Zap-share slavery and the incentive war

Sending a percentage of your zaps to head straight to your Client's development team, optionally or forcibly, sounds like a great way to sustain a project. And, depending on the team's career goals, it is. However, I am here to argue that this revenue model doesn't serve us well.

Let's be real: if you are developing a client and seeking venture capital, then yes, rev-share is by far your best shot at winning. It's a hot favorite in venture pitches because it hands the company (and its investors) control over the entire field while raking in maximum revenue from all participants. Your performance metrics are very well established, incentives are aligned with the fast-scaling needs, the path to growth is very common and many, many investors know the territory extremely well and will be more willing to easily give you money. If that is your case, go for the usual route of YC -> VC -> PE -> IPO. You won't control anything in the end, but it will make you, and your investors, a lot of money.

That being said, I believe this revenue model bakes in the wrong incentives, and forward-thinking clients should seek alternative revenue-generation strategies.

Storytime: Over the past 15 years, I led a medical device business that integrated a rev-share component. Doctors purchasing our devices gained access to our medical record system. The revenue model for that system was rev-share: the system itself was essentially free, and each time providers submitted a prescription, we earned $0.50. Initially, this model thrived because it scaled with our customer's needs. If they were small businesses, their payments would stay small, proportional to their bumpy use. $0.50/patient was something everyone could afford out of their insurance payouts. It was great for beginners, great for large players, and great for us. Things looked great. But little did I know what it would do to the business. Gradually, our focus shifted from developing devices and enhancing the system to obsessing over increasing the number of prescriptions. We ended up staying quite small as a business, but even at that small size, I could already see the damage the revenue model could make at scale. If we grew, it would be all about how to get providers to file as many prescriptions as possible, even for patients who didn't need one. Controlling the medium upon which customers file prescriptions gives the company immense power to incentivize behaviors that will go against the well-being of the community.

Similar tendencies are visible in other platforms like Substack nowadays. You can't visit your favorite author without being constantly "reminded" to subscribe to other creators. It doesn't matter if you care or not about those topics. What matters is that you subscribe to them. The company doesn't care if you end up never reading their content. That's not their problem. Their goal is to push as much content down your throat as possible so that they can collect little fees here and there. The bigger the amount of content you subscribe (not the quality), the bigger the fees they get.

The same is happening with Lightning wallets and many Bitcoin products that sustain themselves by taking a share of your transactions. They are incentivized to make users spend and not to help them manage their finances well.

Nostr won't be different. Zap-share Clients have an incentive to make you spend. In the long run, that is all they will care about. It doesn't matter if the content is good or not.

You become a Foie gras goose.

Social media has grappled with broken incentives since its inception. If we want to design a better social environment, it's our duty to find business models that are more aligned with the well-being of our users. We don't have a clear answer for that right now, but there is hope: we know what we want. We want to align the size of the user's contributions with products that make users feel better and more productive.

In the long run, this desire will split Clients between creator tools and consumer tools. Creator tools should help authors optimize their revenue stream while consumer tools should help readers optimize for their needs and well-being, independent of how much creator tools try to push content down your throat.

If you are a consumer of content (or more precisely, WHEN you are consuming content), you should reward those clients that hit the sweet spot for you without forcing you into spending more than what's needed. If you are a creator (or more precisely, WHEN you are creating content), you should reward clients who help you optimize the outcomes you desire for your content.

I find it hard to believe a single client can play both sides well. In a decentralized environment like ours, specialized clients will always win.

Remember to choose clients that are on your side. A creator's side is not always aligned with the consumer's side. When the eagles are silent, the parrots begin to jabber.