What if we let the registrars set the LTM price?

[jakub]

@jakub: I think you're starting to over-complicate it now with AM vs. LTM.  What's this LTM loophole you're concerned about?

Why do you say it's more complicated now?
It's the same idea but I now propose to use AM instead of LTM.
Nothing else changes. Just replace LTM with AM.

The loophole is this: if a user buys LTM (for whatever price) she can then generate other accounts by making herself the registrar and setting the price for upgrading to 0.
This way she could end up with 100 (or more) LTM accounts and only 20% (of the price she paid for the first one) has gone to the network. The network gets nothing from the other 99 accounts.

With AM this situation is not possible as AM does not give you the possibility to create further accounts (as far as I know).

[tbone]

@jakub: I think you're starting to over-complicate it now with AM vs. LTM.  What's this LTM loophole you're concerned about?

[jakub]

After discussing it with @Xeldal , I now think his solution is the ultimate solution for BitShares in the long run.

Xeldal's proposal turns upside down the whole referral program:
- the current approach is this: we charge high fees by default and then offer discounts.
- his approach is this: we charge low fees by default and facilitate adding profit margins for businesses on top of that.

Xeldal's proposal looks very elegant and efficient.
However, it has one fundamental difficulty: IMO it will require a major code-base upgrade (possibly similar to the migration from BitShares 0.9.x to BitShares 2.0).
(I'm not an expert in this area, so this is just my speculation, that needs to be confirmed by someone more competent.)

Whereas my solution achieves a similar result for both businesses and users, but requires only subtle changes in the code-base, so it should be doable within a simple worker proposal.
The downside is this: it's not as elegant and generic as Xeldal's proposal.

Therefore I suggest using my solution as a quick patch to the referral program. In the long run, however, we should aim at Xeldal's proposal IMO.

One more thing: 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 memberships.

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.

[abit]

EDIT: as @abit and @EstefanTT have noticed, the same goal could be reached by using the Annual Membership (AM) instead of LTM.
So if this idea is too radical for you because it involves LTM, feel free to replace LTM with AM.
The main concept remains the same - let the registrars decide how much AM costs on their platform, in a similar way that they decide how much profit they share with referrers.

I think I don't want to change LTM nor AM as they are too sensitive, instead, I'd like to introduce monthly, weekly and even daily memberships. Maybe I'll set a bottom price for selling these memberships, and let registrar or whoever want to sell them decide how to sell and/or what price should they sell, to bring more competitions and not drive all the prices to zero.

I'm afraid if we go below AM it defeats the purpose of my proposal.
If I understand it correctly, your proposal means that bitcrab would have to renew the memberships of his customers on a monthly, weekly and even daily basis.
That's a lot to work to manage all this stuff for all your customers. I guess he would not want to be bothered with that.

Unless I'm missing something?

I'm not saying only bitcrab can do it. Let all LTMs or maybe AMs to be able to do it in an easier way. Give people some free money. Decentralize it. When a lot of people earn small money, the network will earn big money.

So you suggest expanding the concept to all possible memberships?
Why not do AM and anything shorter than AM, and leave LTM untouched.
We don't really need the advanced features LTM offers, so AM (plus anything shorter) will do the job.

You can check our transaction history to see how many people upgraded to LTM, and how many upgraded to AM. IMO AM is too long for an average Joe to consider, it's hard to sell.

[jakub]

EDIT: as @abit and @EstefanTT have noticed, the same goal could be reached by using the Annual Membership (AM) instead of LTM.
So if this idea is too radical for you because it involves LTM, feel free to replace LTM with AM.
The main concept remains the same - let the registrars decide how much AM costs on their platform, in a similar way that they decide how much profit they share with referrers.

I think I don't want to change LTM nor AM as they are too sensitive, instead, I'd like to introduce monthly, weekly and even daily memberships. Maybe I'll set a bottom price for selling these memberships, and let registrar or whoever want to sell them decide how to sell and/or what price should they sell, to bring more competitions and not drive all the prices to zero.

