Steemit Funding Strategy

This simplified scenario describing how to monetize creative content and incentivize community growth is a flexible model. The basic structure is what’s important. This is one way a collaborative group, whether formal corporation or loose association of hobbyists, can leverage the Steemit platform and monetize their digital interactions and creative content.

Currently the core Steemit platform would need to be used to achieve something like the scenario played out below. With the release of Steemit’s social Token Protocol there will be many additional levels of intricacy and opportunity available to business and community participants. See SMT’s and the Evolution of Steemit for additional information on this.

Steemit is not a miracle money maker, the overall quality of the collective group of individual participants will still be the determining factor in how successful your venture is. The more working capital (Steem Power) your group can accumulate the better your chances of being successful. That being said, the barrier to entry is merely an internet connection and some basic knowledge.

There are four categories of participants in this model; Main Account Holder(s), Admin / Editors / Investors, Content Creators, and Audience.

Main Account Holder:

This would be the official business entity. A newspaper, magazine, official group, etc.

The main account holder is responsible for designing the parameters and flow of capital through their community. They determine who receives the platform rewards and in what proportion.

Administrators, Editors, & Investors:

This would be the newspaper support staff, quality control, and capital investors expecting a return on their investment.

Active workers would be expecting regular returns for their effort and work. Editors and other staff could receive ‘X’% of channel or individual post income. Capital investors could receive weekly, monthly, or yearly returns based on their investment and total channel earnings.

Both parties could provide working capital to the main account (Investments) via Steem Power delegation. This allows them to retain ownership of their assets while giving the main account temporary control of the working capital (SP). To the best of my knowledge, since the investors are maintaining control of their capital no legal restrictions would be present in this funding method.

Content Creators:

This would be the writers, meme makers, video/audio creators, etc. which create the flow of value going through the channel.

Approximately 50% of post payouts are generally in the form of liquid tokens, either Steem Dollars or Steem. Content creators could receive the majority of liquid earnings from their work while the non-liquid income (SP) would stay with the channel (Owners & Investors).

Audience Participants:

The largest piece of this digital puzzle, the audience is the key to success. Up-Votes from the main account (powered by initial owner funding and Investor SP Delegations) would provide a constant base layer of income to the work. The audience support (up-votes and commentary) would be required to turn the venture into a profitable working group.

To create a loyal and large audience, proper incentives should be used. This can be done by having the main account regularly provide meaningful up-votes (currency distribution) to the quality commentary.

The up-votes to the audience incentivizes routine participation while the options to Delegate SP give the audience a means of supporting and investing in the channel and community without expending any funds. This is a powerful capability of Steemit which hasn’t been used to the best of my knowledge.

MONETARY DISTRIBUTION OF LIQUID & NON-LIQUID TOKENS:

Steemit allows authors earn monetary rewards for their work in two forms. A 50/50 split between post rewards being distributed in Steem and/or Steem Dollars (liquid tokens) vs. Steem Power (not liquid) or 100% distribution in Steem Power.

This means all content produced by the business entity will have at least 50% of the rewards stuck in Steem Power and held in the Main Account.

For those with monetary interest in the channel, this potentially poses a problem. Investors are rightfully expecting some sort of return for their allocation of capital into the business or channel, but this value is initially locked up as Steem Power. Several ways to approach this dilemma are;

  • Steem Power can be powered down (converted to liquid Steem) over the course of a 13 week period Power Down Process
  • Steem Power could be Re-Invested on a continuous basis, increasing investors stake
  • Business Account could purchase SP from Investors in return for alternative Cryptocurrency

A way of accounting for each individuals SP investment into the channel and allocating a pre-determined ROI method would need to be provided for by the channel owners. To give a simplified example, Channel A is created with five individual investors collectively delegating 1,000 SP to the channel.

Owner / Investor #1 – 500 SP (50% stake)

Investor #2 – 150 SP (15% stake)

Investor #3 – 100 SP (10% stake)

Investor #4 – 200 SP (20% stake)

Investor #5 – 50 SP (5% stake)

Prior to initiating the channel, the Owner and his four investors agree to distribute earnings on a yearly basis. Over the course of a year, the channel earns 2,000 SP, 1,000 Steem, & 1,000 SBD.

The majority of the liquid tokens would be distributed to authors & editors on a weekly basis (Each post pays out after a 7 Day period of accumulating rewards). The 2,000 SP would be powered down at the end of the year. Over the 13 week process, 1,000 Steem (50%) would go to investor #1, 300 Steem (15%) to #2, 200 Steem (10%) to #3, 400 Steem (20%) to #4, and 100 Steem (5%) to #5.

As long as careful accounting for delegated SP and a set process for distributing earnings was maintained this same process could be used to allow for unlimited investment into the channel by those with available capital, employees or channel authors, and audience members.

A critical part of success within the Steemit Eco-System is developing a regular audience. This could be done by allocating ‘X’% of the channels voting power to the commentary section. Either manual or automated votes to channel subscribers adding valuable discussion to the content could be used to deliver monetary rewards to the audience without needing to expend any advertising dollars.

The flexibility of the Steemit platform allows for many different details and scenarios to be used here. Curation trails and automated voting software would be the two most economical and controlled ways of achieving this. More on these functions can be found here, Steemit & The Independent Media

For any Independent or crowd funded media sources out there, I’m happy to help elaborate or walk you through the process and functions of Steemit if you find it too foreign. The world of cryptocurrency and peer to peer eco-systems like this are a new thing and it takes some experience to learn how to best use them.

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