Potential problems with App beneficiaries

in #steem6 years ago (edited)

I was talking privately with someone the other day about @Dtube attracting Youtubers with a large follower base which is great but, it reminds me of several other times I have considered the beneficiary issues. I am going to use @dtube as an example as it is one of the popular apps that has beneficiaries. This post is just to raise a few questions for consideration for the future.

Who knows about them?

One person who was onboarded by a friend recently, was posting most of their content through @Dtube and was getting some support from @curie from time to time but didn't realize that it costs to use the apps, they didn't know what beneficiaries were at all. I haven't used @dtube for a long time but nowhere in the upload process do I remember it saying about the 25% of the reward cost for using the app. 25% is a considerable amount after curation is removed to pay but I will get to that a little later.

I don't think it says on any of the other apps at time of posting on them either. There is an expectation that this is just known yet, if it was common knowledge, who in their right mind would buy a bidbot vote on top of a post that will also pay beneficiary rewards? These apps offer a service at a cost and therefore should advertise the cost of the service 'at checkout' at least.

A simple example

From the way I understand Beneficiaries it would look something like this:

Using a post with a 100 dollar payout due.

(payout - ~25% curation) - 25% beneficiary.

(100 - 25) - 25%
75 - 25% = 56.25

So, the 100 dollar payout has had 43.75% removed through curation and app cost.

This is not too bad if it was the app itself that voted to get it to 100 dollars but, if it was organic voters, the poster will 'lose' 18.75 dollars to the platform used (at 25%). The platform also benefits from the curation too. If it is the app itself that is drawing the organic voters, that is not bad either but, if the voters are coming through another interface like steemit.com which I assume many are, it may be more beneficial to embed a youtube video, which brings me to the next question.

Is it worth posting there?

The delegation is used to incentivize posters by giving a chance at getting a vote from the app at the ticket price of paying beneficiaries. Because of this, the apps have been able to attract a large user base of small users who may not be getting high payouts currently. They have also been able to support 'regulars' who consistently post and consistently get the app supported vote. No problem there as they are attractors to the platform, currently.

But, unless a larger account which already gets high organic votes can be 'guaranteed' the app vote on top, it is likely going to be very expensive to use the app. So, if an account for example is used to getting 400 dollars on a post organically, to cover the cost of using an app with 25% beneficiaries, the app would have to vote at about 100 dollars to cover the cost plus curation for the poster to break even. Currently, Dtube has a 200 dollar vote so that would be 20 votes like this a day.

Now, there aren't many accounts that get 400 dollars a posts. yet.

Stand by me?

But, lets say they attract a large youtuber user who brings in many onboards and gets 1000 dollars a post organically. To use the app, it is going to cost them ~187.50 for each post but, they would be able to forgo the app and embed a video using another platform like, Youtube. This means that unless the app makes it fundamentally better (censorship might come into play for a few), they are not likely to stick using it.

For video, all that really needs to happen is a service that allows a video to be embedded into a normal post to spring up and say, take 5% beneficiaries instead, for them to jump ship from the app with delegation. For them, the app vote is no longer large enough to cover their usage. Remember that when money is involved, people maximize, it has been proven over and over here.

What this will likely mean is that in order to keep large users, the platforms will have to find other ways to incentivize them to use them which will probably mean, kickbacks and discounts on the beneficiary amount. This means that those who earn the most will pay the least while the smaller users will be paying the larger amount still hoping for the odd app vote. That is going to cause some issues in and of itself most likely.

Distribution but no

The problem I see is that unless an app can continually reward a large poster, they are going to have retention problems but, this sets up another issue also I think. The delegation is meant to attract users but if it is only being used to service large users of the platform, why would small users use it considering they have almost zero chance of getting a vote from the app but are guaranteed to lose 25 percent of any payout they do manage to obtain.

A 10 dollar post with no app vote will still pay 1.875 in beneficiaries after curation. That is a lot for a small account trying to grow isn't it. this means that the distribution is further hampered and small account growth reduced by using the very apps that are meant to increase distribution.

