eevBLAB #59 - Patreon Is An Unsustainable Business

[Marco]

Some alternatives like Subscribestar are already offering the option of using cryptocurrency, so the biggest problem (going from cryptocurrency to whatever the creator uses) arguably has a solution.

No ... the biggest problem is making it user friendly, secure and amiable to recurring payments.

The last one is perhaps the hardest nut to crack, subcribestar doesn't even try AFAICS ... it's just for one time payments. First off unless your cryptocurrency account is linked to your bank account, it can't have the same reliability as a recurring credit card payment for the content provider. So either you allow automatic topping off from the credit card (and invite a whole lot of overhead from the credit card companies, charge back potential and all) or to mitigate it you could require minimum balances before allowing new payments/subscriptions. Even the technical implementation of the recurring payment is not trivial, you will pretty much have to implement it on the Ethereum blockchain and instead of a normal address use a smart contract for the customer deposit.

For user friendliness you probably want to partner with Coinbase so you can handle everything with a single signup, people don't want to go through multiple sites to get everything to work (yes they do that with PayPal and Patreon, but Coinbase isn't PayPal).

One alternative for the security of custom hardware might be to implement the smart contract so transactions can only be done to other smart contracts of your own design and keeping the money in escrow for a while, with the ability to reverse the transaction within that time. You massively increase the burden on your company by allowing charge backs though. Those are pretty much the choices though, if you place all the burden on the customer to caveat emptor then all transactions must be absolutely securely signed off by him ... if you want to take short cuts and allow signing transactions on mobile phones, or worse computers, you pretty much have to have some kind of charge back mechanism for when some zero day lands and empty everyone's accounts.

It's a huge amount of work to get something which theoretically would not instantly turn off a normal user, or turn him off after some inevitable security lapse if you don't design it securely. That's before you even start marketing and see if they are willing to use it.

PS. I'm not sure subscribestar will be able to continue for much longer ... without PayPal and Stripe they have to either deal directly with credit card companies now (huge overhead) or with more traditional payment providers (big fees, and for anything porn related huge fees).

[LapTop006]

If you need 10 tech support people for in-house support of the other 55 employees, or even 290, you're hiring the wrong tech support people.

I'd say it's probably less than half of them working on internal IT needs (helpdesk, hardware tech, as well as network admins etc.), the rest keeping the production elements (ie patreon.com) live and working well. Not just "tech support".

Part of the reason for so many people is you burn them out if they're permanently oncall.

[NiHaoMike]

No ... the biggest problem is making it user friendly, secure and amiable to recurring payments.

The last one is perhaps the hardest nut to crack, subcribestar doesn't even try AFAICS ... it's just for one time payments.

Mining pools already give recurring payments as long as the mining software is running.

I have a script to turn a Raspberry Pi and an old Android phone or tablet into a Swagbucks mining machine that uses very little electricity and needs little manual intervention. In my desire to help others who want to support independent content, I have shared the script, but it still requires manual intervention for the mined coins to support the creators. It would be a lot better if that part could be automatic.

[Marco]

Mining is unsustainable, undesirable and fast becoming unprofitable ... even with ASICs. Burning 10x the electricity in cost of the payment you make is hardly an option.

[NiHaoMike]

Mining is unsustainable, undesirable and fast becoming unprofitable ... even with ASICs. Burning 10x the electricity in cost of the payment you make is hardly an option.

Energy efficient (and highly ASIC resistant) altcoins are the answer, it's just that so far, nobody has figured out how to make one that's overall good as a currency.

[Marco]

It's not really an answer, because mining in and of itself doesn't confer value to a cryptocurrency ... in fact any real cryptocurrency is worthless for this application, normal people don't want to play speculator just to make transactions. Cryptocurrency is only useful because regulators treat it with kid gloves for the moment, so as I said you should use Gemini.

[EEVblog]

They are "culture" driven
https://patreonhq.com/how-to-build-culture-that-lasts-dc25b086cefd

[NiHaoMike]

Mining does offer a solution for those who want to run some sort of machine at home to support their favorite creators. Maybe an alternative would be some Bittorrent like system that rewards users with points for "seeding" content, which can then be used to support creators. Funding is provided by users who pay, which gives them priority access to downloads, so they get more benefit than with existing systems while offering users who don't want to pay some way to help. The device used to seed with can be a Raspberry Pi or similar, so very little electricity use.

