Dealing with variance in commerce and Steemit: "The merchant approach"
In Steemit we have what is known as the "casino effect". This describes the fact that posting rewards are variable: Some times bloggers may get a very small reward while other times they may hit the "jackpot" with some pretty high reward.
![](https://steemitimages.com/640x0/https://pixabay.com/static/uploads/photo/2015/02/12/23/00/roulette-634412_960_720.jpg)
This variance[1] also extends to the quality of content: An author will write several posts and when the rewards are finalized the author may be very surprised to find out that his better articles didn't get more rewards.
Similarities with Commerce
Some will complain that this is simply evidence that the system is problematic but ...have they ever considered the amazing similarities with commerce in the real economy?
![](https://steemitimages.com/640x0/https://pixabay.com/static/uploads/photo/2013/07/13/11/31/shop-158317_960_720.png)
If you've ever owned a store you may have noticed that there are days where selling is very slow and other days when selling is going very well. Some times selling can be so bad where the entire day is a bust - with no money generated.
This variance can extend to larger time periods - like having a week or a month which has been extraordinarily good, or atrociously bad.
Can you spot the parallels with Steemit?
Whose fault is it that a shop does good or bad in different days, different weeks, or different months? The "whale shoppers" who are casting their "buying votes" in a bad way?
On top of that, in the shop scenario, there is also product variance: Products that can be considered "junk" may be selling like crazy, while products that one would assume would sell a lot, in reality don't generate enough revenue.
Paradoxical situations may emerge where a store is sitting on an expensive stock that should be high-performing, while making its daily revenue on stock that seemed stuck and forgotten...
Again, do you see the parallels with Steemit - where "bad posts" can be generating more money than "good posts"? Is it "the whales" fault that this is happening in actual real-life stores?
The Bottom Line matters
In the end of the day, stores thrive or go bust based on the "bottom line" result over a long time, and over the sale of thousands of items. The daily affairs are not that significant in the larger scheme of things - although they can and do create bursts of happiness or disappointment to the shop owner - just like a Steemit poster may feel after getting a high or a low reward.
Store owners, while impressed by the variance of dry periods or product selling anomalies, quickly learn to rationalize the situation and ignore this variance by focusing on long-term revenue and costs. They won't close their shop based on a dry day, week or month.
![](https://steemitimages.com/640x0/https://c2.staticflickr.com/6/5271/5912231439_26f8836d3e_b.jpg)
In the context of Steemit, one could adopt the bottom-line approach of the merchant and say: "I don't care if 40 of my posts made just 10$ while another 10 posts made 1200$. The bottom line is that over two months I wrote 50 posts, got 1210$, so that's an average of 20$ per day and 24$ per post".
The "merchant approach" of dealing with the bottom-line result, is an efficient and time-proven method that allows one to better handle the emotional roller-coaster that daily variance can create. It can become the blogger's biggest intellectual ally in dealing with emotional irrationality.
[1] In probability theory and statistics, variance is the expectation of the squared deviation of a random variable from its mean, and it informally measures how far a set of (random) numbers are spread out from their mean. -Wikipedia
I have an online retail business, so this analogy is relatable to me. One day I'll make almost no sales, and the next day I'll make a ton of sales, but both days I was offering the same inventory. Like you said in your post, as the time horizon expands, the variance becomes smaller. It's very likely I'll have an atrocious day, but it's far less likely that the entire month will be that low-performing.
The approach I'm taking on Steemit could be considered a merchant approach. I'm trying to gain loyal customers (followers) each week. Sometimes they'll buy from (upvote) me, other times they won't. However, I know as long as I continue to provide value, I'll grow my customer base over time, and my bottom line will reflect that.
It's kind of impossible for anyone involved in retail sales to not relate :D
They know precisely how this weird effect works and they also know that they can't really bother with day-to-day results, second guess themselves all the time on whether they are doing something wrong, etc etc.
as long as the content is relevant to the audience. I have seen people writing 50 posts and had not even 1 SBD.
@steempowerwhale 🐳
🌞 upvoting your lifetime dreams!
Obviously if you open a store and sell something that no-one wants (like selling heating equipment near the Sahara desert) that's an issue of "perception" - where the seller doesn't really grasp the market.
Some times though, in terms of broader interests that aren't currently covered, we could say we have a distortion of the market due to very low audience. Otherwise someone would be interested in some type of weird content. This takes the analogy one further, where we go to "ebay sales".
