I respect Ev Williams (co-founder of Twitter and Medium) because he envisions, as I do, a world in which content creators are compensated based on the value they add to their consumers (how much better they make the lives of their audience), and the value they add to the everyone. Imagine a world where people aren’t paid based on how “clickbaity” the title of their article or YouTube video is. Where they aren’t paid based on how useful their content is to Ford and Pfizer. Imagine a world where you are rewarded based on how accurate your information is and how trustworthy you are as a source.
It’s a vision so noble it might appear fanciful, arguably delusional. However, I happen to know for a fact that recent technological developments make it possible. Trivial even. In the following paragraphs I will demonstrate how Medium could monetize their content in as little as one month in a manner that puts them an order of magnitude closer to executing on their vision and I will explain the existing technological protocols that would enable them to do so.
In fact, they could execute on their vision completely.
The issue, as Williams makes clear in his post, is one of incentives. In other words: money. In enterprises there are typically two forms of money that are used to incentivize workers: cash and shares (a/k/a stock). Cash is a liquid form of money that can be used in our everyday lives to buy the things we want and need today. Shares are an illiquid form of money that can’t be used in our everyday lives, but whose value is directly proportional to the value of the enterprise; value which can be captured at some point in the future by converting it into a liquid form of money. Up until very recently the only viable candidates for these two forms of incentive were currency (e.g. US Dollars) and shares in a corporation. Unfortunately, currency is extremely expensive to move around, especially in small quantities, and it must first be acquired. Just try sending someone 25 cents. Now try sending one hundred thousand people 25 cents. The solution I am proposing already executes such transactions thousands of times a day with zero transaction fees.
What’s better, adopting a solution that works right now, that’s open, that’s free, or building your own monetary system from scratch?
Distributing shares to people would be even more problematic. Shares in a corporation are a heavily regulated legal fiction and their distribution is also highly regulated. Further, they grant shareholders special rights with respect to the organization, e.g. the organization has a fiduciary duty to all shareholders. Merely creating and distributing shares in Medium to any person in the world who creates content for the platform would not only be a legal and logistical nightmare, but it would be practically impossible for the corporation to satisfy all of its responsibilities to its shareholders. Most importantly they would be faced with the challenge of becoming a monetary authority. They would essentially become a central bank in charge of controlling multiple money supplies as well as the process through which they are distributed. No simple task, just ask the Federal Reserve.
Bearing all of this in mind, one might be tempted to label my title as clickbait; it’s not. In order to solve this problem in one month (though in reality it is highly unlikely that Medium could solve this problem on their own ever) what they would need is an existing, open protocol, designed to create and distribute 1. cash and 2. shares based on the subjective value of their content creators. Ideally this open protocol will have an operating proofs-of-concept that demonstrate both that the protocol is functional and has sufficiently robust developer and investment support to guarantee its continued operation.
What Is Valuable?
Before I delve deeper into the protocol I would like to address a major issue: distributing money based on value. This is easier said than done. Just look at the complex network of institutions we have developed in the United States just to serve this purpose. The Federal Reserve determines the supply of “cash” (a fiat currency we refer to as “the dollar”) based on an ever growing set of hotly debated criteria which it then distributes throughout its small but decentralized network of regional Federal Reserve Banks.
The Federal Reserve system then outsources the determination of value to independent but certified private banks, the employees of which are trained to assess a loan applicant’s potential productivity and distribute funds accordingly (also using hotly debated criteria). It is these banks that create the majority of “cash” by lending out every dollar they are given by the Federal Reserve System multiple times over. Simple right?
This system is by no means perfect. Very few people, especially in banks, are good at predicting what ventures will be successful. It shouldn’t come as a surprise that the people at the banks in charge of distributing the money only lend it out to entities they believe to be the most secure (like companies that are already huge) while also spending a lot of the money on themselves.
Cutting Out the Middlemen
Fortunately, since the creation of Central Banks there have been a few technological developments, all of which served to eliminate the necessity of various middlemen who had traditionally been seen as indispensable. The most obvious of these is the Internet. But when it comes to the issue of creating money without middlemen one technology stands alone: cryptocurrency.
Bitcoin is obviously the most well known of the so-called “cryptocurrencies” but it has several attributes that make it untenable as a solution for Medium; it is not a programmable blockchain, it would require a large up front capex to acquire the tokens which it would then distribute, and it has no mechanism for rewarding people shares. Neither does Ethereum. There is only one viable crypto I know of which Medium could start using now, that’s programmable, that is designed to issue both shares and cash, and which would cost them nothing. It’s a protocol named STEEM.
