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RE: Let Life Grow! - [PT. 3] - "Self Destructions"

in #life8 years ago

The free rider problem is not a problem, that is where the money comes from. You cannot expect everyone to pay every time. It's not about micropayments, although that could help a bit, the problem would still persist.

Some people will pay some time, but not all people will pay every time. It's a random pool of users that we have with random behaviour, and the profit is growing out of that pool. It's like if you have a hat filled with rocks and diamonds, sometimes you pick the rock and sometimes the diamond, but not always the diamond.

We have to let the random process manifest itself, in other words let the rocks be picked, so that we can pick the diamonds later.

Yes Youtube has a pay-per-view subscription model, but very few people use it, because people figured out that the freemium model is the natural way to do business.

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Bob grows poison oak while Samantha grows artichokes. We need to pay Bob to grow poison oak in order to pay Samantha to grow artichokes later? The point of paying people is to communicate our valuation of their use of society's limited resources. The more valuably a person uses society's limited resources... the more money they'll receive... and the more money they receive... the more of society's limited resources they'll be able to use... and the more of society's limited resources that they'll be able to use... the more value that will be created. It should be pretty intuitive that we want more of society's limited farmland to be used for artichokes than for poison oak.

With private goods... like artichokes... you can only benefit from them if you pay for them. But with public goods... it's possible to benefit from them without paying for them. As a result, the value signals for public goods are less accurate than the value signals for private goods. This means that lots of society's limited resources will be inefficiently allocated.

In order for society's limited resources to be put to their most valuable uses... we have to know people's true valuations of all goods. So it's a problem when your allocation to a Youtube video, Steem story, Facebook post, Twitter post or Flickr photo is less than your valuation.

allocation < valuation = problem

Content creators aren't mind readers. So if consumers don't use their cash to communicate their true valuation of content... then creators will not make truly informed content creation decisions. The logical, but detrimental, consequence will be a shortage of valuable content.

Frank: I don't value your content THAT much (= lie = free-rider problem)
Samantha: Oh, so I guess I'll supply less of it (-> shortage of valuable content)

But if content is paid to consume then the price immediately drops to 0.

If there is a singer that sells his music for free, and one that sells it for 1$, given that there is competition and they will be similar in quality, everyone will prefer the free stuff.

Nobody is willing to pay for something trivial, even if the producer has put tons of work in it. The value is set by the market not by the content creator.

This is why all content creators use 3rd party monetization tools, otherwise they would all go broke. Nobody is willing to pay 10$ for a youtube video, but if they see a nice T-shirt there they might buy it for 10$, and the producer gets a comission from that.

So it's not a problem about valuation, but the fear that the market would value abundant content like videos to 0$.

But you're forgetting about the subscription model... Netflix, Spotify, Amazon Kindle Unlimited, the government. You have to pay taxes anyways... so why not allocate your taxes to the public goods that you value most? I'm already subscribing to Netflix... so why not allocate my fees to the content that I value most? It's not like I'd save money by allocating my fees to less valuable content.

Imagine if Steem switched to the pragmatarian model. Maybe each month we'd all have to pay $1 dollar.... but we could choose which stories we allocated our pennies to. Why not allocate our pennies to our favorite stories? We'd all be able to easily find and read the most valuable stories. The most valuable writers would be compensated accordingly. We'd be giving them an incentive to continue writing valuable stories.

If most members of Steem allocated all their pennies half-way through the month... then this would mean that the fee could be increased to $2 dollars per month. A larger pie would attract more writers to Steem.... there would be a larger supply of more valuable stories... which would attract more readers. A larger pool of readers would be able to support a greater variety of niche topics. It would be a virtuous cycle.