Thought experiment: How SMTs could hurt smaller media companies
I worry the regulatory burdens faced by the SMTs could disadvantage smaller media publications. Since @ned has posted a new video on the SMTs, I figure now is as good of a time as any to talk about my concerns. But first, if you haven't seen the video yet, you can watch it below first. I divided the video into some chapters for easy reference and included links to them below.
- 00:00 - Intro to discuss recurring issues
- 00:11 - Recurring Issues, Pt. 1: Centralized and Decentralized Distributions
- 00:36 - Decentralized Distributions, and its Benefits
- 01:14 - Centralized Distributions, and its Disadvantages
- 03:11 - Regulatory Disadvantages of Centralized Distributions
- 04:12 - "Identity as a Consensus Aspect in Rewards Algorithms"
- 06:40 - SMT Identity ex: Sports Podium
- 08:59 - Dealing with Copyright Management Issues
- 10:39 - Conclusion
When Ned first proposed the Smart Media Token, it sounded like a great idea and it seemed like everyone was excited about it. The recent announcement of APPICS shows the potential innovation SMTs could bring to the marketplace. And for the record, I think that the idea overall is a good one and I am interested to see where it will go and how it could increase the value of Steem.
Because we're in the process of hashing these ideas out, however, I figure I'd throw my hat into the ring and and express my concerns.
My biggest worry is with regard to already established media organizations. My first impression of SMTs was that they would be used to support something like a cryptocurrency-backed Disqus for media companies, and I am still interested to see how this might play out.
While @ned addressed the concerns over how SMTs might catch the eye of financial regulators, depending on which jurisdiction the company resides in, mainly that the companies with offering an SMT should check with their lawyer, I worry that the cost of regulatory compliance would favor larger companies.
Companies like The New York Times, for example, might offer an NYT SMT to reward their readers, and drive traffic and engagement. Given the NYTs established comment moderation system, the SMT would be a natural fit. Also, due to the size of the publication, the cost of regulatory compliance may not negatively impact the company.
But smaller blogs unable to afford the regulatory costs would not be able to compete with larger media companies, and may have an inadvertant adverse effect on already crippled media ecosystem.
Since readers would now have a financial incentive to read and engagement with an NYT article, they would spend less time on the smaller blog that couldn't afford to offer an SMT to their readers. New readers would be incentivized to sign up to participate in the NYTs new crypto-backed social network, increasing the site's unique daily visitors. While this would be great for the NYT, the smaller blogs looking to compete with the NYT would miss out on engagement and traffic, potentially losing advertisers and/or donors in the process.
The other thing is that activists may attempt to hijack comment threads. This already happens, but now a monetized version of this would occur since they could use their email lists to spam an article en masse.
The hope is that both limited bandwidth and financial incentives would encourage more thoughtful interactions. The financial incentives to attack an article, however, could be the very fuel that an activist coalition needs to marshall its supporters against a reporter, media organization, article, or issue. A media organization's SMTs could be weaponized against them.
Those are just some thoughts as I let my mind go to a dark place. I hope I'm wrong.
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Thank you for reading,
- Josh
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