Here is how platforms die: first, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves. Then, they die.
Just to add, the concept of a bait and switch, where you lure a party in with something and then swap it out once they are committed, is not a new idea in the slightest. This is just a modernized, refined tech version.
Uber and Lyft are good examples. Drive out most of the competition with an aggressive early phase where you spend most of your capital to shore up a massively negative balance sheet. You are baiting the customers to you with very low prices.
Then once the competition is eliminated, you raise your prices on the captive consumers that rely on the service to recoup your costs and start making money.
If you, in a video game, have ever lured something in with ranged attacks and then switched to melee to kill it, by plan, you executed this same strategy.
Every single discounted trial period for a subscription is employing a riff on the same concept, where they hope you're too lazy to cancel.
Fools been falling for the bait and switch since ... oh dawn of civilization maybe? Awareness of it defeats it, people don't take bait when they know it's bait. It is not complicated though, and does not require complex understanding to grasp.
IIRC, it's in the article, but what makes enshitification so prevalent in tech is that it mostly involves networks, wherein part of the value of using the application comes from the presence and concentration of other users and providers on it (network effect). Even Amazon, Netflix, and Uber, are subject to that effect because they capture providers, not just users you will interact with. It's a somewhat uniq trait that really exacerbates the problem. This trend will probably continue untill interoperability is legislated.
Right before the pandemic I was trying to not use Amazon anymore (I said f it during the pandemic because it was so hard to get ANYTHING for the first six months, but I need to go back to it). There was some random thing I wanted to buy, so I hunted down the manufacturer's website and ordered it from them directly.
The thing still arrived in an Amazon envelope from an Amazon fulfillment center in an Amazon delivery van, because the small manufacturer was using fulfilled-by-Amazon for all their logistics, even for stuff sold on their own website. So apparently I can't even stop using Amazon if I want to!
Your metaphor reminded me of killing vampires in Skyrim and it made me smile as I also feel a deep sorrow from the fact all major companies now are racing to the bottom while leaving their skidmarks on everything I used to love.
I had just copied the link to post this.
Read this for an actual answer.
That was a good read, the thing is that it seems that all of a sudden a lot of tech companies are getting more and more anti-consumer. I mean it’s not only the whole Reddit and Twitter thing, now Youtube is getting more aggressive with adblocking, Stackoverflow and their mod protest, Google dropping support for the open source diaper and messaging apps on Android…
Many companies are getting more aggressive against their customers, and in the end it feels like the internet as it used to be is really dying, and we might end up with the whole “dead internet theory” becoming reality. I don’t know it just feels very depressing.
It's long, funny, and angry and damn, did it strike a chord with me. It was written in December, '22 so pre-Reddit meltdown but still very relevant to it.
Some highlights include:
Stop talking to each other and start buying things. Stop providing content for free and start paying us for the privilege. Stop shining sunlight on horrors and start advocating for more of them. Stop making communities and start weaponizing misinformation to benefit your betters... It’s the same. It’s always been the same. Stop benefitting from the internet, it’s not for you to enjoy, it’s for us to use to extract money from you. Stop finding beauty and connection in the world, loneliness is more profitable and easier to control.
Over and over again ... I’ve joined online communities, found so much to love there, made friends and created unique spaces that truly felt special, felt like places worth protecting. And they’ve all, eventually, died. For the same reasons and through the same means, though machinations came from a parade of different bad actors. It never really mattered who exactly killed and ate these little worlds. The details. It’s all the same cycle, the same beasts, the same dark hungers.
All ... gone. Dismantled for parts and sold off with zero understanding that the only thing of any value the site ever offered was the community, its content, its connection, its possibilities, its knowledge. And that can’t be sold with the office space and the codebase. These sites exist because of what we do there. But at any moment they can be sold out from under us, to no benefit or profit to the workers—yes, workers, goddammit—who built it into something other than a dot com address and a dusty login screen, yet to the great benefit and profit of those who, more often than not, use the money to make it more difficult for people to connect to and accept each other positively in the future.
It does end on a hopeful note, though.
Don’t ever stop talking to each other. It’s what the internet is really and truly for. Talk to each other and listen to each other. But don’t ever stop connecting. Be a prodigy of the new world. Stand up for the truth no matter how often they take our voices away and try to replace the idea of reality with fucking insane Lovecraftian shit. Don’t give up, don’t let them have this world.
Don’t get cynical. Don’t lose joy. Be us. Because us is what keeps the light on when the night comes closing in. Us doesn’t have a web address. We are wherever we gather. Mastodon, Substack, Patreon, Dreamwidth, AO3, Tumblr, Discord, even the ruins of Twitter, even Facebook and Instagram and Tiktok, god help us all. Even Diaryland.
It doesn’t matter. They’re just names. It doesn’t matter who owns them. Because we own ourselves and our words and the minute the jackals arrive is the same minute we put down the first new chairs in the next oasis. We make our place when we’re together. We make our magic when we connect, typing hands to typing hands.
Hello, world. Come in from the cold. This will be a good place. For awhile. And then we’ll make another one.
Stop buying things and start talking to each other. They’ve always known that was how they lose.
I cannot read that and feel how short-sighted it is. The death of online communities due to money sucks. But how about the actual death of physical people and their physical communities due to literally the exact same thing? It seems douchey to complain about capitalism killing message boards and not connect the idea at all to how it has been killing everything on earth since humans became a thing.
