@ Laeserin
2024-03-20 11:08:53
A discussion of the problems and the promise of an economy based upon a deflationary currency, with suggestions for how to restructure payments to accommodate this.
# The Zap Economy
I think many people have been breaking their heads, trying to figure out business models, when the currency used in the models continuously rises in purchasing power, often even going parabolic, for a time. Let's have a debate about which models are the best and how we can design our own business funding, going forward.
Note:
*From here on, all producers will be described as "creators," which is more fitting to the Nostr lingo.*
## Dealing with spikes in fiat prices
I think the best way to create a business model that deals with sudden spikes in fiat prices is to simply ignore them. The people who are motivated to sudden action by such spikes are traders, and they probably shouldn't be your target market.
## Employment Contracts
One tried-and-true business model is the fee-for-project type of contract that we usually call "employment". These all have a defined beginning, a defined end, and a defined scope. (I will differentiate them from direct, quick fee-for-service; see [Sales Contracts](##sales-contracts).)
Typical "day jobs" are defined this way, with creators being employed for a month or two weeks, to perform a particular task, with a payout at the end and often an automatic extension to the next employment period. Contracting is another common type, as are retainers for specialists like doctors and lawyers.
I think this model can be easily implemented in a zap economy (and, indeed, it already is), as employers can simply keep the employment scope or period small and renegotiate the next one to reflect any deflation. For longer-term employment, they could simply negotiate regular rebalancing to reflect price changes, or link payments to some measure of deflation.
## Patronage
This is the current common business model. A creator (artist, developer, writer, etc.) receives grants or donations that are more or less attached to conditions.
The fewer the conditions attached and the more diverse/larger the patron set is, the more valuable the patronage is and the freer the creator. The negative impact of strings or condensed patronage can be mitigated by the availability of non-funding resources (infrastructure, training, marketing, legal advice, psychological support, access to a team, etc.) or the sheer size of the patronage.
(Although creators, by nature, grate under management and may eventually resent condensed patronage, even if it is very generous, helpful, and well-intentioned.)
## Customer Classifications
This is a highly desirable model, from the viewpoint of most creators, as it is defined and controlled by them, and offers the promise of stable, long-term funding. It is also popular among smaller patrons, as their money investment is more effective and -- let's be honest -- more fun, if it is converted to a Class A Customer status and bundled with the money and enthusiasm of others.
This vaguely resembles a club membership. In this model, there are different levels of customer classes (usually defined using the alphabet, with "A" being the highest level).
An example structure might be:
> A: The most emotionally-invested group. Often very early and constant investors, willing to pay a high premium for membership and to front relatively large sums of money in advance of services rendered. These are your "premium account holders".
> They should receive some outward/public sign of their membership (so that they can find each other, more easily, and to help you market your creations) and some premium content, features, or services. Their support tickets have priority and their complaints and ideas go straight to the lead developer or product owner.
> Even simply arranging for them to attend a teleconference before releases, reserving a special lounge or party for them at conferences, or announcing new features in newsletters, can go a long way.
> B: These are the "normal payees". They pay the minimum to unlock some extra-stuff and always get new releases first, and that's all they really want. Mostly, they just want to not feel like freeloaders, so providing them with a clear payment scheme is enough.
> C: These are the freeloaders. They get a reduced service, but stay friendly because they sometimes market your product to others and they have the potential to move up to a higher class.
The essential part of this model is the pricing.
Class A customers should be onboarded first and pay the highest regular membership fee. This fee should be automatically lowered to Class B level, when adding Class B customers, at a later date, so that your early supporters don't feel disadvantaged.
Class B (with Class A) should have deflation-tracked pricing: 500 sats today, 250 after the next halving, 125 after the next halving, etc. Or something similar. You should always plan for your prices to steadily decrease in nominal terms, while slightly rising in real terms, as your service becomes more advanced and valuable.
## Sales Contracts
This is a clear fee-for-service and is generally set and reset regularly. If you have a long-term sale or resale contract, you should have fee adjustments accounted for, from the beginning.
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And that is all that I have time to write, at the moment.