In effect, I just described something that works like a cryptocurrency "mined" using bandwidth, even if the underlying implementation is not based on cryptocurrency.

[EEVblog]

Mining does offer a solution for those who want to run some sort of machine at home to support their favorite creators. Maybe an alternative would be some Bittorrent like system that rewards users with points for "seeding" content, which can then be used to support creators.

Isn't that how Steem is supposed to work?

BTW, I'm earning Like coins for every time someone thumbs up a video, and they don't even know it, I'm going to be filthy rich if they are ever become worth something (almost certainly won't, but it's kinda fun having millions of an absolutely worthless coin)

[james_s]

not matter how you twist it cryptocurrency is a stupid waste,  it is like flushing useful resources down the drain to get internet points

Why bother actually looking into it, when you could just repeat the blanket statement that the banker told the news reporter, right?

look into what? wasting energy to make something that has no useful value?

That's been my issue with it as well. Most valuable things you mine have inherent industrial value. Gold, silver, platinum, copper, diamonds, all of these things are highly useful materials. Cryptocurrency is like paper money in the sense that it's only valuable because we assign value to it, except printing paper money is very cheap in comparison. Mining cryptocurrency is like plugging in a bunch of space heaters and setting them outdoors, it's almost criminally wasteful. It's main value is as a speculative investment, people mine or otherwise acquire it in hopes that the value will go up and they can sell it off at the right time to leave someone else holding the bag.

Part of me hopes some revolutionary new computing or mathematics appear and crack the whole thing wide open.

[NiHaoMike]

That's been my issue with it as well. Most valuable things you mine have inherent industrial value. Gold, silver, platinum, copper, diamonds, all of these things are highly useful materials. Cryptocurrency is like paper money in the sense that it's only valuable because we assign value to it, except printing paper money is very cheap in comparison. Mining cryptocurrency is like plugging in a bunch of space heaters and setting them outdoors, it's almost criminally wasteful. It's main value is as a speculative investment, people mine or otherwise acquire it in hopes that the value will go up and they can sell it off at the right time to leave someone else holding the bag.

Part of me hopes some revolutionary new computing or mathematics appear and crack the whole thing wide open.

Where would you draw the line for "wasteful" vs "not wasteful"? Using my Swagbucks mining machine that uses 8W as an example, what's the minimum amount it must make per month to be considered not wasteful? $150? $15? $1? What about other energy efficient coins like Curecoin/Foldingcoin where the mining does useful work outside the cryptocurrency system?

In the end, the goal I'm going for is for ways for sharing users to "sell" some sort of resource they have (ideally a "use it or lose it" resource with very low incremental cost like spare bandwidth), but the money they get in return goes to the creators they want to support. (The sharing users can also accept donations, but keep that separate from donations to content creators so that the sharing users won't be parasites.) From the perspective of a paying user, they would support their favorite creators plus what the sharing users are doing to help the community, thus increasing the value of what they're getting for their contribution.

[james_s]

What is the monetary value per watt hour?

I don't see how something that uses 8W is worthwhile, I mean what's stopping someone from building a rack of 100 of those, or a bunch of i7 CPUs running thousands of virtual machines?

The only reason crypto has any value is that it takes a lot of energy to make it. It can be thought of as condensed electricity, except that you can't turn it back into useful electricity. If you can make it with a low cost low power machine then it's not going to be worth much because anybody can make it. If it's cheap and easy to make then it's not worth anything, the value of anything is determined either by its utility or its scarcity.

[NiHaoMike]

I don't see how something that uses 8W is worthwhile, I mean what's stopping someone from building a rack of 100 of those, or a bunch of i7 CPUs running thousands of virtual machines?

Only one machine in the rack will actually work if all you have is one IP address. If you're an IT manager in an office with hundreds of machines that each have their own public IP, try deploying hundreds of Swagbucks mining instances and the bandwidth usage will add up enough to greatly affect network performance. If you try to use a VPS hosting site with lots of bandwidth, the pool servers refuse to accept connections from known VPN/VPS IPs.

[Berni]

When you are running IT in a big organization you can run lots of these without issue.