Here it is: good ol' "Whataboutism", I almost had hope that one discussion could survive without someone going "wait, what about this other thing that people know and probably care about, but is completely irrevelant to the current conversation at hand?" but ah well, today just wasn't the day, I guess.
Seriously tho, to borrow your first sentence: I can't help but read something like "But how about the actual death of physical people and their physical communities" and think...are people just incapable of caring about two seperate issues of different scales at the same time? I don't know, maybe I'm weird because I don't suddenly think of the all starving people around the world and bring them up when the topic of the closing of the food joint a couple of blocks down gets brought up by the regulars...
Interest rates. Money isn't free anymore. It's still not super expensive but it's 5x more expensive than what it used to be since 2008.
This is the answer. The age of free money is over and now we are seeing the effect; rampant inflation and high interest rates. The chickens come home to roost, always.
As a result, the burn rate and runway is starting to be factors in all businesses that aren’t making a profit.
Many companies are getting more aggressive against their customers, and in the end it feels like the internet as it used to be is really dying, and we might end up with the whole “dead internet theory” becoming reality. I don’t know it just feels very depressing.
With all the distributed social networks getting popular only among tech-literate people it feels like we're getting a reverse- Eternal September as well.
2022-'23 really has been the year of enshitification
But I think it all started with Tumblr
A few companies open the floodgates and takes a lot of the blame, flak, and focus (see: Netflix, Twitter). Other companies can seize the moment and ride the wave to potentially increase profits with less blowback than they might otherwise receive.
This can't be true, Reddit said they cared about community /s
That was an excellent read and something I've observed many times but failed to describe so well. I really like the analogy of the big teddy bear.
Is it possible for Lemmy to become enshittified? If so, how? Given that it has federation at it's core and it's not owned by any one entity, wouldn't the greater community just abandon the bad instance and self heal, like a lizard loses it's tail?
I understand how federation could die, like what Google Talk did to XMPP, but not how Cory's described process would affect Lemmy.
I think the exception is companies “too big to die.” They serve as the archangels of tech so ALL other goals lead to being bought by FAANG or dying.
Apparently neither Twitter nor Reddit was too big to fail.
Capitalism. Monetise everything no matter the cost to the users
To expand on this, it's not just capitalism - it's greed.
Potato potato
I don't think "greed" is quite the right word.
"Greed" would be the right word if they were trying to make themselves more profitable.
But they're not: they're trying to make themselves profitable at all.
That's not about greed, but about surviving.
You can't survive unless you stop hemorrhaging money at some point.
Maybe the question is "Why do investors invest so many hundred of billions of dollars into companies that cannot be profitable without becoming super-shitty? And why do users join them knowing that they're going to become super-shitty one day?"
I don’t think “greed” is quite the right word. “Greed” would be the right word if they were trying to make themselves more profitable.
I mean regardless of whether it's greed or not it's happening because they need to generate a profit period lol.
“Why do investors invest so many hundred of billions of dollars into companies that cannot be profitable without becoming super-shitty? And why do users join them knowing that they’re going to become super-shitty one day?”
David Harvey has been ringing the bell on this for at least a decade lol. Effectively capitalism runs out of profitable investments when you need continued YoY growth. Like finding trillions of new investment opportunities a year is just not realistic. So capitalists fund bullshit projects and flow their money into markets where the perceived value is significantly greater than any of the actual socially necessary value. And that distance grows greater over time, until people realize 'what the fuck are we funding' (like what happened with crypto, or the metaverse), and then that gap immediately shrinks and the unlucky capitalists lose their money. And that will continue happening.
Well,greed causes capitalism
To expand on this, it’s not just capitalism - it’s greed.
No it's just capitalism lol. Every company has to continue reaping in profits for capitalists or else it dies. This is just Reddit's way of doing that.
do you think this move will be good for their business?
You ask on Lemmy…
Exactly -- this is almost certainly bad for Reddit's business at this point. The problem here isn't necessarily capitalism so much as it is a egocentric CEO gone mad with power.
Yea, I am not a capitalism enjoyer, but it's comical watching people insert their favorite pet politics as the sole reason for everything that's happening.
I don’t even think it’s a bad business decision.
Most people didn’t use 3rd party apps to begin with. I’d guess about 75% of the vocal minority who protested, will continue to use Reddit.
And a very small % of people will quit Reddit in favor of Lemmy.
Cheers for being the very small %
I’d argue it is, because of the damage they’re doing to their brand.
I’ve said it in a couple other threads, but Reddit has other ways they can monetize their 3rd party app users, such as requiring subscriptions to use third party apps, or even by simply giving third party app devs a longer lead time to change to a paid model. Instead of doing either of those things, the CEO had a tantrum and alienated a bunch of people.
But first be not as terrible to the users to attract them, then hope they're lazy enough to not go anywhere when you treat them terribly later while they squeeze value from them
Capitalism. The incentive for any large, profit-motivated firm will always be to get the most people to pay as much as possible for as little as possible.
Startup releases nice product
Product is cheap or free
Startup gains huge customer base while burning through money
Investors are interested
When initial money runs out, startup either asks for VC money or goes public
Now investors want more growth
Product goes through enshitification to extract more money out of customers
Product loses customers as it loses its original charm
A tale as old as time
Enshittification and the raising of interest rates.