Stand alone

Another problem is the issue with the delegation itself because, when will a platform be able to stand on its own two feet? Remove the delegation and large users have no incentive to post there and pay 25% and, neither will small users. Again, there is a price to not being censored but for the majority of users and their content, that is not an issue at all and is never likely to be as their content is so generic.

Next issue is that if mainstreaming happens for Steem, there is no way that there is gong to be enough delegation value to cover enough of the users but, the apps will be taking very large amounts themselves. This seems fine for app users but, people maximize which means, an explosion of apps that are going to potentially compete on nothing more than the cost of beneficiary. Many are likely to forgo the beneficiary fee altogether and sell advertising instead. Maybe this is the goal, I don't know.

Things to think about

In my thinking though, there seems to be some potential issues with the way beneficiaries are currently used and how the delegation may not only never be able to be removed but, might require constant increases. If delegation needs to keep increasing to keep the app growing that means that the business model is flawed as it continually needs a subsidy making it, protected. Again, this creates problem questions with centralization and cronyism.

As you can see, I haven't thought enough about this yet to really know the ins and outs or have any answers which is why I am posting about it. Delegations are a great way to get apps off the ground but, there has to be a point that the app can stand alone. The beneficiary system is a pay to play system of sorts when people are doing it hoping for an app vote. It is similar to a bid on a bidbot except, you don't have to pay upfront but, there is no guarantee it will come. The only guarantee is that it will cost if any votes do come.

It is also entirely possible that I haven't understood beneficiaries at all and in that case, let me know and then disregard this post.

Taraz
[ a Steem original ]

Oh, this has nothing to do with greedy devs etc as I think they need to get paid for their work by the system they develop it for. These are just questions I see that might come up in time. The devs of these apps often do very good work and deserve reward for their efforts including those of @dtube. For the apps to be real businesses though, they have to be able to attract and retain users as well as pay their people for performing the work and that means a model that eventually doesn't have a delegation which means, compelling enough that organic voters, not just posters, will use it.

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hey @tarazkp I have had the privilege to have @heimindanger to our conference here in Zug to talk about Dtube
As far as I know they did indeed have the 25% in the beginning but they no longer do that now, It was indeed not sustainable but in the beginning it was needed to "kickstart" their system and also become independant of the delegation.
They do realise that they cannot live of this delegation forever and that is not sustainable so this was a way to overcome this.

hope this clarifies some issues you had with their system.

oh, I just used them as an example because they are known (i thought they still had the 25%), this is about the beneficiaries in general though, with or without delegation. I think the apps have to be able to offer more incentive than an upvote from the app anyway.

I haven't had much to do with @heimindanger directly but, from what I have seen of him on the platform, he conducts himself well.

Well according to https://steemd.com/@dtube they are still taking a cut.

am I missing something?

They do redistribute a bunch of that to voters through their own curation system, rather than keeping it. I don't know what the percentages are but it shouldn't be too hard to check.

@krnel @tarazkp it appears that DTube's entire cut goes to their secondary curation system. See this post: https://steemit.com/steem/@tcpolymath/math-of-steem-how-much-curation-does-dtube-pay-out

Yes, @macron mentioned this. As I said, @dtube was an example but even with it going to curators, the same concerns for posters exist. I like the idea of the distribution and I wonder if curation has changed because of it, especially curation through the @dtube interface. I don't know how easy it is to see that but maybe @heimindanger has an idea?

yea, he really is a standup guy. It was really interesting to have a talk with someone who 'gets' the system.
That is also why they went back from this 25%, the realisation that it is in fact not sustainable.
Personally I think a small (really small) beneficiary is acceptable, or at least it would be to me if they provide a service that warrants that.

