Revenue-Sharing Social Network Tsu Has Appeal, Clever Ideas and Risks

One of the strongest critiques leveled against social networks like Facebook is that the users provide the content but the owners keep all the profit. To counter this social networking companies usually argue that they provide the service free of charge, so why should they share the revenue.

But the revenue sharing idea still has appeal for many social networking users, especially the power users who contribute much of the content. This idea has driven Google to share revenues from YouTube videos and also to the creation of several blogging and networking sites that do share revenue. Back in 2012 Bubblews tried this approach with mixed results and others have followed with even less certain success. No revenue-sharing social network comes even remotely close to Facebook. Yet.

Now a new social network called Tsu is trying to execute this concept and they have some interesting new ideas that make it more promising than other rivals. Tsu looks more or less like a typical social network. You can build a profile, share posts, follow or friend other users, like the posts of others and so on. Where Tsu is different from Facebook is that any revenue generated by your content is partly shared with you. So far there is nothing very new, but where Tsu stands apart is in the way the revenue is shared.

You cannot simply create an account on Tsu, you need an invitation link from another user. This is not to limit the flow of signups or to make it sound more exclusive. Tsu needs to know who invited who because the users are structured in a tree, with every user being connected to the person who invited them and the people they invited.

This tree plays an important role in the revenue sharing process because of every dollar that your content generates Tsu keeps ten cents to pay for the cost of operating the service, pays 45 cents to you and divides the other 45 cents among the people above you in your tree. The person who recruited you gets 22.5 cents, the person above 11.2 cents and so on. This recursive incentive scheme means that a user gets rewarded both for their content and for the content of the people they invited, they people those people invited and so on, ad infinitum.

If this techniques sounds familiar you have probably heard of the 2009 Darpa Challenge, where this technique was famously used by a team from MIT to locate ten red balloons placed in visible but unknown locations across the US. The MIT team succeeded in locating all ten balloons in the shortest time because they offered half of the $40000 prize divided up recursively between the people who actually spotted the balloons and the people who recruited them. This technique motivates the greatest number of people to actually look and to recruit extra searchers because you could still earn part of the prize just by encouraging friends to join the search.

You can already see the effects of this recursive incentive scheme on Tsu. Many people are sharing their invite link as widely as possible in the hope that many people sign up using their link. In that way they could earn money even if their own content is good. So, for example, if Lady Gaga or JK Rowling were to sign up using my link and then post copious quantities of compelling content then I would earn half of what they earn.

With this kind of reward existing users are highly motivated to attempt to recruit other users so this part of their scheme appears to work as expected. But there is a downside risk to the emphasis on paying users for their content.

Money attracts spammers and I am sure that I am not the only person to realize that you could make money using Tsu simply by posting clickbait or, worse still, pirated content. Spammers have probably already discovered that they can earn more by creating many accounts or creating their own recursive tree so that the money is shared between themselves and their sock puppets. Policing this kind of activity will be very hard so some people will be attracted to post content by the incentives but there will not be so many people there to consumer the content.

If Tsu can find a clever algorithm like the recursive incentive to solve this problem, too, then maybe one day it will challenge Facebook. Though if that happens I would not be surprised if Facebook doesn't just copy the revenue sharing features or offer the investors behind Tsu a few billion dollars to sell up.

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