The interest rate hike in the USA by the federal government caused this. The companies can't borrow money for nearly free any more. All the entities who would have been offering these loans are now able to buy government bonds with a much more guaranteed return on investment. This means the corporations must squeeze more profit out of their products to pay back loans. There are an enormous amount of large money transactions like this used to run a large business. They do not operate on cash reserves all the time. They have assets and are always evolving to stay relevant. Most businesses have enormous asset holdings but limited liquidity.
This best answers the OPs question. We know why it happens in general, but this is why everything is doing it in overdrive right now.
I also think Spez is trying to rush into an IPO before the bottom truly drops out and the company folds.
The growth of online advertising revenue slowed in 2022 for the first time since 2009.It still grew, just slower.
Interest rates went up.
With the collapse of crypto and Silicon Valley Bank (which was overleveraged in crypto), VC money isn't as free flowing. There really wasn't that much institutional money in crypto, but it's still a destablizing force and has had a ripple effect.
AI is making more people aware of bots. This is related to point #1. A huge, unknown percentage of of FAANG revenue is selling online ads to bots instead of real eyeballs and once the word gets out, ad revenue will slow even more for any service depending on online ads (eg reddit).
One correction,, SVB was not over-leveraged in crypto, they had too many government bonds when the interest rates went up, devaluing them.
That makes a lot more sense. Thank you.
Can't fight the class war if they have us either fighting the culture war, or not talking to each other intelligently.
Dr. Capitalism, or How I listened to stop worrying and love the dollar.
My idea is that they didn't/don't havse a choice but to try something.
They are probably running out of money and no one is giving it to them in this econimical climate.
Maybe profitability, or at least drastic measures, is the request by investors (similary how IMF is "blackmailing" countries when they give them loan).
It might also be an experiment, planned or accidental to male profit of social networks after 20 years of investing.
It is a gamble, but cut has to be made at some point.
Interest rates had been historically low for a long time. Loans were cheap and venture capital was flowing freely. Tech companies could focus more on growing their market share with lots and lots of runway before they needed to become profitable.
Then during the pandemic, Congress gave a massive bailout to businesses. Inflation went skyrocketing, and the Fed had to raise interest rates to limit the damage.
Now money isn't flowing nearly as freely for tech companies. Loans are more expensive, and investors are more content to leave their money in high-yield bonds instead. Tech companies are pivoting to stop chasing market share and instead start taking their profits from their current market share, even if it means their market share stops growing.
These are old era internet companies from when it was considered fiscally fine to be unprofitable as long as you were growing. Those days of the internet are over and the last few companies clinging to that model now have to plan their shift toward either profitability or being sold off for parts.
Because they realize they can get away with pretty much anything.
The companies want to make more money, and they have (what they think) a captive audience that will put up with the increase in costs. Pull off the bandaid all at once to maximize the probability that everyone will shrug and take it.
Both Reddit and Twitter are losing a lot money. They want to squeeze their users for profit.
Regarding Twitter, Elon seems to like trial and error, right? That's how SpaceX developed their rockets - by trying new things and testing them frequently, to see if they work.
So with Twitter I think he's just trying to see what he can get away with. And if he can't get away with something then he'll just roll it back.
As for Reddit, I guess they saw Twitter trying to squeeze more money from their platform and thought "let's try that too".
Twitter had experimented and had a fair system in place through previous trial and error. Elon thought it wasn't good enough and then ran into the wall face-first thinking he was smarter than the average guy. Spoiler: he wasn't.
When a company goes public it becomes something that needs to “appeal to the public”. It’s like when a movie wants to appeal to everyone. By doing so it ends up appealing to no one in particular and it’s a successful meh movie.
Going public then you have a committee of board members making decisions. And who’s going to be on a board? Bunch of rich people who only care about making it the best company for the public. Effectively ditching everything that makes a company risky or unique.
Going public can also be good cos you’ll have public money to invest in new and better tech or systems or acquisitions. So the future they have in mind seem to not include a lot of us. It’s a direction that’ll strip anything unique about reddit and become a successful meh platform
It's a more direct path: going public means they want money. Money, profit, and as much as they can get. That means ads, subscriptions, ads, tracking, ads, data gathering, ads, and the best: get back to work you unpaid peasants mods.
The tech markets have tightened.
To take Reddit’s case: so far, they could raise money at increasing valuation, and that’s how they’d fund their operations without having to have solid monetization. Now that all valuations are down including theirs, they can’t raise anything anymore, leaving them with four (non-exclusive) choices: running out of money soon and closing shop, exiting as fast as possible to get capital injection that way, letting go of most of their staff quickly in order to get leaner, or finding aggressive ways to monetize shortly.
I think Reddit’s monetization situation was grim enough that they’re making precipitated moves towards all the last 3 options, in order not to pick option 1 and die soon. For having been a part of it, a startup looking to exit will choose some very specific metrics that they’re choosing to market their exit on, and then they’ll make all their subsequent moves based on ruthlessly optimizing for those metrics alone. Since those metrics can be way different from the ones the company was using to raise money so far, that by itself can turn a company’s ethos on its head.
I think that’s what we’re seeing across the board in tech companies; except Twitter, which was a rare case of being driven by political calendar, and one person’s political goals. The acquisition agreement was signed just before the markets tightened, and in fact, Musk tried hard to wiggle himself out of it when the market started tightening, because that kind of wasteful ownership doesn’t make sense in the new climate. But this is really specific, and I believe the timing is a coincidence; unlike all the other ones.
They want money. Capitalism strives to constantly grow.
Check out Cory Doctorow's post on a term he coined called enshittification. Good primer to some of the same patterns we are seeing.
