Dreamer
September 4th, 2006, 04:18 PM
I remember when YMMSS claimed that an economics professor had some doubt about the program, but when kim explained it to him, he became a convertor. Who was this masked genious? The world may never know.
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*** ECON 101 ***
**************
In a perfectly competitve market, the profit margin approaches zero. Why?
Lets say I can produce a widget for $1 and sell it for $10. Its a really good widget and has an implied value of $10 and it becomes a very popular item.
After awhile of only me selling this widget, someone comes around and thinks...they can make the exact same widget for $2 (they dont know how much it costs me) and they can sell it for $9. Now, they become part of the widget selling community, and to keep competitive with them, I either must sell mine at $9 or below. So, i stay with $9.
Another party realizes they can make the product and sell it for $8. This trend continue until somebody realizes they can make the product for $.95 and sell it for $1. Granted $.05 per unit of this widget is not that impressive, but if they can sell a million untis in a certain time frame, they can make alot of money. And who do they sell it to? They sell it to the retailers, you and me, who are not able to produce the widget for less then the cost to us.
The problem with this scenario, is the profit margin per widget for some retailers isnt worth selling it. Maybe they dont have the space for the widget (A higher profit item is using the space) or they dont have the clientelle to be able to sell the widgets. So, as profits decrease, some businesses can no longer sell the widget and must leave the market. So, the profit margin for those who remain is close to zero, because where there is a profit to be made, there will be people wanting some of that profit.
And, back to the people who produce the widgets for $.95 and sell for $1. If they do not discriminate against who they sell it to, and willing to sell it for the same price to the end consumer and a business, that will hurt the widget market even more once the end consumer can locate these sellers.
Thats the supply side of the widget market. What will be the overall effect of the demand side? In the long run, it should remain relatively unchanged, or changed very little. Some people will lose faith in the widgets, because of the decreasing cost, and maybe the cheaper widgets are inferior. However, some people will have an increased demand for widgets because they are cheaper. So, overall the demand should be about the same.
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*** The market of STA ***
*********************
Unlike a perfectly competitive market, each sale to IBAs becomes a liablitiy. Lets consider an extreme example.
STA lands Microsoft. Microsoft decides to spend its entire advertising budget with STA instead of tv, radio, newspapers and their own internet campaigns. 100% of the advertising buget will go to STA irregardless if they make a sale, or if anybody clicks on their banner.
So, lets say the first week, they are able to match $1/$. So, if I own a $10 EPC (or whatever they are called) the first week I will make $10. Everybody doubles their money that first week.
What will happen? Some IBAs, happy to finally make a profit, will just take their money and run for the hills. They dont plan on putting any more money in this business, because they already learned there lesson.
Some will mortgage their house to make back some money. A whole bunch of players will dump money into STA so they can double their money in a week.
Unless STA is able to find advertisers that increase at the same rate of purchases by IBAs, the profit per unit will decrease. If the IBA sales double in a week, the profit per each one, assuming the same advertising expenditure of Microsoft, will be halved.
$5 a week off a $10 investment isnt that shabby. So, we run intot he same scenario as a perfectly competitive market. The amount of liabilities to STA via purchases of IBAs will increase while there is enough theoritical profit to be made from each sale.
Eventually, the profit per $320 will be at today's level. $.01/per $320. The problem, though, is that instead of a total of 500,000 positions in the matrix there might be 50million positions. And, what happens when Microsoft decides to leave? STA fails over night.
***************
*** Fixing STA ***
***************
The original lie of 100,000 members making $100,000 isnt that impressive. In the Los Angeles area there is a publication called "The Recycler". Place free ads. It has an online presence and it has a cirulation of 225,000, based on their website, and boosts 10,000 distributed newspapers in a 5 miles radius. So, 100,000 memebers is nothing. Do you think there are 100,000 members who pick up the publication or surf online that have a yearly household income of $100,000? I'd bet money on it. I wont even give any statistics for eBay, who YMAuctions wanted to compete against. Mostly because I dont know the statistics. I have found many businesses who advertise wtih eBay. Its harder because eBay doesnt allow links to ur site, but we got around it.
Steps:
1 - Offer to buy back any positions at $.10/$1. So, if someone has $100,000 worth of positions, offer them $1,000. I think alot of people would go for that. Remove those positions out completely so everybody else makes more money.
2 - Require 1 minute of reading per $10 investment. So, if someoby has one $320, they must read for 32 minutes. If they have 10 of those positions, they MUST read for 320 minutes a month. Any positions that arent being read for their time will expire a month without reading. So, if somebody has 10 $320 positions, and only reads for 32 minutes a week for a month, 9 of those positions will expire and be removed from the system.
3 - All IBAs should have a controling interest in the company, and be told everything that is going on all the time. No generalities. No confidentality. None of that BS.
4 - Any person on payroll that is not performing should be fired. Firings should be immediately for all current persons for failing to perform for 2 years.
5 - Kim, Esto, Mike, Jim, cashmouth, anybody who still actively supports STA should be thrown in jail for promoting and profiting from a scam. These people should be sued for all the money and property they own and returned to IBAs for failing to perform as expected.