I'm afraid if we go below AM it defeats the purpose of my proposal.
If I understand it correctly, your proposal means that bitcrab would have to renew the memberships of his customers on a monthly, weekly and even daily basis.
That's a lot to work to manage all this stuff for all your customers. I guess he would not want to be bothered with that.

Unless I'm missing something?

I'm not saying only bitcrab can do it. Let all LTMs or maybe AMs to be able to do it in an easier way. Give people some free money. Decentralize it. When a lot of people earn small money, the network will earn big money.

So you suggest expanding the concept to all possible memberships?
Why not do AM and anything shorter than AM, and leave LTM untouched.
We don't really need the advanced features LTM offers, so AM (plus anything shorter) will do the job.

[abit]

EDIT: as @abit and @EstefanTT have noticed, the same goal could be reached by using the Annual Membership (AM) instead of LTM.
So if this idea is too radical for you because it involves LTM, feel free to replace LTM with AM.
The main concept remains the same - let the registrars decide how much AM costs on their platform, in a similar way that they decide how much profit they share with referrers.

I think I don't want to change LTM nor AM as they are too sensitive, instead, I'd like to introduce monthly, weekly and even daily memberships. Maybe I'll set a bottom price for selling these memberships, and let registrar or whoever want to sell them decide how to sell and/or what price should they sell, to bring more competitions and not drive all the prices to zero.

I'm afraid if we go below AM it defeats the purpose of my proposal.
If I understand it correctly, your proposal means that bitcrab would have to renew the memberships of his customers on a monthly, weekly and even daily basis.
That's a lot to work to manage all this stuff for all your customers. I guess he would not want to be bothered with that.

Unless I'm missing something?

I'm not saying only bitcrab can do it. Let all LTMs or maybe AMs to be able to do it in an easier way. Give people some free money. Decentralize it. When a lot of people earn small money, the network will earn big money.

[jakub]

EDIT: as @abit and @EstefanTT have noticed, the same goal could be reached by using the Annual Membership (AM) instead of LTM.
So if this idea is too radical for you because it involves LTM, feel free to replace LTM with AM.
The main concept remains the same - let the registrars decide how much AM costs on their platform, in a similar way that they decide how much profit they share with referrers.

I think I don't want to change LTM nor AM as they are too sensitive, instead, I'd like to introduce monthly, weekly and even daily memberships. Maybe I'll set a bottom price for selling these memberships, and let registrar or whoever want to sell them decide how to sell and/or what price should they sell, to bring more competitions and not drive all the prices to zero.

I'm afraid if we go below AM it defeats the purpose of my proposal.
If I understand it correctly, your proposal means that bitcrab would have to renew the memberships of his customers on a monthly, weekly and even daily basis.
That's a lot to work to manage all this stuff for all your customers. I guess he would not want to be bothered with that.

Unless I'm missing something?

[abit]

EDIT: as @abit and @EstefanTT have noticed, the same goal could be reached by using the Annual Membership (AM) instead of LTM.
So if this idea is too radical for you because it involves LTM, feel free to replace LTM with AM.
The main concept remains the same - let the registrars decide how much AM costs on their platform, in a similar way that they decide how much profit they share with referrers.

I think I don't want to change LTM nor AM as they are too sensitive, instead, I'd like to introduce monthly, weekly and even daily memberships. Maybe I'll set a bottom price for selling these memberships, and let registrar or whoever want to sell them decide how to sell and/or what price should they sell, to bring more competitions and not drive all the prices to zero.

[clayop]

Why he's not a businessman in this case? Do you think the CEO of Alipay is not a businessman too?

My point is this: if he's a businessman (as I'm sure he is), he'll sell LTM for zero only to those customers who would not have bought LTM in the first place.
So no network's income is actually lost. What is lost is *theoretical* income that would not have materialized anyway.

And your approach is based on the same assumption. LTM fee decrease -> more demand for LTM / Transfer fee decrease -> more demand for transfer

I don't understand why you associate more demand for LTM with transfer fee decrease.

I meant that you argues LTM fee decrease -> more demand, while you opposites transfer fee decrease -> more demand for transfer. It's ironical.

