What if we let the registrars set the LTM price?

[xeroc]

Why would I as a registrar not offer a LTM to my customers for free? Who prevents me from doing that?

[xeroc]

And I've just realized that my offer to @bitcrab is actually much better than $0.018 he's managed to get from the committee.

He didn't actually get anything from the committee and the $0.18 is also not the current proposed transfer fee

[jakub]

Won't we upset our most loyal bts members who paid 100$ for them LTM ??

But the point is we have this problem already. If you give me a public key of your choice I can register a LTM account for you for just $25 (this is a serious offer).
Are you upset that you've paid $100 to OpenLedger? 

Would it be possible to do something similar but with "annual members" ? So LTM still have a valued product that anybody is giving for free and they also keep having part of the fee produce by the annual members and the basics accounts below ?

Absolutely, annual membership should be included in this solution.

[jakub]

And I've just realized that my offer to @bitcrab is actually much better than $0.018 he's managed to get from the committee.
If he chooses to give LTM to his customers for free, than they end up paying $.008 ($0.04 * 20%) per transfer (i.e. 50% less than what the committee offers).

Well, if this is not a generous offer, I don't know what is.

That sounds like a very reasonable compromise for all of us.  Although the final solution really should include %-based fees so that micro-transactions and non-payment applications (e.g. messaging, etc.) will be more feasible.  Do you have thoughts about %-based parameters that would yield similar revenue to the network compared with the $.018/.04 flat fee?

If this proposal gets some support and we settle for the flat transfer fee around $0.04, the minimum %-based limit seems quite straight forward to me: $0.008 (which equals the LTM discount: $0.04 * 20%).

As for the maximum limit and percentage rate - these are quite political decisions.
But I believe they should be chosen in such a way that for most issuers it will be a tough decision to make (this will be the case when the trade-off between flat and %-based scheme is balanced).

[abit]

I would be interested in seeing the reaction of some of our larger referral-dependent businesses, such as @ccedk .

I admit that CCEDK contributed much to the ecosystem, and I appreciate that.
However, I think ccedk currently has unfair advantages when competing with other registrars, since it's the only one registrar listed on http://bitshares.org. Also BM recently suggested that we need more faucets integrated in wallet.
Competitions will make the ecosystem better, right?

Jakub's proposal is very interesting. Right now I don't know if it's good, I need to think more.

[EstefanTT]

Won't we upset our most loyal bts members who paid 100$ for them LTM ??

Would it be possible to do something similar but with "annual members" ? So LTM still have a valued product that anybody is giving for free and they also keep having part of the fee produce by the annual members and the basics accounts below ?

[tbone]

And I've just realized that my offer to @bitcrab is actually much better than $0.018 he's managed to get from the committee.
If he chooses to give LTM to his customers for free, than they end up paying $.008 ($0.04 * 20%) per transfer (i.e. 50% less than what the committee offers).

Well, if this is not a generous offer, I don't know what is.

That sounds like a very reasonable compromise for all of us.  Although the final solution really should include %-based fees so that micro-transactions and non-payment applications (e.g. messaging, etc.) will be more feasible.  Do you have thoughts about %-based parameters that would yield similar revenue to the network compared with the $.018/.04 flat fee?

[jakub]

(A) The committee approach: reduce the transfer fee to a very low level of $0.018 (~5 BTS) and thus effectively remove the transfer fee incentive from the referral program.
Consequences for businesses:
For a blog/website business (e.g. fav or Max Wright):
- there is no incentive to operate as there is almost no income (unless they manage to target advanced users, which is unlikely)
For a UI business (e.g. ccedk, kenCode or merivercap):
- there is almost no income from the referral program (unless they manage to target advanced users, which is unlikely)
- they have only one option: construct their own mechanism of charging higher fees and, if they do that, they get 100% of the profit
- the lowest *flat* transfer fee they can offer to their customers is $0.018

Consequences for the network:
- there is no revenue from non-advanced users (EDIT: I should have said: almost no revenue. The network gets 20% of each transfer fee but as the fee is extremely small this income becomes negligible)
- the number of LTMs sold drops substantially (only advanced users have a reason to buy it)
- as a result, the network's revenue stream drops substantially, as LTM upgrades currently make around 90% of the network's revenue

Conclusions: (1) blog/website business are lost, (2) each UI business needs to construct its own charging mechanism to survive and (3) the network's income definitely drops.


(B) My approach: reduce the transfer fee to a relatively low level of $0.04 (~12 BTS) and keep at least some of the transfer fee incentive in the referral program. Also, allow registrars to sell LTM at any price they want, provided the network always keeps a 20% cut.
Consequences for businesses:
For a blog/website business (e.g. fav or Max Wright):
- there is still an incentive to operate as they can count on the referral income from non-advanced users
For a UI business (e.g. ccedk, kenCode or merivercap):
- they have a real choice: they can opt out from the referral program by offering LTM for free and instead construct their own mechanism of charging higher fees to keep 100% of the profit OR they can stick to the in-built scheme and sell LTM for any price they find suitable for their customers (the downside is this: they only keep 80% of the profit and they risk that some of their users will try to buy LTM cheaper elsewhere and then migrate to use their apps)
- the lowest *flat* transfer fee they can offer to their customers is $0.008 (i.e. 50% less than the committee approach)

Consequences for the network:
- revenue from non-advanced users is preserved, as the network always gets 20% whenever the in-built referral program is used for non-advanced users
- the number of LTMs sold increases substantially as LTM prices are perfectly matched to what each customer is willing to pay
- it's hard to predict the net effect: on the one hand there might be some revenue lost due to getting on average less than 4k BTS for each LTM sold, but on the other hand there will be more LTM sold and the income from transfer fees will be substantially higher

Conclusions: (1) blog/website business are preserved, (2) UI businesses have a *real* choice and (3) the network's income is most likely preserved or even increased.