I believe there is another comment that breaks down a supposition for Reddit's enshittificationw, too, in this thread.
Inflation , and late stage capitalism.
Deleted
Tbh, not sure many of us would behave differently in the same situation.
Imagine you can get a billion dollars, and in exchange you need to destroy your product.
Would you take the deal?
The user bubble has popped now that investors started questioning why the fuck they’ve been investing huge amounts of money into companies that make no money just because they have lots of users. With that investment money drying up, these tech companies are desperate to start making a profit so they can survive and grow their value still.
TLDR: investment in unprofitable tech companies is drying up and companies that aren’t profitable are scrambling to make money.
Interest rates go up. Quantitative Easing go down.
They might have to play with real money lol
This is it. For nearly 15 years money was basically free for tech companies. Banks don't pay anything, bonds don't pay anything, the stock market is overheated and investors are still looking for return. So if your tech company was already public you could borrow in the form of bank loans or bonds for dirt cheap and if it was still privately held you can get money from individual and corporate investors.
Now that the free money era is over a lot of companies have had to finally think about making a profit so that they can keep the lights on. This is why there have been tens of thousands laid off in the tech sector in the last year or so.
As far as Reddit goes I have no idea what they've been thinking. It seems like they've been spending money developing features nobody wants or needs: locally hosted images and video which have to cost a fortune, live chat, and NFTs, to name a few. They've got the ~20th most popular website in the world with millions of daily active users and they can't figure out how to make it profitable?
The API the third party applications used doesn't serve ads. All they had to do for a bump in revenue is to insert ads and require third party applications to display them or risk losing their API access. Users would grumble but it's a pretty reasonable ask. The fact that they didn't do this demonstrates to me that they don't think the money is in serving ads, they think it's in data mining and they can only get the data they want from the official app.
The other issue to consider is MBAs. Or at least the MBA way of thinking, that "caring about customers" actually means "leaving money on the table." The relentless search for "business efficiency," evaluated in pure accounting terms, can easily lead to destroying the core business due to a lack of understanding of how the core business shows up on a P&L statement.
Any company with a MBA at the helm always seem to make poor choices. Look at the all the companies that have started switching back to engineers for leadership they've started making comebacks.
Reddit wanted to kill third party apps because they have ad blocking features and don't show unwarranted sponsored posts. Reddit wants to serve users as much ads and sponsored content as possible, which was not really able to happen with third party apps.
Twitter had experimented and had a fair system in place through previous trial and error. Elon thought it wasn't good enough and then ran into the wall face-first thinking he was smarter than the average guy. Spoiler: he wasn't.
They are trying to squeeze as much money out of their platforms as possible, regardless of the fact that it's at the expense of users and will downgrade users experiences.
Honestly they do it so consistently that i'm starting to wonder if they have a choice.
A common way to do things for tech startups is that they get venture capital funds, use them to run the business at a loss hoping to acquire market dominance, and then use market dominance to turn a profit. I think a lot of tech startups that we know are currently in phase 2, meaning they've thrown money out the window for years and are now trying to recoup their investments.
Also, Reddit wants to go public and Twitter already is. This is relevant because investors are animals, all they see is short-term profit, and they use their voting power to make the company behave that way.
There's a common thread between both my theories: it's shareholder capitalism. I say this as a lifelong shareholder myself, shareholders ruin everything.
Rabbits
In short: money.
Long story is that a lot of these tech companies started as startups funded by VCs.
Borrowing money was cheap so they got dumped buckets of money onto them to burn in an effort to try to get a foothold and/or kill off competition by undercutting them.
Now that they've gained a foothold and in some cases have a near monopoly or duopoly and now that borrowing money isn't cheap anymore, they need to start cutting cost if not outright turn a profit.
Specifically for Twitter, Musk needs to cut cost because he bought Twitter at a severe premium and has made it less valuable by the minute ever since he took over. This to the point that he is leaving bills unpaid.
Specifically for Reddit, they've burned through all that VC money and have been eying a juicy exit in the form of an IPO. An IPO would be a payday for everyone who initially invested into Reddit because now they can sell their shares for more than what they invested (or at least that's their hope). In order to get a good price once they go public they want to cut cost and increase revenue to seem as valuable as possible.
Specifically for YouTube, the ad game has been generating less and less revenue over time and advertisers have been burned in the past by having their ads placed next to objectionable content.
So the knee-jerk reaction is to severely tighten the rules for content, lest they be demonetized.
This however made creators realize that their livelihood in the form of the pittance that's called AdSense payout is very fragile, so they started moving to doing sponsorships, soliciting Patreon donations and partnering with Nebula.
Now YouTube is missing out on those revenue streams and often ad revenue as well as creators often turn off ads on their video when they have sponsor deals etc.
So what does YouTube do? They started monetizing videos of creators who are not eligible for their partner program (i.e. place ads on videos and not share it with creators) and not give those creators the option to turn off ads, they started severely increasing the amount of ads on videos that do run ads, they started severely pushing YouTube Premium and now they're cracking down on adblockers.
I feel like they all see the inevitability that AI will drastically change the money model very soon. And it will not be to their profit, so best make every penny they can right now is their mentality.> Half the time when I comment, it just spins. :( Edit: Apparently when I comment it posts, but just shows spinning until I manually refresh. Must be on my end.
Rabbits
Dr. Capitalism, or How I listened to stop worrying and love the dollar.