And I get your point - price differentiation. But it cannot be applied when the product is exactly same. If you can get LTM for free, why would you like to pay for it? There can be some reasons, such as informational barrier, but I believe people will move to zero cost registrar quickly.

[jakub]

We can leave LTM fee unchanged, let it be the key to advanced features.

In the meanwhile, we give annual members more discount on basic features(it's currently 0% due to a bug), and give registrar a choice of how much they charge for it.

//Update: maybe we can provide more choices: not only annual membership, but also monthly, weekly even daily membership (for example for trials). When the users found that membership is good, they'll buy when needed.

Hi, anyone noticed my comments above?
I think short-term membership is more attractive and better for competitions .
Better if users can buy membership from any LTM's, but the seller are always need to split some to registrar/original referrer.
If the price not be driven to zero, all parties will happy.

//Update: I think it's OK to leave LTM and annual membership fees unchanged. Play with shorter period of memberships.

@abit , I've given it some thought and I think I agree with you.
We could leave LTM untouched and reach our goal with AM as all we need is the 80% discount for transfer fees, not the advanced features associated with LTM.

And if it's doable, we could also introduce shorter period of membership as a marketing tool.

But the key thing for me would be to fully transfer the control over the AM price to registrars.
This way the transfer fee battle could be finally resolved without pushing the flat transfer fee extremely low.

[jakub]

Why he's not a businessman in this case? Do you think the CEO of Alipay is not a businessman too?

My point is this: if he's a businessman (as I'm sure he is), he'll sell LTM for zero only to those customers who would not have bought LTM in the first place.
So no network's income is actually lost. What is lost is *theoretical* income that would not have materialized anyway.

And your approach is based on the same assumption. LTM fee decrease -> more demand for LTM / Transfer fee decrease -> more demand for transfer

I don't understand why you associate more demand for LTM with transfer fee decrease.

[jakub]

They are given full control and therefore full ownership and therefore full liability.

Full ownership of what?
I don't think you've understood my proposal.

The registrars already decide how much of their profits they share with the referrers.
All I propose is to give them one more option: decide how much LTM costs.

They do not get any ownership of anything.

The current situation gives registrars no control over the network..

I don't give them any control over the network.
I just let them choose a pricing strategy that suits their customers.

They own price control. Control = ownership.

Their profit margin is set by how much they make on the services they are 'selling' at a margin.

'Their customers' not Bitshares users.

Right now I can sell you LTM for $25 or $50 or even $120.
Do I control the price?

[clayop]

If you say he'll sell LTM for zero to customers who could have bought it for more than the current minimum price of $20 - well, you are right, the network would have lost some revenue.
But that would also mean that bitcrab is not a businessman.

Why he's not a businessman in this case? Do you think the CEO of Alipay is not a businessman too?

And your approach is based on the same assumption. LTM fee decrease -> more demand for LTM / Transfer fee decrease -> more demand for transfer

[jakub]

He is most likely to sell ltm at $0. In this case how can you compensate the network income?

If you say he'll sell LTM for zero to customers who could have bought it for more than the current minimum price of $20 - well, you are right, the network would have lost some revenue.
But that would also mean that bitcrab is not a businessman.

[clayop]

The biggest problem that I have with this proposal, is that you are proposing to give a way one of the biggest sources of revenue of the network it self. It's not just the referral program that makes money out of it, but also the network itself. How would you compensate for that?

I think this is a misconception.
I'm not giving away "the biggest sources of revenue of the network".

Actually the opposite is achieved here: I'm trying to maximize for the network the revenue stream from sold LTMs .

What scenario would you choose?
- bitcrab treats the referral program as a "trouble maker" and sells 20 LTMs a year. Network's income: 20 * $100 * 20% = $400
- bitcrab embraces the referral program and sells 2000 LTMs a year (some of them for free but with an average price of $10). Network's income: 2000 * $10 * 20% = $4000

bitcrab will do his best not to give LTM for free, if he feels some of his customers could pay something for it.
So he'll most probably give away LTM for free only to those who would not buy LTM anyway.

He is most likely to sell ltm at $0. In this case how can you compensate the network income?