Steemit.com is running at a loss! Start generating revenue or get out, you are strangling other applications from succeeding.
The best thing so far out of all the things regarding the recent news at Steemit inc. is that I see the whole blockchain in a new light and I'm learning about things I previously never thought about like costs.
I am going to keep this article about my finding as simple as I can.
There is too much 'noise' out there and I like to inform as much people as I can about what's going on.
Today I want to talk about Steemit.com and why it should start generating revenue.
Why it costs money?
Now to understand why Steemit.com needs to generate revenue you first need to understand why it costs so much money to run.
According to @ned (CEO of steemit inc.) almost $2 million a year. Making it an incredible expensive website for the amount of users that we have.
The reason for this is that Steemit.com is not an average website, it's an interface that allows you as a user to communicate with the Steem blockchain.
If this interface wasn't there than it would be very difficult for most users to communicate with the blockchain because to do so you would need to use something like this:
I doubt we would have gotten all our users if things looked like this.
Using Steemit.com as an interface attracted many users.
Now, to communicate with the blockchain every action that we do needs to be stored on the Steem blockchain.
A blockchain is a big ledger after all that keeps track of transactions that have taken place in the past.
The Steem blockchain is therefor ever growing and stored on these things called Full Nodes.
These full nodes are now part of the issue. They are very expensive and getting more expensive with time progressing.
Steemit inc. is paying for these full nodes by selling their own STEEM on the market.
Steemit inc. has a lot of pre-mined STEEM. But it's not an infinite amount. It will run out at some point and even faster if price goes down.
If they have to take their full nodes down because of this it will no longer be possible for us to use these nodes to communicate with the blockchain.
What you need to understand is that it's not just Steemit.com that uses these full nodes. Because they are public other applications use them as well (but not all of them. Esteem for instance doesn't, they have their own infrastructure.)
This adds even more costs to the nodes (more traffic) Steemit inc. provides for all of us for free.
How to pay for full nodes: # Option 1
I hope you understand now that Steemit.com is not the problem. The problem is the full nodes.
These full nodes are provided for free but they need to be paid for.
Now Steemit.com is the most popular way to communicate with the blockchain.
Most users use Steemit.com to consume and create content.
Steemit.com doesn't have a revenue model and as the most popular frontend that is simple silly, especially in these times of hardship.
Therefor:
Advertisement on Steemit.com could be a way for Steem inc. to generate revenue to keep the full nodes running.
We don't know how long this bear market will last and if the Steem price will ever recover but if money is not made in another way then these nodes can't be paid for.
Besides generating revenue. Advertisement has several other benefits.
If revenue is generated through advertisement than selling STEEM on the market is less needed, alleviating the selling pressure on the price.
It can also show investors how the Steem blockchain can generate revenue making investing in STEEM more interesting.
And, it also will give other frontends the option to go this route.
The big problem with Steemit.com is that no other Front-end can compete with it because they don't charge a beneficiary reward on posts or show adds.
Steemit.com is therefor running at a loss! It's literally strangling other applications from succeeding for no good reason!
Why?
Using another frontend by users is extremely unattractive. Why pay for those if you can just use Steemit.com that has no adds and charges no beneficiary reward.
IMHO: Generate revenue or get out of the way.
How to pay for full nodes: # Option 2
There is another option and that's putting the responsibility of running full nodes with App developers.
Of course App developers will need to find their own revenue models to afford these full nodes.
Some already do. Like Esteem. Even if Steemit inc. would take their full nodes offline, Esteem will still work fine and we will still be able to communicate with each-other through Esteem.
Steemit inc. can then take their nodes and steemit.com offline and save a lot of money.
It then would become Steemit inc's sole job to develop the blockchain and one job would be to reduce the costs of hosting these full nodes for every app developer (something they are working on right now).
An extra benefit for option #2 is that it decentralises the blockchain as well as forces app developers to find revenue models.