It's not necessarily greed. The infrastructure to keep Reddit alive can't be cheap. How do you pay for that? VC money has dried up so these services that have been free to users are all quickly scrambling to make money. I definitely think they did it wrong. They should have planned the API fee changes out for years instead of trying to force it in a month.
They make money by serving adds to the people providing their site content.
And no, that is not what happened. They were trying to increase their valuation for future share holders.
Edit: adding it is the only greed, that is the reason.
I wonder if restricting API access might be related to the explosion of GPT where ML companies need training data and they've been sucking it up from everywhere they can. Reddit and Twitter realized that they could charge these companies for access instead and hence all of a sudden API access costs money.
That has been the reasoning from Reddit. I believe it's one of those business conveniences where yes, he's not wrong, and gives them an excuse to kill something they think is extracting revenue from them (3rd party apps). Convenient excuse, but no one believes it.
I mean the purpose of a commercial platform is to create profit for the owners of the platform. I find it kind of funny that people are all outraged that these platform are pursuing their business interests. The mistake people made was to rely on these platforms to build their communities thinking that made them stakeholders.
Ultimately a for-profit social platform can only make money via advertising. If you are depending on advertisers to be profitable you become beholden to those advertisers. Advertisers do not care about "community," "sustainability," or what made the platform attractive to users in the first place. But they do care about "public perception," and "number of users," and most importantly number of impressions per user, per hour. The advertisers customers care about things that hurt their branch, so they dont' want NSFW content, they don't want violent content, they don't want controversial content, they don't want anti-capitalist content, they want "quality" impressions.
So if you are twitter or reddit, or facebook, or whatever, if your advertisers make a demand that will piss off your users and make it worse for them you will always do it and you will continue to do it until the platform dies.
from Cory Doctorow's article on 'enshittification', which has become mandatory reading.
Just to add, the concept of a bait and switch, where you lure a party in with something and then swap it out once they are committed, is not a new idea in the slightest. This is just a modernized, refined tech version.
Uber and Lyft are good examples. Drive out most of the competition with an aggressive early phase where you spend most of your capital to shore up a massively negative balance sheet. You are baiting the customers to you with very low prices.
Then once the competition is eliminated, you raise your prices on the captive consumers that rely on the service to recoup your costs and start making money.
If you, in a video game, have ever lured something in with ranged attacks and then switched to melee to kill it, by plan, you executed this same strategy.
Every single discounted trial period for a subscription is employing a riff on the same concept, where they hope you're too lazy to cancel.
Fools been falling for the bait and switch since ... oh dawn of civilization maybe? Awareness of it defeats it, people don't take bait when they know it's bait. It is not complicated though, and does not require complex understanding to grasp.
IIRC, it's in the article, but what makes enshitification so prevalent in tech is that it mostly involves networks, wherein part of the value of using the application comes from the presence and concentration of other users and providers on it (network effect). Even Amazon, Netflix, and Uber, are subject to that effect because they capture providers, not just users you will interact with. It's a somewhat uniq trait that really exacerbates the problem. This trend will probably continue untill interoperability is legislated.
Right before the pandemic I was trying to not use Amazon anymore (I said f it during the pandemic because it was so hard to get ANYTHING for the first six months, but I need to go back to it). There was some random thing I wanted to buy, so I hunted down the manufacturer's website and ordered it from them directly.
The thing still arrived in an Amazon envelope from an Amazon fulfillment center in an Amazon delivery van, because the small manufacturer was using fulfilled-by-Amazon for all their logistics, even for stuff sold on their own website. So apparently I can't even stop using Amazon if I want to!
Your metaphor reminded me of killing vampires in Skyrim and it made me smile as I also feel a deep sorrow from the fact all major companies now are racing to the bottom while leaving their skidmarks on everything I used to love.
I had just copied the link to post this.
Read this for an actual answer.
That was a good read, the thing is that it seems that all of a sudden a lot of tech companies are getting more and more anti-consumer. I mean it’s not only the whole Reddit and Twitter thing, now Youtube is getting more aggressive with adblocking, Stackoverflow and their mod protest, Google dropping support for the open source diaper and messaging apps on Android…
Many companies are getting more aggressive against their customers, and in the end it feels like the internet as it used to be is really dying, and we might end up with the whole “dead internet theory” becoming reality. I don’t know it just feels very depressing.
If you haven't already, I suggest reading Stop Talking to Each Other and Start Buying Things: Three Decades of Survival in the Desert of Social Media, a blog post by Catherynne M. Valent. (It's actually referenced in the article above.)
It's long, funny, and angry and damn, did it strike a chord with me. It was written in December, '22 so pre-Reddit meltdown but still very relevant to it.
Some highlights include:
It does end on a hopeful note, though.
I cannot read that and feel how short-sighted it is. The death of online communities due to money sucks. But how about the actual death of physical people and their physical communities due to literally the exact same thing? It seems douchey to complain about capitalism killing message boards and not connect the idea at all to how it has been killing everything on earth since humans became a thing.
Here it is: good ol' "Whataboutism", I almost had hope that one discussion could survive without someone going "wait, what about this other thing that people know and probably care about, but is completely irrevelant to the current conversation at hand?" but ah well, today just wasn't the day, I guess.
Seriously tho, to borrow your first sentence: I can't help but read something like "But how about the actual death of physical people and their physical communities" and think...are people just incapable of caring about two seperate issues of different scales at the same time? I don't know, maybe I'm weird because I don't suddenly think of the all starving people around the world and bring them up when the topic of the closing of the food joint a couple of blocks down gets brought up by the regulars...
