STEEM: Freemium Is Not Free!!!!
There seems to be a great deal of confusion about the business model in the Internet Age.
Here is a simply universal law of Informational Technology that applies to the entire online world.
NOTHING IS FREE! EVERY NETWORK HAS A COST!
- Servers cost money
- Memory costs money
- Developers cost money
- Hosting costs money
- Domain names cost money
Everything has a cost.
One of the biggest misleading statements on STEEM is that it has no transactions cost. This is not true.
The true reads this way: STEEM has no DIRECT transactions cost.
Make no mistake about it, there is a cost. And someone is paying it. The only question comes down to who?
The uproar since Hard Fork 20 appears to be simply because so many do not understand the system. STEEM is not free now, nor was it before. There were costs to transactions and account creation. It simply is impossible to avoid these.
I see people saying many people are leaving. Where are they going? There is no such thing as a "free" social media site. It does not exist.
What about Weku? People are going there because it is free.
Does that network defy the laws of informational technology? Do they have servers, developers, and domain names? If they do, their system is not free.
I want you to think back to the situation with @dtube. Do you remember how people complained that they took 25% of the reward for a post to cover costs and for further development? This really upset people. So, when dlive came along while providing a free service, many jumped ship.
Of course, unknown to everyone was that dlive had an ulterior motive. Plus they had funding out of a $20M ICO. I bet if @dtube had $20M behind it, that would be free too.
The epitome of this discussion is Facebook. Everyone and their brother knows that behemoth makes a huge chunk of change. How do they do it? Well advertising is one way. Another is through the selling of data. Both of these are fairly well known.
There is another way that just came out. Facebook compiles phone numbers for "security" reasons. I guess if you lock yourself out of the account, they can text for verification. Pretty handy deal.
Do not think for a second that was their reasoning. The truth is the robocalls you get, there is a good chance Facebook is the reason.
https://www.eff.org/deeplinks/2018/09/you-gave-facebook-your-number-security-they-used-it-ads
It appears they were selling phone numbers that were received under the guise of "security".
So which of these appeals to everyone? We could make STEEM free by having the Witnesses place ads everywhere. That would allow STEEM to remain free. Then people could do whatever they wanted.
Or we could have Busy and Steemit sell all our data. They could install tracking devices, coupled with the ads, to monitor our every move. This would certain raise enough money that "free" would be possible.
Naturally, everyone on here should hate those ideas.
The model that is being embraced is called "freemium".
This is used in many industries. As you can tell it is a combination of free and premium. When combined, both aspects exist within the same system.
An example everyone might be familiar with is Dropbox. This is a very successful freemium organization. People can have free storage up to a couple GBs. After that, the pay model starts. Obviously, those with the free account do not get the same things as those who pay.
From what I understand, many games are this way. The free version gives someone access and a certain amount of activity before it locks one out. Over the next day or two, the system recharges giving access again. If one wants to play more without waiting, money is paid to gain greater access.
This is how STEEM is. People with more SP are able to conduct more activity on the blockchain. Those with less, will be limited. This was a topic on the Witness call yesterday. Obviously, there needs to be a level found where a newer person can interact in such a way to grow the account but does not receive the same abilities as those with more SP have.
Based upon many posts over the last few days, some seem to disagree with this. I guess they believe someone signing up should be given the same rights as one who was here contributing for 6-9 months. Does a new person really deserve the same level of access as someone who worked his or her butt off to get 500 SP?
Do not forget, all transactions do have a cost that someone is paying. I know many on here are into freedom, against socialism, and prefer free markets to reign. If that is the case, why do some who believe in that tout the idea of subsidizing activity?
There is no doubt it is a fine line that the community needs to find. It appears that accounts under 50 SP are the most affected. I know of one who is operating without a problem at 200 SP. She was doing her regular activity and her RC never dropped below 97%.
As I stated yesterday, on the Witness call, it was evident they are very mindful of newer people. We all know that people joining the STEEM blockchain is growth. This is needed.
The other day I put up an article that talked about STEEM becoming "exclusive". Some took exception to that term since it meant some are excluded. This really is not the case. The Resource Credits separate STEEM in the sense that costs are explicitly shown. This is a good thing. If we hope to attract businesses, this is something they need to know.