Hey guys, I think there is a debate for sure on how to find the right mix between rising the reward for creators and platforms taking a cut to boost their development. I think mainstreaming Dapps would be the best for the whole steem ecosystem as it will bring more curators, hence more rewards. As someone said in the comments here, the question would then be: will the reward pool be large enough to reward larger audiences? Probably not and that's why SMTs are coming up (hopefully as soon as possible).
About curation rewards I think it is wrong to view it as a "commission" stolen from creators, it is on the contrary one of the main features of the steem vision i.e to reward the community for their work of detecting and "flagging" the quality content for others. To me this vision aims at establishing a new paradigm to the targeted advertising business where users personal data is indeed stolen to make massive profits for the GAFAM.
Finally about DTube, there is a misunderstanding here which is too bad as most of the article focuses on it (even though as you said it is just an example). DTube does not take the beneficiary reward anymore, in fact it takes the cut but redistribute it to curators which was a move to test a new redistribution scheme in order to attract more curators hence more voting power to the benefit of creators, all the details are in DTube last post: https://steemit.com/dtube/@dtube/curation-and-economic-update

I will get to this later if you don't mind, (away at the moment). It is good to know about @dtube however it doesn't really change much from what this post talks about. Many posters still don't know and for a highly rewarded organic poster, they are in the same boat. It is good if it attracts more organic voters through @dtube though but, even that isn't necessary is it? One will still get the curation bonus if voting through steemit.com or the like?

thanks for the reply.. i will return to it when back in the city :)

One person who was onboarded by a friend recently [...] didn't realize that it costs to use the apps, they didn't know what beneficiaries were at all.

This is the biggest problem, not that there is a cut taken, but that the information on it is not clear enough. In my view almost all apps are guilty of this, it needs to be much more prominent.

DTube does not take the beneficiary reward anymore, in fact it takes the cut but redistribute it to curators which was a move to test a new redistribution scheme in order to attract more curators hence more voting power to the benefit of creators, all the details are in DTube last post

No, DTube does still take the cut but it claims to redistribute it. DTube is still handling this cut, and the policy can change at any time. Be clear.

Most of the posts that I have seen that use Dtube have been ones where the main voter is Dtube, so the author is probably making a lot more money than they otherwise would. However, you're correct that if someone were to use bidbots on top of it, their profitability would go right down the tubes.

A way to get around that would be to post from an alt account and then link to the video with your main account. Not that I'm advocating doing this. I'm just saying it's possible.

Most of the posts that I have seen that use Dtube have been ones where the main voter is Dtube

This is a problem because that delegation will eventually have to be pulled so, then what?

A way to get around that would be to post from an alt account and then link to the video with your main account

yep.

When the delegation is pulled then you will probably see people move back to Youtube. As long as the video isn't being censored, you can post a video even if it's no monetized. Then you post the link for that on Steemit and you can still get some amount of monetization of your content.

I've also heard about content producers not liking the fact that you can only get paid for seven days with Dtube. If you have a big enough following on Youtube that you're allowed to monetize, you can make money indefinitely on the video. It's tough because I want to root for Dtube, but I don't know that it solves the problems of Youtube other than the censorship issue. That might be enough of a solution for some, but for the ones that are trying to make a living off videos, I don't see them converting.

I've also heard about content producers not liking the fact that you can only get paid for seven days with Dtube.

This will likely change through SMTs as they can operate off the chain to some degree.

Ahhh, that will be an interesting change. If the SMT has enough of a following on its own, then authors might not care if they get Steem. As long as they're getting paid somehow, it might be enough to keep them.

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It depends what's happening to that 25% take. If the app is powering it up, then as the size of the userbase grows, the weight of the app's organic upvote increases to compensate; ultimately meaning less and less reliance on outside delegation.
If that 25% take is all going back to the delegators then the app's native SP will only grow through curation rewards (much more slowly.)

Yes, it does depend on this but even through powering up, how long to get the equivalent 2 million SP and that will be required to support (hopefully) many more users.

With this reading I am learning many things I did not know, @tarazkp. I have used little dtube. The times I've had to make a video I do it on youtube. By acquaintance, I lean more toward this platform. Now, every time I have the possibility to assemble a material, I will take into account what you have told me. He who does not know is like he who does not see. Thank you for keeping us informed.

It depends on many factors whether it is better to use other platforms, this is just to raise some questions and discussion, not a guide.

Hi Taraz. If what you are saying is correct then it just sounds like a total rip. The cost of 25% for using the app is not a smart move and I think it is one they will have to change if they want to grow. Luckily I don't use dtube and don't have any plans to.

It depends on the size of the account as if one is used to getting nothing, there isn't anything to really lose. @dtube is a decent platform and all apps that have beneficiaries have the same issue potentially, I just used dtube as an example.

