Business Model
Insight #1: The is no free lunch
In online digital services, like in life, there is no free lunch and someone always needs to pay the bill. There are three main ways for paying for online digital communciations services.
Ads. Use a service which displays ads and give some of your digital attention to experience these ads. e.g. promoted tweets, moments, etc... For this model to work, users must allow the service to track their online usage habits and build personal profiles of users, as without strong ad targeting these models are always less profitable or might not be profitable due to competition on advertisers budgets. Personalized ads are more proftiable than non-personalized ones.
Donations, Grants and Taxes Have someone else pay for the service so you can use it for free. For example, Wikipedia is supported by donations and grants. The BBC world service is funded by the British tax-payers. The Signal messaging service is funded by a $50M grant from WhatsApp co-founder.
Direct Pay. Pay directly to the service provider for provided content or services. This can be a one-time per content fee or a recurring subscription fee for access to capabilities and content for a time period. For example, The Wall Street Journal, Netflix and New York Times online subscription plans.
Insight #2: There is no one-size fits-all anymore
It is false to assume that all people prefer ad-supported services over paid options. As of 2021, there are about 4 billion people with Internet access - that's almost half of the world's human population. Even a small subset of these people is a very large group. E.g. A niche communications platform may have tens or even hundreds of millions of satisfied users. As we further move into the 21st century, more and more people will start to understand the serious privacy, social and moral issues involved in ad-supported services. More and more people being to realize that in ad supported service, they are the product of the service and not its end-users. The real users are the advertisers who buy end users' attention. User-facing features are mostly designed to help advertisers improve ad targeting.
If you choose an ad-supported service then you need to give up on your communications privacy and accept to be brainwashed on a daily basis as advertising is a really a form of brainwashing. Most people seem okay with this decision. Subnet may not appeal to these people. It is an irratioanl decision based on lack of good alternatives. Subnet aims to be such an alternative that will appeal to a more ratioanl sub-set of Internet service market which is mostly irrational.
If you choose a service that is paid by donations of others, then it might not be a good long-term decision as donations may dry out.
Subnet will be compelling to people who find the paid services option better than the other alternatives, assuming it can provide an excellent user-experience on par with ad-supported messaging platforms. We assume that at least tens of millions of people and maybe up to low hundreds of millions of people fall within this catergory. This is a large addressable and underserved market.
In Subnet, network servives are provided by entities who chose to serve users and to get compensated for their provided services. Users pay for using the service to these entities directly and without any intermediate third-party. Payments are done using a cryptocurrency which is designed to empower the service. The crypto technology empowering the service enables frictionless nano-payments (payments significantly smaller than micro-payments) from users to service providers and from users to other users.
Subnet network services are not provided by a company or an organization that is able to change its privacy policy, terms of use, or usage fees at will. It can't be forced into giving away users private data to government official requests. By design, the entities collectively providing the service do not have separately or jointly access to any private user data. In other words, Subnet privacy design starts by removing the corporation as a monolithic entity that has most user data and replacing it by a federation of service providers which don't have access to user data.
Insight #3: Regulation is not the answer
Regulation is proposed by many as the best way we have to solve problem with present-day online communications platforms. National and international regulation as a solution to the social networks great harm to humanity can't by-itself solve the problem. Regulating service providers that employ harmful business models is only a mitigating half-measure. A decentralized social network with strong privacy preserving design principle that gives users a viable alternative is key.
Insight #4: Some people don't to subsidize their online communications costs by sale of their data and metadata
Subnet aims to become a platform where users strongly control who has access to the data they create and publish. There is no option for service providers to obtain and sell users data. Subnet is designed to appeal to this market segment and to provide it an alternative for paying for digital services. In a world of 4 billions of people online, 'some' may apply to hundreds of millions of people worldwide.
Insight #5: Privacy and user data ownership is the moat
It will be extremely difficult for the current public digital service providers companies to switch to a privacy-first business model due to vast majority of their revenue derived from abusing users privacy and a corporate mandate to maximize shareholders value and not users value. Public companies are prisoners of their cash cows and corporate mandate.
Subnet Crypto-Economic Model
Subnet is powered by a native cryptocurrency - Subnet Coins. It runs a native blockchain called the Subnet blockchain. Subnet is not going to have a token issued over another cryptocurrency blockchain.
Users need to purchase Subnet Coins to pay for provided network services. Miners of the Subnet blockchain get compensated for maintaining the network in Subnet Coins. Subnet Coins are going to be valuable if the Subnet network services and the Subnet brand will gain market traction with users.
Subnet will be developed by a private development company (Subnet Co) which will be equity-funded by investors. Equity in the company will be translated to Subnet Coins allocations specified in the Subnet blockchain genesis. Investors and miners will be able to sell their Subnet Coins to the public via cryptographic exchanges or other means.
Subnet software is going to be 100% open source so its security and privacy features can be audited and verified by anyone, and so there will be no need to trust Subnet Co promises for not being evil. It can't be evil.
The Subnet brand is going to be protected by global trademarks to protect the brand and Subnet Coins from copycats. Any party may freely copy and use the Subnet software to introduce their own services but they will not be able to use the Subnet brand in their marketing and services.
The value and strength of the Subnet brand depends on the level of execution of the Subnet Co and, the experience of Subnet products and services with users and miners, and the strength of the community engaged and supporting the project.
Subnet Business Model
- Service providers get paid by users for network services on a pay-per-use or a fixed-monthly fee.
- Users pay other users for subscription services and for premium content.
- Service providers are incentivized to maintain and secure the Subnet Blockchain.
- Platform developers and investors will profit by having a small percentage of the issued Subnet Coin at service launch. Subnet Coin is going to be a valuable cryptocurrency if the service is successful with end-users and service providers.
Service Providers Revenue Streams
- Network services provided to users.
- Users content storage. e.g. an encrypted backup of client data that enables restoration of identity and account data when a user moves to a new client device or changes service providers.
- Consensus protocol rewards for providing the security for the platform's currency.
- Transaction fees for submitting blocks with transactions to the Subnet Blockchain.
Users Revenue Streams
- Newsletters and premium status updates that other users subscribe to.
- Premium digital content purchased by other users.
- Premium groups that other users join and participate in.
There's a strong alignment of interest between all of these parties. This provides value to the service's native cryptocurrency. SUB Coins are going to be valuable if the service will be useful for a large number of people and financially profitable to network operators.
In the future, commercial licenses for additional Subnet networks may be granted.