Another term that many complain about is "pay to play". They do not believe it is a good concept for people to have to pay to be on this blockchain. Well, to start, nobody needs to pay. One can still get an account via other means and grow.
Secondly, as one Witness mentioned, it is not pay to play as much as it is "invest to play". One is not really paying anyone anything. When buying STEEM and powering up, it is still your money. It still resides in your account. This is just an investment in one's activities on here.
Again, if 50 SP is the level where transacting gets difficult, that is about $45 USD right now. I know this is out of the range for a lot of people in the world. In those instances, there are other paths to pursue on here. However, for those who can afford it, like those in the west, that is a month worth of Starbucks visits. It is not the end of the world for someone who is serious about growing this as an economic vehicle for oneself.
The implementation of the Resource Credits simply make the cost of things evident. There was a time, early this year, where many smaller accounts were locked out. This was when the cryptomarket was on fire and the network was more heavily used. We will see the same thing happen with the new model. If traffic is heavy, those with almost no stake on the blockchain will be locked out.
Some might feel this will stunt STEEM's growth. It will not. The reason I state this is where are people going to go? There is no such thing as a free network. People are even waking up to the fact that Facebook and Reddit are not free.
Every blockchain is going to follow the same path. There will be creative ways to get around it but all have the same issue. Ultimately, someone is paying for the network to operate.
Fortunately, with the STEEM blockchain, there is versatility. As a freemium network, people can join through the applications, most of whom have enough RC to sign people up. This will give people basic interaction up to a certain limit each day.
For those who are earnest about being here, there are a number of alternatives to grow faster:
- Purchase STEEM and power up
- Receive SP delegation which also increases RC
- Get RC from the pool (this is not for certain but @ned mentioned this in a post a while back)
Therefore, we see that STEEM is not a free blockchain but a FREEMIUM one. One does not need to put money in to access what is on here. However, when first starting, there will be limitation on what one can do. As one progresses and grows, either via investment or effort, the limitations will be lifted. Each SP will provide one with more access.
And isn't this how it should be? Those who give to the blockchain benefit either through direct SP or delegation from others who believe in them while those have other motives do not.
Hmm... there is 7+ billon people on the planet. And only under 300 million STEEM. If you need to get 50 STEEM to interact with a platform, it's makes STEEM just a tiny elite club. Not a social media for masses, or "blockchain of opportunities".
People not mind to pay cost if they do not know about it. But if you charge them with a obvious paywall (even of it actually cheaper that way) - people get upset and get out.
The masses was 1900-2000 Era. The masses are no longer needed to create massive wealth now.
The basic economic model of a freemium game is that the small percentage of users who are willing to pay for premium services subsidize free play for the vast majority. Games then acquire a stream of paying premium players by acquiring vast numbers of free users and providing a constant stream of challenging content to keep them playing constantly and eventually inspire some of them to convert to giving them money.
It requires that free play be as appealing and addictive as possible while also making sure that the premium features you offer are both compelling and come at a reasonable perceived cost.
None of this really applies to the current incarnation of Steem. We've seen that the powers that be here really do not seem to care about user acquisition and retention, which is an absolutely key component of any freemium model. Plus the lecturing about "who pays their fair share" that accompanied RCs is a direct contradiction. In a freemium model everyone knows and accepts that the paying users are covering the costs.
Who doesn't care about user acquisition and retention? Steemit.com? If that is your answer, you are correct. They do not care. Nor do they care about their UI. @andrarchy reaffirmed that clearly. They are completely focused upon the blockchain and feel that is where their resources are best suited. Some might disagree but that is their viewpoint.
That said, do you think the people behind @steemhunt care about what you mention? @dtube? @busy.org? @actifit? I bet they do. The application developers are the ones who care because they are the ones who are the business owners.
And now with the ability to onboard their own users, they can drive traffic to their sites (hence here).
Pretty hard to be a contradiction when that is what is happening here. If someone signs up new and lets say they get 5 posts, 10 upvotes, or 15 transactions per day. Who is covering that cost? By the way, who covered the cost for that person to sign up? Someone had to.
Now multiply that over 1M times for people who want to post a blog or two a day. Isn't that exactly what you described?
