Recently I was reading this article on medium and one particular line got me thinking.
"The only source of money that is coming into the system is the money that other content writers invested in. That means that by upvoting some post you redistribute OTHER’s money (writers, not readers)."
While most of the article was interesting and insightful I was not sure what to construe of this. If you think a little I think this is true. But I don't think we need to be alarmed. Whether it is SBD or STEEM or STEEM Power they are all tokens. A token means a share in the company/platform. Your share is worth something only when the platform makes money. The platform may not be making any money today but still the tokens are valued around 1USD because there are enough number of people who believe in the potential of the platform.
Steemit is a publishing platform
Steemit is a publishing platform. I would put TV channels, Radio stations, Newspapers, Facebook, Twitter, Instagram, tumbler, medium steemit and all the the similar websites in the same bracket. If content is created(by a single individual, editorial team or masses) and is consumed by people, I would call it a publishing platform. By that definition Steemit is a publishing platform and publishing platforms have only two ways of making money.
How does publishing platforms make money
Any publishing platform in general and Steemit in particular can make money in two ways
- When advertisers pay them.
- When readers pay to consume the content.
TV channels and Newspapers are the examples of publishing platforms which make money using both these. In case of newspaper it is the revenue from advertisers that subsidises cost the end users pays for the newspaper. The same could be said for TV channels as well. Excluding these two every other platform makes money from advertisers. Especially on the web making users pay a fee for content is turning out to be a herculean task. Even the best and popular newspapers were not successful in this. The same holds good for the Web 2.0 companies as well. The publishing platforms that were abel to monetise have thrived and others have withered away or are on the verge of withering away. While Google and Facebook are examples of the companies that made it big using the Strategy 1, Apple and Netflix are examples of companies making it big using Strategy 2.
How does steemit make money
While Steemit may not be making money today going forward Steemit will find more ways of monetising user attention spans. In this Steemit might be more similar to Facebook as the two ways infront of Steemit are
- Promoted Posts
- Advertisements
Facebook has used both of them very effectively. For at least couple of years I think Steemit will stick to promoted posts. The maximum they might adventure to will be interlacing some promoted posts in the tabs like home and trending. Before looking at Advertisement Steemit should consider differentiating individual accounts and company accounts so that they can safely test the Advertisement concepts and also use it as a playing ground to prove to the advertisers that they will get their return on investments through promoted posts. When steemit really gains the momentum and steem tokens stabilise to the range of stability we see in the shares of the companies then Steemit might consider Advertisement. But the major differentiator will be in case of steemit it will be the platform making money and not the company. So the returns will also be redistributed to the users of the platform.
Should Steemit stick to only promoted posts
In my opinion yes. Ads in general are irritating and intrusive. Irrespective of whether it is an image, post or video an Ad is still content. The only way to make sure that this content doesn't become irritating and intrusive is by making it compete with other content. This way the quality of ads can also be improved. The business behind the ads will put more thought into it and make it targeted and tag it properly. A side benefit of this would be if the content of the Ad connects with the consumers they will upvote the content and the Ad maker can even recover the money invested in the ad. This will further trigger the cycle and lead to better ads.