Big places have a dedicated fiber line directly to the towns major internet exchange. These fiber lines are in the order of 100Gbit or more. This means you can fit about 10 000 average residential connections into that pipe. And if you own such a line you also own a IP pool of at least a few 1000s of IPs. So pretty easy to run a few thousand instances on that and still look like its a few thousand households doing it.

One of the places that had such a connection is the university and the high school i went to. The link to the internet is so fast that they didn't even bother to put in any sort of traffic limiting, despite people using torrent all over the place. As long as you found a 1Gbit Ethernet port on a wall you had 1Gbit out to the internet and your own IP and could download torrents pretty much as fast as your hard drive could write data. Im pretty sure you could even obtain multiple WAN IPs if you had a switch plugged into that port.

The internet that big organizations get is FAR from the internet mere mortals get at home.

[MT]

Fasten your seat belts folks, the change to gold standard has already begun.

[NiHaoMike]

When you are running IT in a big organization you can run lots of these without issue.

Big places have a dedicated fiber line directly to the towns major internet exchange. These fiber lines are in the order of 100Gbit or more. This means you can fit about 10 000 average residential connections into that pipe. And if you own such a line you also own a IP pool of at least a few 1000s of IPs. So pretty easy to run a few thousand instances on that and still look like its a few thousand households doing it.

One of the places that had such a connection is the university and the high school i went to. The link to the internet is so fast that they didn't even bother to put in any sort of traffic limiting, despite people using torrent all over the place. As long as you found a 1Gbit Ethernet port on a wall you had 1Gbit out to the internet and your own IP and could download torrents pretty much as fast as your hard drive could write data. Im pretty sure you could even obtain multiple WAN IPs if you had a switch plugged into that port.

The internet that big organizations get is FAR from the internet mere mortals get at home.

A lot of those super fast connections are lumped into the "VPN/VPS" category and rejected. Finally, the IP that mined the coin is visible to the exchange which gives a last line of defense against Swagbucks becoming dominated by mining businesses. (I wouldn't be surprised if the exchanges and/or pool servers actually use a whitelist of known residential IP ranges.) That's also the biggest downside - the exchange pretty much has complete control over how much the coins are worth.

Keep in mind that Swagbucks has been out there for years and if it could be easily taken over by mining businesses, it would already have been.

[Berni]

Good luck keeping an eye on all IP ranges all over the globe, especially when you get into IPv6 ranges.

Its also possible that the big guys simply haven't bothered with it cause it doesn't look profitable enough. There are so many different kinds of crypto coins out there these days that its hard to get noticed from the crowd.

The original idea behind cryptocurencies back when bitcoin started out to facilitate payment for goods was good. But now that people started seeing it mostly as a way to make money things got out of hand. Because of that the value of these currencies started going all over the place and that made them terrible for payment of goods as anyone accepting them as payment would need to get rid of them as fast as possible while they still retain the same value unless they want to play the crypto stock market game.

Maybe now that things have calmed down they can once again have a shot at the original goal for facilitating payment of goods and services, but i think the next major instability in crypto prices is just a question of time.

[NiHaoMike]

Good luck keeping an eye on all IP ranges all over the globe, especially when you get into IPv6 ranges.

Swagbucks is only available in some locations (North America being the biggest) partly for that reason.

[13hm13]

Great BLAB Dave -- thx!

About VC funders "strategy" ...

In fact, the unofficial 4-step plan to success in Silicon Valley,  is:

Grow fast
Lose money
Go Public
Cash Out

https://thenextweb.com/insider/2017/03/11/bro-culture-poisoning-silicon-valley/

Bottom line:
The VCs and CEOs (of startups) walk out with mucho $$.

The workers of the startup are the losers (unless a highly unlikely "unicorn" is produced).

[Simon]

In my  opinion, Youtube   content  creators (not all)  have become  solely   about  making  money,   verses  making  real good content

You could say the same for some peoples posts.......

[Simon]

Given the armchair head quarters it rather looks like this is jobs for the boys and and expectation that ones desired lifestyle justifies ones salary rather than the other way around.

Taking on investment unnecessarily is about the most stupid move, it means you are selling out before you have anything to sell. This feels like a modelled was followed because they felt it was the "big" thing to do.