Exactly. It really should be up to each app to develop a business model for themselves. Network resources do not come for free and developing them is the province of Steemit Inc. If some app chooses to be ad powered and is successful, then that is precisely their own business and should not concern Steemit Inc or anyone else. We stakeholders own the infrastructure. That's all.
If facebook had required users to pay to post more than 1 or 2 cat photos a day, I suspect most of us would never have heard of facebook and that it would have gone the route of myspace. It may not be fair, but the reality is that Facebook, Google, Twitter, etc. are the norm, and the norm is not two posts (including comments) per day, which is what a 15 SP account gets at this point. Add the byzantine rules on Steem and the lack of "friends" and you have a platform that is not all that attractive to new casual users who are not crypto or economic-experimentation geeks. Some time ago, I recall that a daughter of a Google Plus employee, when asked by her dad to use Google Plus replied by saying something like "Dad, social means where the people are, and the people are on Facebook."
The question is whether the application developers can mask the problems with Steem caused by the extreme proof of stake hierarchy, RCs, and the byzantine voting rules. If they can, things may work out, but if not, Steem can always hard fork again to try to address the issues.
Proud member of #steemitbloggers @steemitbloggers
Interesting post but I don’t think the comparison with Freemium stands.
As a social media we need the network effect and to have the most people on our platform. By reducing the attractivité to join Steem for new members, we are basically letting other platforms fulfill this need.
I still didn’t get the point of HF20 to be honest...
prevent spam? Easier on boarding ?
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spot on
network effect absolutely will not happen if people have to pay first to get in!! nope! not in a world of other "free" platforms (i say "free" because there is the cost of stolen data, etc, but people turn a blind eye to that and think it's free)
Following you is one of the things I never regret :) thanks for doing all this writeup about Steem and bringing up important points about HF20 that many people seem to miss or ignore.
Thank you for the kind words @reggaemuffin.
Like the old saying goes, I do this because I cant sing or dance.
I am going to start to delve into the Witnesses some to help spread the word. You are on my list to cover.
@taskmaster4450, I'm not witness or anyone important but I also want to express my thanks to you for your insightful articles!
Good shot out, I think taskmaster is with most of his views right on point. Most people complaining about Steem never see the bigger picture or are pationed enough to let things develop. He clearly makes a difference between businesses (dapps) and Steem Blockchain developers what I think most people get wrong or don't see the difference. @Reggaemuffin you are also one of the top carrying Witnesses here, good job!!!
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Just to echo a few comments I've seen here, including some of your own, I think that what's most important is getting users to try out the platform.
If a new user can't comment and like and follow at least a decent amount in their first go, they won't feel like investing.
Maybe a solution would be to offer a week long trial of sorts. Sign up, and you get a small bump to normal activity permissions. Not too much, and definitely not too little. The exact amount will be simple trial & error to find.
Then, after a week, that user gets an alert stating:
"Hey, thanks for being a weeklong Steemian! Pretty cool around here, right? Well, if you'd like to continue interacting at the same amount that you've been doing, we recommend you invest in your SP. If you need more time, don't worry, your account will stay open, your just going to be limited in the amount you can do each day." Follow this with a brief, layman's description of RC and the cost of running this platform. Something to that effect.
You'd then wanna direct users to a page where they'll be able to see roughly how many actions they'd get for investing a certain amount, like a slider.
I know Steem is new tech, but there's a lot we can learn from "old businesses" that we can use to our advantages.
Nice post, I enjoy reading your view on these recent matters, if not for at least being so positive in times of chaos lol ^_^
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i like your solution! if indeed we are going to stick with such low operation possibilities for the newcomers, i agree at least giving them a taste is a better option than just locking them out completely. no one will join if that's the case.
This is the best comment I have seen today. Let's not be blind to the obvious problems with this new system! Well, unless we want Steem to remain a closed circuit of old players and no new friends.
Every time I see something like this excerpt below, I'm infuriated because of how detrimental this can be to the future of the blockchain (relative to the limited range of emotions possible on a largely neglected blogging platform). I've been active on Steemit.com on almost a daily basis for 13 months and it doesn't grow old.
Business are made of lots of people, including westerners who drink Starbucks, and people who work in sweatshops because they have no other choice. Businesses also exist because they have customers they acquire and retain, i.e., more people.
