Dan Romero on Warpcast

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Dan Romero pfp

There are 3 business models for apps. 1. Free with ads 2. Subscription 3. Transaction fee The common thread for all three models is the user—a person, business or AI—has money to spend. That’s obvious for 2 and 3 since the model involves spending money directly with the app. But for 1, if your user base doesn’t have money to spend, the ability to monetize via ads will be low.

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Other notes Farcaster is still figuring out its business model. Experimenting with 2/3. Ads would be a client-level decision. Crypto today is really good for 3, bad UX for 2 but a bunch of smart wallet stuff can improve this, 1 is nascent (although a few examples like CoinMarketCap and Dexscreener). Subvariant of 1 “selling data” but less valuable than monetizing via ads. This is also increasingly limited because of regulatory (which ironically makes the at-scale web2 players more powerful).

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Pay one time has mostly been replaced by subscriptions. Many games still have this model. MMOs of course are subscription. But if you do still have that model, it’s pretty common to charge once per version, eg HipsterCalendar v1 v2 v3 etc, which is basically a subscription just opt in vs opt out. Same applies to AAA games with a regular release cadence, eg Call of Duty.

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RIP one time purchase software

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@hammallama.eth

What category does "hold x coin x amount to use app" fall into?

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Icetoad 🍕 🎩 🐈

I found one that is none of those

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4. pay to win? polymarket, lotteries, @onit etc. arguably a subset of transaction fees because the revenue comes from the pot made up of the transactions. but a very different framing

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This user hates subscriptions. So much. I feel like people are getting tired of them but maybe that’s just because I’m still so mad at Adobe

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samg.base.eth 🎩🍖

Curious what you think of #1 but with opt in rather than opt out, with incentives for opt ins (even better perhaps based on interaction with ads). To me the idea of decentralized social media can thrive by acknowledging that ads have no value without interaction and ultimately the users should be paid for their time interacting with and being willing to tolerate the ads. The fact that most socials drown you in ads then charge you to remove them drives a lot of bad will. I think there is opportunity to both have ad revenue and make us not hate it by doing a micro rev split. With Rewards and wallets it’s basically already setup to execute.

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Goldie 🧟‍♂️

how important is retention time? the idea was to keep everything in-house for a user correct? we’re going with #1 with the @podplayr .. not everything has to cost something 😅 especially not up front, most of the best apps started by not charging a user anything …so why the big push for in app transactions? 🤔

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What’s the likelihood of a new cryptonative model emerging in next 3-5 years? 5-10 years?

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4. Tons of users, loose money every quarter. Then exit to Facebook/google/etc.

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Pope Tomato pfp

Which of these do Bluesky and Mastodon fall into? I think Bluesky will transition to 1 eventually as they stop relying on just VC money, but I don't know how to categorize Mastodon.

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funny how no option includes a token. I found tokens are rarely if not never a good monetization model for apps.

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Antonio García Martínez pfp

Antonio García Martínez

Lastly, I can almost guarantee the CPMs we're driving for publishers right now are higher than what you're making off 2 and 3. And not only at no cost in user engagement...but in fact, users who see ads will have more onchain engagement and stronger retention (unlike in the legacy internet ads world).

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Antonio García Martínez

While you're correct that 3 is significant for wallet apps, ads can still be a significant line-item alongside swap fees. But those transaction fees are likely de minimis on an app like Warpcast since financial transactions aren't really its reason for being.

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not saying this would tell you whether to choose 2/3, but i'd take a deep dive into Acquired's episode on Costco. interesting piece of their business model is that they have substantial parts of their revenue come from both subscription AND product sale throughput. what that looks like in software.. idk, but i think it balances the monetization points of the protocol and the hub. protocol would be longer-term view, but can be substantial and stable with a thriving ecosystem built on the social protocol. hub i'd expect you'd be able to find monetization earlier on with 2/3

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crypto is best for 3 and vice versa

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Alberto Ornaghi

re: 1 Of you are running ads from third parties and the users don’t have money to spend, it’s not your problem. You get the money from the advertisers not the users (even if the users don’t spend)

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Antonio García Martínez

If your users have no money to spend, it's models 2,3 that are most impacted, not 1. Facebook couldn't get away with charging users the ~$60 ARPUs globally they make, which is why they need an ads model. Particularly in social media, where the expectation of 'free' has been set for a while, subscriptions are never happening at scale.

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