Steemit’s New Business Model Shows How Compensation by Micro Contributions Works
The Business Model Pioneered by Steemit Could Pose a New Organizational Paradigm for the Modern Economy.
When you post something on a popular microblogging service and it generates a high degree of positive feedback by some metric, for instance “likes,” you have just created value for that company.
When you issue a query to an Internet search engine and click through to a result, you have just created value for that company.
When you post a photo of your handsome face to a certain service, and many people share it across the Web... you probably get the picture.
- Handsome Face
#$%! you, pay me
This altruistic contribution to the bottom line of Silicon Valley-based behemoth corporations is at the crux of how an organization, with a scant few bean bag chair laden offices, can create value for millions upon millions of customers.
British evolutionary biologist Richard Dawkins argues that at the core of seemingly altruistic exchanges is often a latent horse-trading process.
For instance, your parents take care of you because you share half of their genes and you are hopefully (the fact that you’re reading this article greatly increases the probability that you fall into this category) an efficient and natural gene propagation mechanism. Then why do so many people while away their days improving the product offering of faceless social media companies?
The reason is that they do in fact derive some value from this interaction in the form of recognition from their network connections. Some people thrive on this attention. For better or worse I personally know a few of them.
But is this remuneration sufficient? Could we create a better model for such services?
More than hot air
Steemit is a news service website which combines blogging and social networking.
Frankly, that sounds like a bunch of hot air. However, Steemit has added a new dynamic to this well-worn paradigm in the form of compensation for users based on the popularity of their contributions in the form of a platform-centric cryptocurrency known as Steem.
The facility with which one can disseminate small payments across the Internet using cryptocurrencies is what makes this service possible.
Once in awhile, it’s interesting to look for something online using a second tier search engine, just to remind oneself of how abysmal they are.
But what if that company were able to offer you a superior value proposition in the form of direct compensation? Imagine a world wherein a scrappy newcomer to the search game could bootstrap their data acquisition process by paying users to issue queries on its site.
This business model sounds completely unsustainable - and it is - but with adequate financial backing it could enable them to harness the initial “information capital” needed to make a run at the entrenched market players. Recall that PayPal started out by paying people $25.00 a piece to try out their service.
How does mining work within the Steemit economy? How do they prevent inflation? What would happen if the value of Steemit greatly exceeded the value of an individual post? How will they adjust the rate of compensation?
Obviously, there are a few questions to work out to create a fully viable system based on this model, however, Steemit represents a laudable first effort. Personally, I commend them on the penetrating insight and considerable chutzpah it must have taken to conceive and implement this concept. If I were to design this system under the prevailing economic conditions I would use Bitcoin to motivate contributors, it strikes me as a simpler model.
Nevertheless, it will be interesting to see how Steemit and platforms of a similar nature will develop going forward.
In the modern economy, people are being made redundant and laid off in droves, hordes of young people are unable to find employment and the competitiveness of the now global labor market have increased. Perhaps compensating people for incremental micro-contributions to online platforms will create for them a new sustainable career path.