SteemIt's Business Model
Presently, SteemIt is supported mostly by speculative investments. The platform has potential (Plus investors are in love with crypto), and they're emptying their pockets into Steem coin investments. Short-term this is great. Investors get their Cryptocurrency, the demand drives up the value, the users of the SteemIt platform benefit, and everyone is happy.
While some cryptos have value as a form of currency, the value of Steem is largely tied to speculation about the future of the SteemIt platform. Unfortunately speculative investments aren't a good long-term business model. Steem has no way of turning a profit (That I'm aware of) other than by getting investors to dump their money into it.
In order to remain competitive long-term in the social media space, SteemIt will need to come up with a revenue model that doesn't rely on continuous investments into cryptocurrencies. Whether that means more emphasis on paid promotion, or selling some adspace in those lovely white margins, SteemIt is eventually going to need to stand on its own two feet and generate some value for its currency that isn't tied directly to coin investments.
This will probably mean one of the above:
- Integrating "Promoted Posts" into users' regular feeds to increase exposure.
- Selling adspace in the page's sidebars, in article content, or in feeds.
If this makes you gag, you're not alone.
Part of the appeal of SteemIt is the non-cluttered, ad-free interface. But that UI is only possible because of the bullish cryptocurrency market. Once it cools down, SteemIt might have to make some compromises in order to keep bringing in money - And it's users may not be ready for that.
Thanks for reading,
-Matt
Steemit doesn't need to make a profit. Steemit is decentralized, it simply doesn't care about money because no one is running it.
That's the beauty, there is no incentive for an owner to take all the profits from the platform, the only people who earn are the users. As long as the steem cryptocurrency has a value on the market, all users will keep making money.
I understand what you're saying, but someone is footing the bill for the web hosting and the bandwidth. A number of people are developing the platform.
If the earnings on crypto become insufficient for these roles to turn a profit, what keeps SteemIt running?
Not to mention the increasing programming and admin staff they HAVE accumulated to keep the wheels turning. It doesn't happen on its own! At some point external revenue of some kind has to be factored into the equation.
And yes, it does need to make a profit as the platform does have costs and those costs are going to rise over time as a result of external marketplace factors. That profit can either be drawn out by the original creators and developers of the platform or left in to fund ongoing development and expansion.
I think it's interesting that I have not yet been able to find anywhere I have searched any succinct explanation or disclosure by the platform creators of current funding sources other than references to those who are prepared to pay to acquire STEEM and Ned Scott's vague reference to a so called "angel" investor.
That is most definitely not a viable long term model scenario.
Having said that I think the Steemit platform is an interesting and fascinating creation that does have the potential to develop into a global community and mutual aid user platform that has the potential to shift some of the wealth being generated from personal information and content creation back to the user base that has to date been forced or coerced into giving up their rights to that information.
Facebook and Amazon weren't making money initially but when they caught on they did (and do) quite well. Cryptos are still really new and are going to go through some trials and tribulations in determining market value. Once that gets sorted out I think it will be the norm.
I cannot rememeber whether facebook is currently protitable. But a lot of industry is based on speculation. If you look at the fundamentals of Tesla you wont be very pleased - and yet, the company is skyrocketing. Or look at the orginal theranos, which at one point was valued as billion dollar company and currently is nothing (talk about to the moon and back in a few years).
I agree, the market doesn't seem to factor in any kind of risk because there really hasn't been a significant market correction during most people's life time. I do thing a new paradigm will start to develop soon though.
I see no ads on Steemit but still wondering who the fuck pay that large amount of money to the publishers?