How to pay for full nodes: # Option 3
The third option is rather simple. Charge app developers for using Steemit inc's nodes.
Not every app developer can afford a full node from the start. But while they build their revenue model they can use Steemit inc's nodes and you can charge them for it.
End note
I would love to see a combination of these 3 options taking place.
Revenue on Steemit.com + charging app developers for using your nodes. And also putting responsibility for revenue and taking care of their own infrastructure with app developers.
I hope through this article you have learned why this blockchain is expensive and why revenue is needed.
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Get it Here:
I have the answer if anyone wants to listen to me ... it is very simple. I have the answer @ned @exyle it will take me 2 minutes to set up..... I can send you the script now if you like.
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Do tell. Are you joking or serious?
No ... I am completely 100% serious. But nobody at Steemit seems to really care. I run a few small blogger blogs+ Youtube Channel and generate $50 per month by adding the Adsense script to the side of my blogs... with the # views Steemit blogs would earn a lot more. It’s easy to set up @ned
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If we all subscribe to @ned on YouTube he will hit 1,000 subs and can add YouTube Ads ... sometimes I make $500 USD a month on YouTube with only 3,000 subs.
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If only @ned would read my ideas I could really help him.
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Monetize Everything .... start with Adsense and Youtube....
https://steemit.com/steemit/@offgridlife/how-to-help-steemitcom-make-hldrqxyy
This article was truly insightful! This information should not be taken for granted.
Steem Inc. continuous funding of Steemit.com is probably what helped make this community great. But I agree it's time for them to generate revenue from it.
Yes I agree. They have grown a tremendous community. But it's time to look at it in a new light now.
What happens if steemit inc makes such a loss that they have to shut down Steemit.com?
That would pretty much be the end if understand you correctly, right? Because the other interfaces are not really ready to take over or can’t afford the full nodes needed.
Hm...
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No, Steemit inc doesn't own the blockchain. They do develop for it and own the website Steemit.com.
Everyone can setup a full node. And some have (previous post). So the blockchain will always be there as long as these nodes are alive.
But Steem inc. does own a lot of the infrastructure that apps use currently to access the blockchain.
I want to see this change. More decentralised. But it costs money. Being able to Generate revenue is therefor a must.
Yes.. I think part of the community would be really against accepting advertisement, but we have to see Steemit as a business.
Ideally the Blockchain and community could sustain itself by constantly adding value and keeping prices at a certain level. But accepting ads could be a great way to transition to that stage. It could be an interim solution.
Unless of course Steemians would be incentivized for allowing ads in their feed. Like the Brave browser does. A fair revenue share - then everyone would be for it, I guess :)
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Those people have no business interfering when adults talk real business. Unless they're ready to pay up to cover the infrastructure costs themselves, they should shut up.
You can add value all you want but getting money out of it is the crux of the matter here. Advertisements or other type of paid promotion, subscriptions and tipping are the only viable long-term solution. Relying on a game of greater fools can work for while but it will end in a pile of rubble eventually.
That, and nothing less or nothing more, is what makes a blockchain-based solution like Steem unique. Distribution is guaranteed to be safe from the arbitrary dictates of a central authority. The way to monetize content is exactly the same as with traditional social networks. The only differences are in distribution and governance.
I've got to be honest I'm a little confused by this. Are there not any kinds of rewards associated with running a full node on the steem blockchain? I thought that full nodes got some percentage of all of the newly minted STEEM.
Unfortunately not. Witnesses get rewards from validating blocks but there is no automatic reward linked to running a full node. You have to rely on the hope that, because you run a full node, the community will "acknowledge" the effort and you'll get more votes for your regular witness
As much as I don't want to see Steemit bogged down with all kinds of adds like other places, I don't want to see it go down the tubes either. Another idea in the line of advertising could be promoted posts. As much as you like or dislike vote buying. Paying money to make your post a promoted post could be a way for them to generate revenue. Instead of paying money to a third party service, you would just pay it directly to Steemit.
