Unlimited is like a Ponzi Scheme • Hacker News Board

Re: Unlimited is like a Ponzi Scheme

#31

Post by tomhoward » Sun, Dec 13, 2020, 2:43 PM UTC

giantg2 wrote: post #24

tomhoward wrote: post #12

Earlier quoted context omitted.

Sure - the title is crafted for rhetorical effect not literal accuracy. But it's comparable, in the sense that the "returns" for earlier customers (ongoing provision of storage service) are funded out of the contributions of later new customers, and when the supply of new customers runs out, the returns can no longer be funded and the system collapses. Edit: Also not that the phrase "is a Ponzi scheme" is often used…

I think accuracy is important. If an author isn't trustworthy or correct on this, then why should we listen to their other information in good faith? I think it's not just new users. It's also new content/files. Existing users uploading more pictures can also generate revenue, right?

It's a metaphor or analogy, which is a perfectly commonplace and legitimate form of argumentation.

> I think it's not just new users. It's also new content/files. Existing users uploading more pictures can also generate revenue, right?

Well, no; if it's an unlimited usage plan, then there's no more revenue from existing users, but they become more costly to support as time goes on, making the system ever more unsustainable and destined for collapse.

Re: Unlimited is like a Ponzi Scheme

#32

Post by cipherboy » Sun, Dec 13, 2020, 2:45 PM UTC

Is a like -> is like a?

Like never appears in the original article.

Re: Unlimited is like a Ponzi Scheme

#33

Post by FpUser » Sun, Dec 13, 2020, 2:48 PM UTC

redm wrote: post #3

I launched MediaFire as an unlimited storage provider in 2006. While it is true that data accumulates as time goes on, it's not as big of an issue as described. Older data tends to be smaller, for example, photos were lower resolution. That is compounded by the fact that storage is getting cheaper. For example, the price for a 500GB drive in 2006 is the same as a 14TB drive price today. If your getting the same subsc…

>"I launched MediaFire as an unlimited storage provider in 2006."

Oh hello there. Best wishes and hope life is wonderful for you.

The company that saved me big bucks on Amazon S3 fees that were absolutely insane. Yet the same company that completely ignores requests to fix disappearing files that remain in disappeared state despite re-upload.

Re: Unlimited is like a Ponzi Scheme

#34

Post by anoncake » Sun, Dec 13, 2020, 2:49 PM UTC

colde wrote: post #5

giantg2 wrote: post #2

It's not really a ponzi scheme. You're not investing (uploading) your images with an expected return on that investment.

Yeah, it seems closer to a "tragedy of the commons" kind of situation. Where a few users deplete a shared resource affecting everyone else.

Except that they did not pay for their fair share of a limited resource but for an unlimited amount of it.

Re: Unlimited is like a Ponzi Scheme

#35

Post by yokto » Sun, Dec 13, 2020, 2:51 PM UTC

There is an exception to what the author is saying: make the cost of adding data for the user exponential (or at least non-linear). This is what Crashplan does with their unlimited backup model. It's unlimited, but at some point (number and size of files to keep track of), your computer will be limited by its processing capabilities in a manner that you can only solve by throwing more metal at the problem, which becomes uneconomical for the user. (Source: the internet, I can't remember where, but might find it when I'm back on my computer)

Re: Unlimited is like a Ponzi Scheme

#36

Post by foolmeonce » Sun, Dec 13, 2020, 2:57 PM UTC

giantg2 wrote: post #24

tomhoward wrote: post #12

Earlier quoted context omitted.

Sure - the title is crafted for rhetorical effect not literal accuracy. But it's comparable, in the sense that the "returns" for earlier customers (ongoing provision of storage service) are funded out of the contributions of later new customers, and when the supply of new customers runs out, the returns can no longer be funded and the system collapses. Edit: Also not that the phrase "is a Ponzi scheme" is often used…

I think accuracy is important. If an author isn't trustworthy or correct on this, then why should we listen to their other information in good faith? I think it's not just new users. It's also new content/files. Existing users uploading more pictures can also generate revenue, right?

It fits the flow model of a ponzi scheme:

At each future stage a growth of fresh input is required to make up for a growing backlog of past transactions. Since the world is finite, the available growth must come to an end while the back log does not. (A possible disagreement with this is if expected media quality/size is growing in size similar to Moore's law.)

The author makes their own distinctions in the article, but I don't see how you could choose a more appropriate title without assuming a lot of pre-existing knowledge in the audience.

Re: Unlimited is like a Ponzi Scheme

#37

Post by rognjen » Sun, Dec 13, 2020, 2:59 PM UTC

While in general I understand (and agree to an extent) the sentiment it's nothing at all like a Ponzi scheme.

Re: Unlimited is like a Ponzi Scheme

#38

Post by Spivak » Sun, Dec 13, 2020, 3:00 PM UTC

anoncake wrote: post #34

colde wrote: post #5

Earlier quoted context omitted.

Yeah, it seems closer to a "tragedy of the commons" kind of situation. Where a few users deplete a shared resource affecting everyone else.

Except that they did not pay for their fair share of a limited resource but for an unlimited amount of it.

Can we please dispel this notion that “unlimited” means literally unbounded to the point of absurdity. Seemingly everyone understands that bottomless breadsticks doesn’t mean that Olive Garden literally has infinite breadsticks and that you’re not allow to show up with a semi and tell them to fill it up.

Unlimited means that you don’t have a set quota and as long as your usage doesn’t cross over into genuine abuse of the service that you don’t have to worry about it. If you cat /dev/random into your unlimited storage provider 24/7/365 you can’t really be surprised when they ban you.

Re: Unlimited is like a Ponzi Scheme

#39

Post by jariel » Sun, Dec 13, 2020, 3:02 PM UTC

crisper wrote: post #23

jariel wrote: post #10

It's a hustle but not really a Ponzi scheme.

Yeah definitely more of a hustle than a Ponzi scheme. I would maybe call it a long slow bait and switch?

Yes, Bait and Switch is the right term.

The author is trying to allude to the positive business sentiment of an every growing base which fuels the hustle until there are no more takers, but it doesn't quite work I think because it was always costing and losing money.

With Ponzis, you need cash from ever more investors to payout previous investors.

Re: Unlimited is like a Ponzi Scheme

#40

Post by imtringued » Sun, Dec 13, 2020, 3:05 PM UTC

est31 wrote: post #25

redm wrote: post #17

Earlier quoted context omitted.

There's nothing you can do other than move away from unlimited storage. The model, as the OP states, works well initially, however over time, "power users" emerge to want to make use of unlimited. The only choice is to remove unlimited storage as a fixed subscription fee. You may have metered billing (unlimited storage but you are charged per GB) or to do away with unlimited storage all together. Keep in mind, that c…

Marketing wise, it's better for the business to market with "unlimited" than creating a limit, even if it won't affect 90% of the users. For users, it creates a different feeling of freedom, even if you never use that freedom.

If you still want to play that game then restrict the service in other ways. You could for example throttle user upload to 10mbit/s if they have uploaded more than 500GB per month. That way no single user can practically upload more than 3.5TB per month. The 2 petabyte abuse scenario would have been avoided while still being able to brag about some users storing 50TB of data on your platform.