I don't see how Dtube can continue on its current course if its membership increases.
There next change will be interesting to see how they implement it. They have not been to transparent so far and I don't see that changing.

To pay people to use their service then spread the cost over the entire client base is a plan that never leads to a successful business.

All of these things are in 'continual adjustment' as much of what is getting done hasn't really happened in this way before. Time will tell but, I think changes will need to be made soon.

One thing for sure is that blockchain business models are being developed. You do have to give them credit for the app they developed. The technical part is done the business part is a whole other area and skillset. I hope they do it, I would like it to be successful and others because it brings in an expansion of the use of Steem

I've been a vocal critic of beneficiary rewards in their current form for some time now, but not for any of the reasons you mentioned. You raise some good points, though. I think what will happen eventually is that apps will find a market balance against the convenience they provide. Honestly, I think the days of 25% beneficiary rewards are numbered. Something like 5% is much more sustainable, but even that may be too high in the long run.

One thing you didn't mention is how the rewards are distributed. I don't like beneficiary rewards in their current form because they go straight to SP. Unfortunately this causes less SBD to be printed, which in turn causes lower downward pressure on SBD, which contributes to the broken peg.

I am working on an app of my own. It's an internal struggle whether I want to use beneficiary rewards or some other mechanism. I know that I want it to be free, and I know that I don't want to force anyone to contribute. I believe that since it is something I'm doing in my free time and not my job, I do not strictly need compensation. Plus, it will be open source and free software, so hopefully I will have some support from Utopian as well.

So, if I do have beneficiary rewards, there will be a clearly advertised option to disable them. The question remains if I even want to be responsible for that damage to the peg. When SBD was higher, the answer was an absolute "no." These days, it's approaching a "maybe," but it's still a "no."

The good news is that @timcliff has recently submitted a pull request to fix this issue by paying out beneficiaries according to the author's selected payout mechanism. It seems, though, that it has been tagged for HF21. I don't know how far off that is, but seeing as we've been waiting for HF20 for a really long time, it saddens me to see it being delayed.

One thing you didn't mention is how the rewards are distributed.

I didn't mention this because I didn't know about it :D

I don't know much about the technicals of them at all, they are a bit of a grey area for me but I am looking at it from a user behaviour perspective and sustainability. I think 5 is too high in the long run too but 25 is a little insane now.

I think devs should be able to earn on their work but it has to still be sustainable without a delegation.

One of the other ways for app developers to gain monetary support is posts made for that express purpose. In my reply to @steemchiller's recent weekly support post announcement, I mentioned that if we can support links to off-chain videos, photographs, art, music, and livestreams with our votes... I see no reason we can't support ongoing development of apps and tools the same way.

I had already voted on that one :)

"If delegation needs to keep increasing to keep the app growing that means that the business model is flawed"

Of course, it doesn't actually need to have a business model, if the mere existence of the app is the end, rather than the means.

For example, the UK Government subsidises the National Theatre, in London. That Theatre puts on risky shows that commercial producers are frightened of, and won't finance. But once in a while, the Theatre produces huge hits, like "War Horse," "The Man with Two Guvnors," "The Curious Incident of the Dog in the Night Time," which then transfer to the commercial West End and Broadway, and send back immense revenues to the National Theatre. End result: the subsidised theatre ends up paying for itself.

By the same token, if DTube, DLive, etc, etc stimulate new users in to the Steem ecosystem, such that Steem itself grows more than the value of the delegations (ie Steem is purchased by new users in order to participate in DTube and DLive), then effectively the cost of delegation has been returned with interest to the Steem delegators, by the flourishing of the Steem price.

"Many are likely to forgo the beneficiary fee altogether and sell advertising instead."

Is this how DLive make money? Do DLive make any revenue at all, or are they completely subsidised? And how does DTube continue to exist, given that DLive is so aggressively offering much more favorable terms to the user?

I actually find this post of yours particularly fascinating, and hope others can shed light on how all this works.

They could also be used as a proof of concept app and then get to a point where they are shut down as new apps enter into the ecosystem to compete.

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