[jakub]

And I've just realized that my offer to @bitcrab is actually much better than $0.018 he's managed to get from the committee.
If he chooses to give LTM to his customers for free, than they end up paying $.008 ($0.04 * 20%) per transfer (i.e. 50% less than what the committee offers).

Well, if this is not a generous offer, I don't know what is.

[tbone]

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.

In the same way my UX is affected when I buy a pair of nice sneakers from a local online shop and three days later I find out that I could've bought them on Alibaba for half the price.
This is the way things are nowadays and people are getting used to it.
Smart people who have the time to hunt for discounts get lower prices than people who don't have time for that.
Take airline tickets as an example.

Yeah, this is just a fact of life.  One could come up with a zillion examples. 

[jakub]

Very interesting thought. Where is the "to the network" money going? Does the BitShares system need it for maintenance, etc.? Because if so, then this suggestion might set up a system where some users are paying for it and some are not.

Absolutely, the system needs funds for maintenance and development. And my proposal aims to maximize the income stream for the network.

My point is this: let's us not be afraid to get rid of the minimum price for LTM. As registrars have a huge 80% sales margin, there will be a natural incentive for them to set the LTM price at such a level that maximizes their profits (and also the network's profits) instead of driving the price to zero.

The net effect should be very positive for the network. No artificial protection (in the form of minimum LTM price) is needed, *if* the incentive structure is set right. The 80% sales margin takes care of this.

A better wrinkle might be to keep that 20% as a minimum threshold price and then allow your suggested flexibility for the remainder of the referral. Or perhaps this is what you have in mind already.

If we set a minimum price for LTM, we'll end up with what we have now (maybe except for the option of selling LTM for more than the current fixed price).

[tbone]

Very interesting thought. Where is the "to the network" money going? Does the BitShares system need it for maintenance, etc.? Because if so, then this suggestion might set up a system where some users are paying for it and some are not. A better wrinkle might be to keep that 20% as a minimum threshold price and then allow your suggested flexibility for the remainder of the referral. Or perhaps this is what you have in mind already.

I would be interested in seeing the reaction of some of our larger referral-dependent businesses, such as @ccedk .

What @jakub is proposing is that there is always a 20% network cut of any LTM fee that may be charged.  But he's also saying that the LTM fee can be set by the business itself to any level including zero.  That makes the referral program optional, as it should be.  Think about it.  How can we force a business to accept 80% of a hefty referral fee from their users? 

And in the case of those businesses that can't or don't want/need to take a referral fee, if we do as you say i.e. enforce at least 20% of some hefty fee that would go to the network, now all we're doing a is charging an exorbitant account creation fee without adding any value.  That doesn't make sense.  What @jakub has come up with is a good, sensible, creative way to solve the problem we're facing, and to reach a reasonable compromise. Kudos to him.

[donkeypong]

Very interesting thought. Where is the "to the network" money going? Does the BitShares system need it for maintenance, etc.? Because if so, then this suggestion might set up a system where some users are paying for it and some are not. A better wrinkle might be to keep that 20% as a minimum threshold price and then allow your suggested flexibility for the remainder of the referral. Or perhaps this is what you have in mind already.

I would be interested in seeing the reaction of some of our larger referral-dependent businesses, such as @ccedk .

[jakub]

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.

In the same way my UX is affected when I buy a pair of nice sneakers from a local online shop and three days later I find out that I could've bought them on Alibaba for half the price.
This is the way things are nowadays and people are getting used to it.
Smart people who have the time to hunt for discounts get lower prices than people who don't have time for that.
Take airline tickets as an example.

BTW, currently we are not free from this "problem". What prevents bitcrab from selling LTM with a 50% discount?
The only difference is that currently bitcrab can offer maximum 80% discount, while my solution pushes it to 100%. Not much of a difference.

[jakub]

@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). 

Thanks for this. Sometimes I have the feeling that I'm the only one here trying to find a solution that can be fair for *all* parties.

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.

Yes, I'm talking here about the flat transfer fee.
And you're right, we should use fiat when discussing fees.

IMO, something around $.04 makes sense for two reasons:
(1) This way LTM can still be targeted to non-advanced users (especially when %-based fees are implemented) - and this is extremely important for businesses that cannot earn money in any other way, e.g. Max Wright.
(2) This way there is space for the minimum limit in %-based fees (otherwise the choice for issuers will be fictional, and if the committee ends up to be the only entity using it, private SmartCoins will get unfair advantage)

We already know that $.04 is too high for the Chinese market. And that's where the flexible LTM price kicks in. If it's too high for your customers, sell LTM to them for e.g. 100 BTS or even give it for free and the problem is solved. No revenue is lost for the network, as those customers who cannot accept $.04 per transfer would not have bought LTM anyway.