Interest rates. Money isn't free anymore. It's still not super expensive but it's 5x more expensive than what it used to be since 2008.
This is the answer. The age of free money is over and now we are seeing the effect; rampant inflation and high interest rates. The chickens come home to roost, always.
As a result, the burn rate and runway is starting to be factors in all businesses that aren’t making a profit.
With all the distributed social networks getting popular only among tech-literate people it feels like we're getting a reverse- Eternal September as well.
2022-'23 really has been the year of enshitification
But I think it all started with Tumblr
A few companies open the floodgates and takes a lot of the blame, flak, and focus (see: Netflix, Twitter). Other companies can seize the moment and ride the wave to potentially increase profits with less blowback than they might otherwise receive.
This can't be true, Reddit said they cared about community /s
That was an excellent read and something I've observed many times but failed to describe so well. I really like the analogy of the big teddy bear.
Is it possible for Lemmy to become enshittified? If so, how? Given that it has federation at it's core and it's not owned by any one entity, wouldn't the greater community just abandon the bad instance and self heal, like a lizard loses it's tail?
I understand how federation could die, like what Google Talk did to XMPP, but not how Cory's described process would affect Lemmy.
I think the exception is companies “too big to die.” They serve as the archangels of tech so ALL other goals lead to being bought by FAANG or dying.
Apparently neither Twitter nor Reddit was too big to fail.
Capitalism. Monetise everything no matter the cost to the users
To expand on this, it's not just capitalism - it's greed.
Potato potato
I don't think "greed" is quite the right word. "Greed" would be the right word if they were trying to make themselves more profitable. But they're not: they're trying to make themselves profitable at all. That's not about greed, but about surviving. You can't survive unless you stop hemorrhaging money at some point.
Maybe the question is "Why do investors invest so many hundred of billions of dollars into companies that cannot be profitable without becoming super-shitty? And why do users join them knowing that they're going to become super-shitty one day?"
I mean regardless of whether it's greed or not it's happening because they need to generate a profit period lol.
David Harvey has been ringing the bell on this for at least a decade lol. Effectively capitalism runs out of profitable investments when you need continued YoY growth. Like finding trillions of new investment opportunities a year is just not realistic. So capitalists fund bullshit projects and flow their money into markets where the perceived value is significantly greater than any of the actual socially necessary value. And that distance grows greater over time, until people realize 'what the fuck are we funding' (like what happened with crypto, or the metaverse), and then that gap immediately shrinks and the unlucky capitalists lose their money. And that will continue happening.
Well,greed causes capitalism
No it's just capitalism lol. Every company has to continue reaping in profits for capitalists or else it dies. This is just Reddit's way of doing that.
YES.
do you think this move will be good for their business?
You ask on Lemmy…
Exactly -- this is almost certainly bad for Reddit's business at this point. The problem here isn't necessarily capitalism so much as it is a egocentric CEO gone mad with power.
Yea, I am not a capitalism enjoyer, but it's comical watching people insert their favorite pet politics as the sole reason for everything that's happening.
I don’t even think it’s a bad business decision.
Most people didn’t use 3rd party apps to begin with. I’d guess about 75% of the vocal minority who protested, will continue to use Reddit.
And a very small % of people will quit Reddit in favor of Lemmy.
Cheers for being the very small %
I’d argue it is, because of the damage they’re doing to their brand.
I’ve said it in a couple other threads, but Reddit has other ways they can monetize their 3rd party app users, such as requiring subscriptions to use third party apps, or even by simply giving third party app devs a longer lead time to change to a paid model. Instead of doing either of those things, the CEO had a tantrum and alienated a bunch of people.
But first be not as terrible to the users to attract them, then hope they're lazy enough to not go anywhere when you treat them terribly later while they squeeze value from them
Capitalism. The incentive for any large, profit-motivated firm will always be to get the most people to pay as much as possible for as little as possible.
A tale as old as time
Enshittification and the raising of interest rates.
The interest rate hike in the USA by the federal government caused this. The companies can't borrow money for nearly free any more. All the entities who would have been offering these loans are now able to buy government bonds with a much more guaranteed return on investment. This means the corporations must squeeze more profit out of their products to pay back loans. There are an enormous amount of large money transactions like this used to run a large business. They do not operate on cash reserves all the time. They have assets and are always evolving to stay relevant. Most businesses have enormous asset holdings but limited liquidity.
This best answers the OPs question. We know why it happens in general, but this is why everything is doing it in overdrive right now.
I also think Spez is trying to rush into an IPO before the bottom truly drops out and the company folds.
The growth of online advertising revenue slowed in 2022 for the first time since 2009.It still grew, just slower.
Interest rates went up.
With the collapse of crypto and Silicon Valley Bank (which was overleveraged in crypto), VC money isn't as free flowing. There really wasn't that much institutional money in crypto, but it's still a destablizing force and has had a ripple effect.
AI is making more people aware of bots. This is related to point #1. A huge, unknown percentage of of FAANG revenue is selling online ads to bots instead of real eyeballs and once the word gets out, ad revenue will slow even more for any service depending on online ads (eg reddit).
One correction,, SVB was not over-leveraged in crypto, they had too many government bonds when the interest rates went up, devaluing them.
That makes a lot more sense. Thank you.
Can't fight the class war if they have us either fighting the culture war, or not talking to each other intelligently.