You can literally sell junk on ebay. Junk that other people may value highly. Yet a local pawn shop may be unable to sell them for a good price. The difference being that on ebay you are tapping millions of potential buyers while the pawn shop taps just a few hundreds / a few thousands potential buyers.
So, if we extend the analogy, and Steemit had 1000x the audience, there would be a lot of upvotes by having people who find value even in content that other people don't.
Exactly @alexgr. Like the saying goes "one man's junk is another man's treasure" - so if the audience is large enough the likelihood of someone finding your junk as treasure is much higher.
This can be said for the tags on steemit that still have smaller audiences especially.
P.S. - I'm going to Las Vegas next weekend. Hopefully the variances are good to me! :-)
In theory, if variance tends towards the average that one would expect, like 1 heads - 1 tails - 1 heads - 1 tails, (instead of HHHTTHTTTTH) you could destroy the casino with a Martingale strategy. The casino is actually counting on variance doing its "weird" thing of continuous one-sided streaks to save itself from losing over the long run.
Good luck and have fun anyway :)
. . . Junk selling well ?
Would that be like rubbish posts getting serious upvotes ? ? ?
What does that remind you of ?
Anyone remember the inventor Gary Dahl ?
This was the guy who dreamed up the " pet rock " . . .
I wonder how much gold that craziness made him ! ! !
/hugs ; )
[ nothing in this post should be taken to suggest I do not think the above post is not simply terrifically awesome ! ! ! ]
( + upvoted + )
Great post:)...I have had an online catalogue in a virtual world since 2007. I have also sold virtual currency as a reseller. In most cases, sales are dependent on three main variables: Price, Quality and Trends and of course regular injections of new products. Most stores that are successful have all 3 and have a good marketing campaign in place. There is no real secret if you have the variables the marketing and build a good client base you will succeed.
Steemit is something entirely different. Being active in the community building your Rep, and some luck getting exposure to a whale or two can elevate your success.
I see a few accounts that post four posts a day and don't earn huge amounts, but they chip away at it, and I think they do ok. Other users have found gold by being added to a whales list.
I see other accounts that post 2-3-4 times daily with great content and don't make a cent, and that's because they are missing the key components.
There is a definite type of material that gets more attention on steemit. If you don't produce it, you have to be either very persistent or a lucky SOB. Quality wasn't a primary factor in the beginning, but I think it maybe creeping in the door slowly.
A merchant approach may work for some, but without all the keys you can't open the door.
We can say that the similarity here is relevant to the demand/success equation:
In principle, if a store sells something in high demand, then they are more successful. It's the same with Steemit bloggers who provide content of higher demand.
Not all stores sell the same stuff, and not all stores generate the same revenue. Likewise not all bloggers write the same stuff and naturally their revenue differs.
Being a known store (established blogger), with high reputation and a lot of clients ("followers") can also increase sales (blogging rewards) relative to an unknown shop (blogger) with near zero clients (followers) or reputation.
It would be interesting to read some good analysis of what's underlying demand on Steemit. I've seen some crappy writing wrapped in a pretty wrapping that consistently gets high $$$ and many examples of the opposite. Maybe you should undertake this labor - you have the mind fo it.
I'll give it a thought and maybe I'll write something in the future :D
Emotions are almost always the variable economic actors fail to account for properly. But you talk elsewhere in the comments about faulty perception of demand... We can also have faulty perceptions about the bad days, making emotional assumptions and taking it personally when something that should sell doesn't. That's especially true when you're trying to sell your own written thoughts.
Eeeexactly...
Interesting perception and good arguments there. I like it.
Maybe, in the next post you can take the analogy even further:
...etc
What do you think ? Can be an interesting sequel ?
Fine post. :)
Indeed... I'll think about it :D Thanks.
Great post. I like your analogy and it is totally relatible to me.
There is too much gaming to actually get attention for equal quality. We must work harder to get value-adding dolphins to choose the best in a category, rather than luck or systematics giving $1000 for a post equal to another one being paid $0.00. This is not natural economics or will not be if it continues, but I expect improvements.
Yet the argument here is that natural economics do work like that, in waves: Stores do not experience consistency on how they sell their stuff - unless they have a very huge volume of sales. And it's not an issue of whales, or dolphins. It's just the way life and maths work (variance).
hey alexgr thank you for ur upvote.. i read this article and really enjoyed it ! i wish u a very nice day .. i followed you <3 kalipo
Humh ; I wonder who hit the jackpot with this post : )
/ hugz ; )