**************
*** ECON 101 ***
**************
In a perfectly competitve market, the profit margin approaches zero. Why?
Lets say I can produce a widget for $1 and sell it for $10. Its a really good widget and has an implied value of $10 and it becomes a very popular item.
After awhile of only me selling this widget, someone comes around and thinks...they can make the exact same widget for $2 (they dont know how much it costs me) and they can sell it for $9. Now, they become part of the widget selling community, and to keep competitive with them, I either must sell mine at $9 or below. So, i stay with $9.
Another party realizes they can make the product and sell it for $8. This trend continue until somebody realizes they can make the product for $.95 and sell it for $1. Granted $.05 per unit of this widget is not that impressive, but if they can sell a million untis in a certain time frame, they can make alot of money. And who do they sell it to? They sell it to the retailers, you and me, who are not able to produce the widget for less then the cost to us.
The problem with this scenario, is the profit margin per widget for some retailers isnt worth selling it. Maybe they dont have the space for the widget (A higher profit item is using the space) or they dont have the clientelle to be able to sell the widgets. So, as profits decrease, some businesses can no longer sell the widget and must leave the market. So, the profit margin for those who remain is close to zero, because where there is a profit to be made, there will be people wanting some of that profit.
And, back to the people who produce the widgets for $.95 and sell for $1. If they do not discriminate against who they sell it to, and willing to sell it for the same price to the end consumer and a business, that will hurt the widget market even more once the end consumer can locate these sellers.
Thats the supply side of the widget market. What will be the overall effect of the demand side? In the long run, it should remain relatively unchanged, or changed very little. Some people will lose faith in the widgets, because of the decreasing cost, and maybe the cheaper widgets are inferior. However, some people will have an increased demand for widgets because they are cheaper. So, overall the demand should be about the same.
*********************
*** The market of STA ***
*********************
Unlike a perfectly competitive market, each sale to IBAs becomes a liablitiy. Lets consider an extreme example.
STA lands Microsoft. Microsoft decides to spend its entire advertising budget with STA instead of tv, radio, newspapers and their own internet campaigns. 100% of the advertising buget will go to STA irregardless if they make a sale, or if anybody clicks on their banner.
So, lets say the first week, they are able to match $1/$. So, if I own a $10 EPC (or whatever they are called) the first week I will make $10. Everybody doubles their money that first week.
What will happen? Some IBAs, happy to finally make a profit, will just take their money and run for the hills. They dont plan on putting any more money in this business, because they already learned there lesson.
Some will mortgage their house to make back some money. A whole bunch of players will dump money into STA so they can double their money in a week.
Unless STA is able to find advertisers that increase at the same rate of purchases by IBAs, the profit per unit will decrease. If the IBA sales double in a week, the profit per each one, assuming the same advertising expenditure of Microsoft, will be halved.
$5 a week off a $10 investment isnt that shabby. So, we run intot he same scenario as a perfectly competitive market. The amount of liabilities to STA via purchases of IBAs will increase while there is enough theoritical profit to be made from each sale.
Eventually, the profit per $320 will be at today's level. $.01/per $320. The problem, though, is that instead of a total of 500,000 positions in the matrix there might be 50million positions. And, what happens when Microsoft decides to leave? STA fails over night.
***************
*** Fixing STA ***
***************
The original lie of 100,000 members making $100,000 isnt that impressive. In the Los Angeles area there is a publication called "The Recycler". Place free ads. It has an online presence and it has a cirulation of 225,000, based on their website, and boosts 10,000 distributed newspapers in a 5 miles radius. So, 100,000 memebers is nothing. Do you think there are 100,000 members who pick up the publication or surf online that have a yearly household income of $100,000? I'd bet money on it. I wont even give any statistics for eBay, who YMAuctions wanted to compete against. Mostly because I dont know the statistics. I have found many businesses who advertise wtih eBay. Its harder because eBay doesnt allow links to ur site, but we got around it.
Steps:
1 - Offer to buy back any positions at $.10/$1. So, if someone has $100,000 worth of positions, offer them $1,000. I think alot of people would go for that. Remove those positions out completely so everybody else makes more money.
2 - Require 1 minute of reading per $10 investment. So, if someoby has one $320, they must read for 32 minutes. If they have 10 of those positions, they MUST read for 320 minutes a month. Any positions that arent being read for their time will expire a month without reading. So, if somebody has 10 $320 positions, and only reads for 32 minutes a week for a month, 9 of those positions will expire and be removed from the system.
3 - All IBAs should have a controling interest in the company, and be told everything that is going on all the time. No generalities. No confidentality. None of that BS.
4 - Any person on payroll that is not performing should be fired. Firings should be immediately for all current persons for failing to perform for 2 years.
5 - Kim, Esto, Mike, Jim, cashmouth, anybody who still actively supports STA should be thrown in jail for promoting and profiting from a scam. These people should be sued for all the money and property they own and returned to IBAs for failing to perform as expected.