Dr. Capitalism, or How I listened to stop worrying and love the dollar.
Probably enshitification!
Look it up.
https://pluralistic.net/tag/enshittification/
My idea is that they didn't/don't havse a choice but to try something.
They are probably running out of money and no one is giving it to them in this econimical climate.
Maybe profitability, or at least drastic measures, is the request by investors (similary how IMF is "blackmailing" countries when they give them loan).
It might also be an experiment, planned or accidental to male profit of social networks after 20 years of investing.
It is a gamble, but cut has to be made at some point.
Interest rates had been historically low for a long time. Loans were cheap and venture capital was flowing freely. Tech companies could focus more on growing their market share with lots and lots of runway before they needed to become profitable.
Then during the pandemic, Congress gave a massive bailout to businesses. Inflation went skyrocketing, and the Fed had to raise interest rates to limit the damage.
Now money isn't flowing nearly as freely for tech companies. Loans are more expensive, and investors are more content to leave their money in high-yield bonds instead. Tech companies are pivoting to stop chasing market share and instead start taking their profits from their current market share, even if it means their market share stops growing.
These are old era internet companies from when it was considered fiscally fine to be unprofitable as long as you were growing. Those days of the internet are over and the last few companies clinging to that model now have to plan their shift toward either profitability or being sold off for parts.
Because they realize they can get away with pretty much anything.
The companies want to make more money, and they have (what they think) a captive audience that will put up with the increase in costs. Pull off the bandaid all at once to maximize the probability that everyone will shrug and take it.
Both Reddit and Twitter are losing a lot money. They want to squeeze their users for profit.
Regarding Twitter, Elon seems to like trial and error, right? That's how SpaceX developed their rockets - by trying new things and testing them frequently, to see if they work.
So with Twitter I think he's just trying to see what he can get away with. And if he can't get away with something then he'll just roll it back.
As for Reddit, I guess they saw Twitter trying to squeeze more money from their platform and thought "let's try that too".
Twitter had experimented and had a fair system in place through previous trial and error. Elon thought it wasn't good enough and then ran into the wall face-first thinking he was smarter than the average guy. Spoiler: he wasn't.
When a company goes public it becomes something that needs to “appeal to the public”. It’s like when a movie wants to appeal to everyone. By doing so it ends up appealing to no one in particular and it’s a successful meh movie.
Going public then you have a committee of board members making decisions. And who’s going to be on a board? Bunch of rich people who only care about making it the best company for the public. Effectively ditching everything that makes a company risky or unique.
Going public can also be good cos you’ll have public money to invest in new and better tech or systems or acquisitions. So the future they have in mind seem to not include a lot of us. It’s a direction that’ll strip anything unique about reddit and become a successful meh platform
It's a more direct path: going public means they want money. Money, profit, and as much as they can get. That means ads, subscriptions, ads, tracking, ads, data gathering, ads, and the best: get back to work you unpaid
peasantsmods.The tech markets have tightened.
To take Reddit’s case: so far, they could raise money at increasing valuation, and that’s how they’d fund their operations without having to have solid monetization. Now that all valuations are down including theirs, they can’t raise anything anymore, leaving them with four (non-exclusive) choices: running out of money soon and closing shop, exiting as fast as possible to get capital injection that way, letting go of most of their staff quickly in order to get leaner, or finding aggressive ways to monetize shortly.
I think Reddit’s monetization situation was grim enough that they’re making precipitated moves towards all the last 3 options, in order not to pick option 1 and die soon. For having been a part of it, a startup looking to exit will choose some very specific metrics that they’re choosing to market their exit on, and then they’ll make all their subsequent moves based on ruthlessly optimizing for those metrics alone. Since those metrics can be way different from the ones the company was using to raise money so far, that by itself can turn a company’s ethos on its head.
I think that’s what we’re seeing across the board in tech companies; except Twitter, which was a rare case of being driven by political calendar, and one person’s political goals. The acquisition agreement was signed just before the markets tightened, and in fact, Musk tried hard to wiggle himself out of it when the market started tightening, because that kind of wasteful ownership doesn’t make sense in the new climate. But this is really specific, and I believe the timing is a coincidence; unlike all the other ones.
They want money. Capitalism strives to constantly grow.
Check out Cory Doctorow's post on a term he coined called enshittification. Good primer to some of the same patterns we are seeing.
I believe there is another comment that breaks down a supposition for Reddit's enshittificationw, too, in this thread.
Inflation , and late stage capitalism.
Deleted
Tbh, not sure many of us would behave differently in the same situation. Imagine you can get a billion dollars, and in exchange you need to destroy your product. Would you take the deal?
The user bubble has popped now that investors started questioning why the fuck they’ve been investing huge amounts of money into companies that make no money just because they have lots of users. With that investment money drying up, these tech companies are desperate to start making a profit so they can survive and grow their value still.
TLDR: investment in unprofitable tech companies is drying up and companies that aren’t profitable are scrambling to make money.
Interest rates go up. Quantitative Easing go down.
They might have to play with real money lol
This is it. For nearly 15 years money was basically free for tech companies. Banks don't pay anything, bonds don't pay anything, the stock market is overheated and investors are still looking for return. So if your tech company was already public you could borrow in the form of bank loans or bonds for dirt cheap and if it was still privately held you can get money from individual and corporate investors.
Now that the free money era is over a lot of companies have had to finally think about making a profit so that they can keep the lights on. This is why there have been tens of thousands laid off in the tech sector in the last year or so.