There needs to be a revenue stream being developed from outside of Steem. Advertisements work for most websites. I know it's not cool and add free is better. But we are all invested in this blockchain so we all indirectly benefit too from incoming revenue outside of the chain. Thanks for your suggestions.
I’m curious what the cost is to run a single node for an app. 🤔
I'm hoping @good-karma might share some of these numbers. I'll ask him.
Our fullnode server (only) cost around 1k eur per month, note that we don't have the same load as Steemit (website). If load increases, we have plans on load-balancing fullnode servers.
Thanks for letting us know, man.
@good-karma, does every Node store the same info or not?
Thanks for the numbers! I was interested in knowing how much it costs you!
Would be interesting to know as well. Also how they are paying for it? Is it from a steemit delegation or beneficiary rewards?
Reminder Steempeak.com doesn't have any beneficiary rewards!
Awesome article btw!
Do you know if they have a revenue model? Do they have their own full node?
I don't know, you'd have to ask them :P
Thanks, and I just did.
Did they give an answer yet?
Noice, keep up the good work, enjoying the perspectives lately!
I think Steemit Inc. needs someone that understands the financial side, as they obviously haven't had that so far. If I was Ned, I would of put adverts on already. Why lose money when there's no need? The fact that steemit has always had that beta in the logo since I've been here shows me that they want to make something better. Monetize steemit and get back to working on SMT's and a new social media platform that doesn't have the flaws that steemit does. They can also charge for using their nodes, why should other projects use them for free? That's not sustainable and there's no point building things that aren't sustainable.
Thank you for this very informative post @exyle. Of all that you said, that stands out to me:
I will assume, as one of our Witnesses, that this is 100% accurate. If so, frankly it is alarming to me, as it doesn't indicate this enterprise was originally built on a foundation which would last. My only hope is, there is more to the story.
I would like to clearly understand, from the outset, what "the plan" was to transition out of this state. If for no other reason, as you say, than *"... it's not an infinite amount." Exactly. So, again, doomed to fail ultimately, unless there is more to "the plan."
[Note: On top of that, as you indicate, the need to continuously sell that volume of STEEM seems counterproductive to the overall goal of having the price go up, not down ...]
Any more input on this? I accept the point of your post is that Steemit needs to generate income. But, with all due respect, it is coming from someone outside of Steemit, Inc. and leads to the impression they have no thought or plan of their own. From the beginning ...
I'd really appreciate your further perspective on this. Thanks agaiin @exyle! 👍
As with most other other models, the deployment of a piece of technology will often come with a lost in the initial stages. You must give away most of the tech for free (if you can) to support the idea. This is typically the case for leading edge ideas.
Obviously, the struggle to cover basic costs appears to have driven the price of steem down, but as with anything, the privatization of steem nodes brings business opportunities to some, which means we're going to test how well this "business" idea of steem is going to survive. This will be capitalism at its best.
It's deducted from the announcement post of the layoff.
The bottom of STEEM is way lower than they expected and therefor they had to let ppl go. They couldn't afford to keep the on.
The core dev team is still there.
Right now the focus is to reduce the costs of the full nodes by reducing RAM usage. It's priority because it's costing them 2 million dollars a year. Not much in the good times but a problem in a long bear market and if this comes from STEEM than it puts a lot of pressure on the market.
Outside revenue models need to be found, now more than ever.
I don't think this situation was fully anticipated but we are in it now so we have to get a move on or everyone loses.
Okay, thank you @exyle.
Ultimately I favor a fully decentralized architecture spread over the globe, with no single point of failure capable of "bringing down the whole house."
Right now, at this point, it is of real concern to me we don't appear to have reached anything close to that.
I appreciate your efforts, hopefully allied closely with others, to come up with a viable solution.
All the best to you @exyle!
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@exyle, just thank you, hope @ned takes in consideration what you're saying
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