What if we let the registrars set the LTM price?

[mint chocolate chip]

My point is that a user who paid the full price will find out the day after he could have gotten the same thing for free. That is the user experience you are advocating.

[tbone]

@jakub:  You've really stuck with this and now I think you're seriously onto something here.  The optional/variable LTM makes a ton of sense and should appeal to all parties, especially when coupled with a sensible compromise on the transfer fee schedule (including %-based fees). 

The only thing I don't get is the idea of letting the network "keep the transfer fees at a higher level (e.g. 10 BTS)".   Are you talking about a flat fee?  What about the %-based fee proposal?  Also, as you know, to me setting fees in BTS is like talking gibberish.  It's just not helpful.  So let me translate 10 BTS, which is CURRENTLY about $.04. 

So the question is what are you targeting at $.04?  It sounds like a flat fee since $.04 is too high for a lower limit if we want to facilitate micro-transactions...and too low for an upper limit since it would hurt revenues.  So if this a flat fee, can I assume you intend to start discussing %-based fee parameters that would yield somewhere around the same amount of income i.e. an average of $.04 per transaction?  If so, I think overall this would be a very good solution/compromise and I can't think of any good reason why anyone would be dead set against it. 

[jakub]

Why buy a cow when you can get milk for free?

Nope, this is *not* an adequate analogy.
If I'm a registrar, why would I give you LTM for free if I can earn an 80% margin by not giving it for free?
After a while, the market competition will settle the regional LTM price, which is appropriate for a given regional or demographic market.

Your idea undermines the entire referral system.

Nope, it makes the referral system stronger, as it introduces real competition among registrars and referrers that cooperate with different registrars.

The current situation is not so much different.
These are the only differences:
- registrars cannot sell LTM for more than 20k BTS, even if they had customers willing to pay more.
- registrars are forced to use the referral program, as there is no way that they can avoid the minimum 4k BTS payment to the network.

As a result, the price of the LTM has a lower bound of 4k BTS, which seems to be still too much for the Chinese users.
This is what we end up with: the Chinese businesses perceive the referral program as an obstacle while it might make perfect sense elsewhere (or even in China, *if* the LTM price could be adjusted to suit their markets) .
IMO, the problem is not with the referral program itself, but with this fixed minimum price that needs to be paid to the network, regardless of regional circumstances.

One might say that this proposal means that the network will lose a huge part of LTM income on the Chinese market.
Well, this is not true. If the minimum price of 4k BTS is too high for them, they will not buy it anyway, so no substantial income is lost.
On the other hand, if there are some rich users in China who are willing to pay a higher price for LTM, I'm sure there will be some BitShares-based Chinese businesses that will reach them - the 80% sales margin incentive should be big enough to make the effort.

As we have it now, the Chinese businesses try to find a way around the referral program and this is what they currently do: they lead this campaign to lower transfer fees to $0.018.
I'm quite sure that if they could sell LTM for e.g. 100 BTS instead of 4k BTS, they would *not* want to lower the transfer fee to $0.018 so desperately.

So this is my offer to the Chinese business: the network will let you sell LTM at any price you want (including zero) but in return you will let the network keep the transfer fees at a higher level (e.g. 10 BTS) which is more globally suitable.

The net income for the network should be positive: even *if* the network loses some income on the LTM sales on the Chinese market,  it will certainly have more income from transfer fees globally.

[mint chocolate chip]

Why buy a cow when you can get milk for free?

Your idea undermines the entire referral system.

Maybe you can have it so the referrer can reduce his take and thus make LTM membership cheaper, but the 20% to the network has to be out of the full amount charged for LTM that is set by the network.

[Pheonike]

Sounds good. The more modular we can make the fee structure, the better it will be for everyone. Then we can have true competition between business instead one accusing the other of handicapping it's strategy.

[jakub]

Currently we have this:
The price of LTM is set globally by the committee and the network takes a 20% cut whenever a user buys LTM.

And we have this problem:
Some businesses say that fees (especially the transfer fee) are way too high for their customers.
The low fees offered to LTM users would be fine for them but upgrading to LTM is currently too expensive to be considered an option for their customers.

What if we did this:
We could allow the LTM price to be set not globally by the committee but instead individually by the registrars (e.g. OpenLedger).
The network's cut would be 20% of any amount the registrar sets as the price of LTM.

If the registrar believes she can sell LTM for 50k BTS, 10k BTS goes to the network.
If the registrar charges 20k BTS for LTM, 4k BTS goes to the network.
If the registrar decides to give LTM for free, nothing goes to the network - and we have the situation desired by China: low fees and no referral incentive.

And this way the referral program becomes effectively optional, as all depends on the sales strategy of the registrar.
Some of them might want to position themselves as high-end platforms and try to acquire clients who will pay a higher price.
Some of them will find medium pricing most suitable.
And some of them (mostly in China) will be happy to skip the referral program entirely in exchange for low fees for their customers.

EDIT: this proposal has been revised and no longer LTM is involved in it.
I now think that LTM should stay as it is, as the same goal can be achieved with AM (Annual Membership) and/or shorter membership schemes.
So whenever LTM is mentioned in OP or the discussion below, please replace it with AM.

AM (and/or any other shorter membership scheme) is better for our purpose than LTM due to these reasons:
- AM does not allow users to create subsequent accounts (this would be a loophole if LTM was used).
- AM only offers what we actually need for our purpose: a price discount. This way we do not end up giving away access to advanced features when it's not needed.
- AM costs significantly less, so it is easier to sell it at a relatively good price.
- *if* there are any cases of lost revenue for the network, they will be on a much smaller scale.

I do maintain my position that a revenue can be considered as lost *only* when a user ends up paying less than s/he was willing to pay.
I don't think there will be any significant number of such cases, at least until competition on the hosted wallet market grows substantially, as only strong competition can push the AM to a level that is lower than the level users are willing to pay.
So until that happens, we are sure to preserve the network's income or increase it.