If Smart Media Tokens (SMT) are not disruptive then they will be a failure

I see a lot of articles about how SMTs are going to be the next biggest thing to sliced bread. I think it has the potential to reach there but not the way it is being imagined right now. There is a fundamental assumption that the Steemit model will work for everyone else. There is no evidence to support that theory mainly because there are no business models out there that work like Steemit.

Steemit is unique

We have a large aggregation of content creators rewarding each other. By any yardstick, this is a very unusual proposition and very hard to emulate on a mass scale. Typically in most content publishing systems, there are a large number of readers and a few writers. This scales spectacularly because most consumers want to be fed information and publishers know their audience well.

We vote for each other on the platform because:

• Quid pro quo: I will vote for you, because you vote for me
• Collusion: we can all vote together and make money for each other
• Appreciation: genuine feedback on articles written by people with an eye towards content quality, style and delivery
• Good nature: generally hell bent on making everyone’s life a little better

Steemit has a good model going where if the system can be made to work properly and only quality content gets rewarded then it could very well be the best content publishing platform in the world. Writers and curators will form the backbone of the community while readers will be pure consumers of the content. Advertisers will work with us because of the high impact of targeted advertisements based on sets of focused readers.

Trust me, that is a good thing even if it is not the let us conquer the world vision that is floating around.

The case being made for SMTs is incorrect

Here is the sales pitch:

There are lots of digital content providers and aggregators that exist and have existed for a number of years. They each have a sizeable viewership base. Currently none of them are monetizing their platform except through advertisements. In addition they don’t provide incentives for curation and don’t allow their readers to be financially rewarded. So if they want to monetize content then Steemit makes it as easy as 1-2-3

Hence they will all gravitate to Steemit and start using the blockchain to implement a cryptocurrency based rewards system that will automatically upgrade curation and increase the level of involvement from their readers. In other words, financial rewards will be their ticket to increased success with their user base. Steemit’s rewards based voting system will provide a major fillip to the content provider in terms of user retention, expansion and unlocking new revenue opportunities. Now companies can solicit feedback or improve user engagement by rewarding their contributions

To put it bluntly, we enable the next generation of DisQus, Taboola, ProductHunt and Outbrain.

There are quite a few reasons why we should view this with a pinch of salt:

1. Most digital content publishing sites already have their own user base built on years of proving their content quality
2. The user base will neither erode or enhance significantly because they have spent a lot of time in understanding their requirements and the kind of content that is consumed
3. They have some kind of curation infrastructure because of votes, claps editors and what not
4. They definitely have discrete analysis infrastructure that is either home grown or outsourced
5. They have the capability of delivering feeds to their subscribers and some even wrap your personalized content into digests
6. Their major revenue comes from advertising and any subscription inflow just keeps them relevant

Another critical observation that needs to be made is that most content aggregators/publishers are not a community. They have registered users or transit viewers who are not interested in the betterment of the platform. This means that rules of community engagement that have proved useful at Steemit will not be so effective with them.

Even if they monetize user interactions it will be a small part of their marketing budgets.

Since the number of readers is disproportionately large compared to the number of writers/curators, a rewards system to readers will not scale enough to be satisfactory to everyone concerned.

This is exactly what worries me as using a blockchain to incrementally improve an existing model is not worth it. Steemit should create or enable brand new business models otherwise it will see limited success.

So where is the opportunity?

It is true that today these existing content providers don’t have any rewards system in place and hence it is an area of opportunity. But if it was such a huge opportunity, someone would have already established a working model with fiat or by using some other cryptocurrency.

There are three large opportunities with SMTs that are worth pursuing.

Create many niche Steemits

Steemit has proved itself as a community of connected users who are interested in growing themselves and each other. In other words, readers and creators have come together to carve their own niche. This kind of a community works great when it is highly specialized. If you are a narrow focused community then it is easy to generate subscription revenue, create advertisement landfills and make every reader into an expert curator.

But when it becomes generic and all purposes then human nature takes over and fissures widen.

This article is a nice read on why big communities are failing

Here are a few examples:

Ravelry is a free site for knitters and crocheters. Ravelry
What are you working on? Dribble is where designers get inspired and hired. Dribble
A new niche network for survivalists, bushcrafters and nature lovers. Survival Info

So in other words, become someone like iPublisher but with the tremendous benefit of blockchain. We may have to upgrade our publishing capabilities in order to attract them but it is worth it. Each community will need to be walled off both in terms of content access and tokens deployed.

Niche subscriptions revenue is all the rage

The principle is the same as what we are doing today but don’t ever go after the Mediums/HackerNoons of the world. Steemit becomes a content publishing powerhouse for the next generation of niche communities that will collectively grow larger than the biggest publishing houses.

Become the curation backend of the world

I think this is a fantastic opportunity for the kind of infrastructure we have built. Our voting algorithms (stake or account based) could be a great fit. Links gets posted to the blockchain from different accounts. Each account represents a source of content (content aggregator or publisher). Curation happens with rewards being credited. Maybe we will need the Oracle functionality that is being released to create lists of valued curators.

An internal algorithm will deliver the curation report to the account and the subsequent actions are left to the account holder.

There is no limit to the type of accounts we can go after. We could have accounts ranging from enterprise to ordinary consumers. Even the big content aggregators will outsource the work to Steemit. Curators are members of the Steemit community and could run into millions. We could use the SMT mechanism to generate different tokens based on content specialties.

Each specialty could be vertical (industry specific) or horizontal (curation task specific). Accounts would buy the tokens they want and spend them for curation. Tokens would also pay the Steemit community for general development.

E.g. you could have technical support manuals as a specialty. How about 3D printing? Cryptocurrency?

Curata is a good software company but we are talking about the being the world’s largest crowd sourced manual curation community.

Conclusion

Steemit is a disruptor because of its blockchain pedigree and must upend the market by using superior economics. The economics of scale must cut out middlemen or Steemit must become the ONLY middleman around.

Steemit has three choices and each one is a huge bet.

1. We make a bet on the fact that all content providers want to do their own curation by providing rewards and hence we enable the backend for a rewards based system

2. We do the curation for everyone and end up with lower margins, low visibility, incredible volumes and become the world’s first content curation community

3. We become a content publishing powerhouse for niche communities that ensures that such communities publish on our platform and sustain it by using Steemit’s core strength

You make the choice and pick whether you want Steemit to be a blockchain enabled Taboola, super scalable Curata or a next generation niche YouTube+NyTimes+WordPress

if you have other ideas on how SMTs can disruptive business models, do share them and we will discuss. your comments are welcome