long-term profits.
The question is also about incentives to power up. If it is profitable to power up at all only because there are high SP users who behave altruistically, that model can't be sustainable.
For Steem to be sustainable, paying for Steem Power with fiat must enable the payer to gain access to fiat revenue streams. Paid commercial promotion does just that. Remember the photography contest example where a camera manufacturer buys or more likely rents Steem Power to be able to reward the contestants. If priced right, paying for SP can be a financially rewarding proposition under that scenario. This, in fact, is the actual value proposition of Steem according to the white paper.
If don't see clear signs of growth in the number of users in the years following HF21 and acceptance of paid promotion and advertising on Steem as a way to fund it among prominent stakeholders, I will power down and sell everything at the peak of the next speculative bull run and never look back.