How will businesses most likely hear about Steemit.com in the foreseeable future? The people/users that they retained that respect how they're valued, treated and would be willing to put their customers in the same environment. Just imagine if they cared more on these points, instead of giving them a free pass, or putting them on a pedestal for seeing some type of more grandiose picture it's suggested we must be naive for missing.
How many more potential business have been missed or will never come to fruition in the future because of this? This also applies to us seemingly low-priority Steemit.com users. It's common sense.
I've earned all my SP mostly because I don't want to put my money into a company who doesn't care about the items you reiterated above. While I enjoy the relationships, learning and interaction on this platform, I personally couldn't recommend a business to the blockchain, or would even build my business on here, unless the company showed other values. While businesses may use the blockchain in various ways, Steemit.com will likely be a large part of it on a user-level at some point.
People use the blockchain. Steemit.com is how many people form their judgments and opinions about the Steem blockchain, whether they should or not. While every transaction has a cost, or a "freemium", those who continue to feel that resources are not best spent on people (read: future business owners and customers beyond Steem Power holdings/transaction volume), really don't feel like the proper leadership to me for attracting the masses.
I feel that prioritizing the experience people have with the blockchain will lead to more success than a super highway with "100,000+ businesses" and "SMTs by last February", when they do arrive. It's like putting the cart before the horse.
Nice post in general.
That is not the idea and for a very good reason. I predict that five years from now Steemit.com will be forgotten. It's a minimum viable product, a prototype, it's nowhere near in functionality or design modern where web applications need to be. It's a primitive web interface to the blockchain that was the first of its kind to succeed the command line client used by the hard core nerds who came here first.
The masses love apps that look and feel fantastic and function smoothly. They don't care about blockchains. The native token system on top of the app functionality is a big bonus.
All fair points. Thanks for engaging. I'd imagine this interface is as how you feel and will be because of how the company treats it. If it saw the interface as an invaluable means of staying connected to people/businesses/future businesses (even as a marketing platform), because the company will need all of this to be relevant and have value in the future, perhaps we'd be much further along on the roadmap and it wouldn't need to be deemed as a vestigial stepping stone. It's much harder to get new customers than retain current ones, and this site is the medium for achieving this for the foreseeable future. First impressions and ongoing reputation are priceless when more competition will be along in due time.
It is totally fine to say this, however steem must then not call themselves a chain with free transactions.
It's fine to switch, you just can't claim to have free transactions when you don't.
Steemit has been advertised as "earn rewards for your writing" for ages. That's what drew people here to a large extent. (Not me, to be honest, I came here to be able to comment on someone's posts.)
Your post is speaking a lot of truth but it is used by other users arguing EACH USER SHOULD INVEST FIAT MONEY into the Steemit project which
So .. yeah, I'm kinda blaming you because I cannot argue with each of them. ;)
Maybe this is the time where some people are delegating more to other users. Which in fact is the kind of socialism which is bullied by others. Still, it keeps our society going.
Then..its not free?
Taskmaster, I always appreciate how you are bringing so much positivity to the steem blockchain! thanks for that!
I do disagree with you in reality however, around the pay to play or more honestly invest to play scenario. Many people will not be willing to do this until they have a positive experience. Many people come to Steem through just stumbling across it on the internet and they will enter in on a trial basis- it's a users market at this point- I don't think Steem is reliable enough (as a place to earn through sharing) at this point to engage users through inviting them to power up a bit at the beginning. The threshold of experimenting here always has to be free, otherwise I see the community not being inviting for most people. Yes facebook sells your data (i no longer use it), but people are blind to that (or don't care?!). In an ideal world what you are saying is true, but I don't think people will care about the fact that none of this is free (previous "hidden" cost of interaction.)
The users under 50 SP need to be given some basic daily thresholds of being able to comment up to 30, vote 40-50 and power up money. Otherwise you're telling someone to engage to earn to power up to invest, but you're not giving them much bandwidth to do so. It's counter intuitive. If I was told I had to invest before I could ever get off the ground here, Steem would've lost me early on. I do like the incentive to power up to get MORE actions available on the blockchain, but absolute new users under 50 SP need more RC activities available to them.