Just Use It
I’m not the only one who thinks so. Earlier today Fred Wilson (Co-founder of Union Square Ventures and investor in Twitter, Tumblr, Foursquare, Zynga, Kickstarter, etc.) posted an article titled, “Online Publishing Should Look At Steem, Not Spotify, For Inspiration.” But why look to Steem for inspiration when you can just USE it?
STEEM solves the problem of how to distribute cash and shares by outsourcing the determination of “what is valuable” to the crowd of people using the service. Instead of asking an intermediary to guess what products (in this case content) people find valuable, it provides the people with the ability to communicate (through “upvotes”) how valuable they think something is, and then the Steem algorithm automatically distributes both cash (called Steem Dollars) and shares (called Steem Power) based on the collective and subjective determinations of those people. A key innovation of Steem is that the more “shares” you are able to earn the more money your vote distributes. In short, if you create a lot of content that a lot of people judge to be subjectively valuable, you are rewarded for your efforts not just in cash and shares, but in INFLUENCE as well. And it does all of this without charging ANY FEES.
If one is sincerely interested in creating a platform that motivates creators to make content that adds value to people’s lives and rewards them accordingly, I can’t think of a better way than putting the power in the hands of those very people to determine who is rewarded and who is not. Since no one is the same, it is not possible for any intermediary (no matter how noble they claim their intentions to be) to accurately represent the needs of a large and diverse group of people. The only option is to distribute that power to the people. And Steem does just that.
Steemit: An Operational Proof-of-Concept
If anyone at Medium would like to see exactly how this would play out, they need only check out steemit.com. There they will find an open beta version of a blogging platform that leverages the STEEM protocol to do exactly what Medium is looking to do. Designed and built by the same team would built the STEEM protocol, for the past 6 months Steemit has been distributing Steem Dollars and Steem Power to thousands of accounts (now over 120 thousand) without incident. The Steem Dollar has maintained its peg to the US Dollar (to a remarkable degree) and the base token has maintained value on open markets. Right now it is trading at around 16 cents per token, but it has traded as high as $4 a token.
Unlike other cryptocurrencies, mechanisms have been put in place so that fraudulent or criminal acquisition of tokens can be rolled back. To date not a single person has claimed they were not able to cash out the tokens they acquired purely from creating content on steemit.com.
It Just Works
On steemit.com people create written content (often with embedded photos and videos) everyday for which they receive financial rewards based on the subjective determinations of Steemit users and which they are free to cash out (immediately in the case of Steem Dollars and after 3 months in the case of Steem Power). As an added bonus, since all the content is posted to an immutable and open blockchain, censorship is impossible.
Just go to steemit.com and you will see the top trending posts for the last 24 hours and the US Dollar value of how much the authors have been rewarded. In fact, you can see how much this very article is earning on steemit.com right now.
The Ideal Solution Exists
Frankly, it’s hard to imagine a more ideal scenario for Medium. The technology they need already exists and demonstrably works. The reason they don’t know about it, and that no one else is using it, is solely that it is NEW, just as the internet (another open and free protocol) once was.
From a technological standpoint, I don’t see what choice they have. Would anyone seriously suggest that it would be an efficient allocation of resources to spend God-knows-how-long to build their own solution and hope it works? What will happen to the moral high ground they gained from firing 50 people to avoid becoming ad-revenue based when they announce that they are instead using that capital to become a highly experimental fintech company?
But Isn’t Steemit a Medium Competitor?
The beauty of STEEM is that no one who uses the protocol is competing with anyone else who uses it because they all have shares in the entire ecosystem. What helps one helps all. I bet the people at Steemit would be happy to lend Medium a hand. All Williams would have to do to test out my hypothesis is reach out to Steemit Inc. and see if they’re open to helping.
STEEM Will Exceed Williams’ Expectations
As I said at the beginning, I have a ton of respect for Williams — what he has created in the past and the hard choices he continues to make at Medium — and I believe that were he to truly understand the potential of the STEEM blockchain protocol he would be eager to adopt it not just because it would enable him to realize his vision of a world where content creators are rewarded based on the value they provide to others, but because it enables anyone to build any business based on the very same principles.
If you agree that Steem is Medium’s best path forward, tweet this post to Willaims @ev.
Thanks for reading!