As far as Reddit goes I have no idea what they've been thinking. It seems like they've been spending money developing features nobody wants or needs: locally hosted images and video which have to cost a fortune, live chat, and NFTs, to name a few. They've got the ~20th most popular website in the world with millions of daily active users and they can't figure out how to make it profitable?
The API the third party applications used doesn't serve ads. All they had to do for a bump in revenue is to insert ads and require third party applications to display them or risk losing their API access. Users would grumble but it's a pretty reasonable ask. The fact that they didn't do this demonstrates to me that they don't think the money is in serving ads, they think it's in data mining and they can only get the data they want from the official app.
The other issue to consider is MBAs. Or at least the MBA way of thinking, that "caring about customers" actually means "leaving money on the table." The relentless search for "business efficiency," evaluated in pure accounting terms, can easily lead to destroying the core business due to a lack of understanding of how the core business shows up on a P&L statement.
Any company with a MBA at the helm always seem to make poor choices. Look at the all the companies that have started switching back to engineers for leadership they've started making comebacks.
capitalism — they want more money
enshittification
Money. It really is that simple.
Reddit wanted to kill third party apps because they have ad blocking features and don't show unwarranted sponsored posts. Reddit wants to serve users as much ads and sponsored content as possible, which was not really able to happen with third party apps.
Twitter had experimented and had a fair system in place through previous trial and error. Elon thought it wasn't good enough and then ran into the wall face-first thinking he was smarter than the average guy. Spoiler: he wasn't.
They are trying to squeeze as much money out of their platforms as possible, regardless of the fact that it's at the expense of users and will downgrade users experiences.
Honestly they do it so consistently that i'm starting to wonder if they have a choice.
A common way to do things for tech startups is that they get venture capital funds, use them to run the business at a loss hoping to acquire market dominance, and then use market dominance to turn a profit. I think a lot of tech startups that we know are currently in phase 2, meaning they've thrown money out the window for years and are now trying to recoup their investments.
Also, Reddit wants to go public and Twitter already is. This is relevant because investors are animals, all they see is short-term profit, and they use their voting power to make the company behave that way.
There's a common thread between both my theories: it's shareholder capitalism. I say this as a lifelong shareholder myself, shareholders ruin everything.
Rabbits
In short: money.
Long story is that a lot of these tech companies started as startups funded by VCs.
Borrowing money was cheap so they got dumped buckets of money onto them to burn in an effort to try to get a foothold and/or kill off competition by undercutting them.
Now that they've gained a foothold and in some cases have a near monopoly or duopoly and now that borrowing money isn't cheap anymore, they need to start cutting cost if not outright turn a profit.
And so the enshittification begins.
Specifically for Twitter, Musk needs to cut cost because he bought Twitter at a severe premium and has made it less valuable by the minute ever since he took over. This to the point that he is leaving bills unpaid.
Specifically for Reddit, they've burned through all that VC money and have been eying a juicy exit in the form of an IPO. An IPO would be a payday for everyone who initially invested into Reddit because now they can sell their shares for more than what they invested (or at least that's their hope). In order to get a good price once they go public they want to cut cost and increase revenue to seem as valuable as possible.
Specifically for YouTube, the ad game has been generating less and less revenue over time and advertisers have been burned in the past by having their ads placed next to objectionable content.
So the knee-jerk reaction is to severely tighten the rules for content, lest they be demonetized.
This however made creators realize that their livelihood in the form of the pittance that's called AdSense payout is very fragile, so they started moving to doing sponsorships, soliciting Patreon donations and partnering with Nebula.
Now YouTube is missing out on those revenue streams and often ad revenue as well as creators often turn off ads on their video when they have sponsor deals etc. So what does YouTube do? They started monetizing videos of creators who are not eligible for their partner program (i.e. place ads on videos and not share it with creators) and not give those creators the option to turn off ads, they started severely increasing the amount of ads on videos that do run ads, they started severely pushing YouTube Premium and now they're cracking down on adblockers.
I feel like they all see the inevitability that AI will drastically change the money model very soon. And it will not be to their profit, so best make every penny they can right now is their mentality.> Half the time when I comment, it just spins. :( Edit: Apparently when I comment it posts, but just shows spinning until I manually refresh. Must be on my end.
Rabbits
Dr. Capitalism, or How I listened to stop worrying and love the dollar.
As always, $$$
Cory Doctorow termed it "Enshittification", and wrote about the process here: https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys
I'm glad I read through the whole thing.
Bummed that I won't be winning a testicle 😰
I'm glad I read through the whole thing.
Bummed that I won't be winning a testicle 😰
I'm glad I read through the whole thing.
Bummed that I won't be winning a testicle 😰
Stupidity and greed, a great combination!
It's not necessarily greed. The infrastructure to keep Reddit alive can't be cheap. How do you pay for that? VC money has dried up so these services that have been free to users are all quickly scrambling to make money. I definitely think they did it wrong. They should have planned the API fee changes out for years instead of trying to force it in a month.
They make money by serving adds to the people providing their site content.
And no, that is not what happened. They were trying to increase their valuation for future share holders.
Edit: adding it is the only greed, that is the reason.
I wonder if restricting API access might be related to the explosion of GPT where ML companies need training data and they've been sucking it up from everywhere they can. Reddit and Twitter realized that they could charge these companies for access instead and hence all of a sudden API access costs money.
That has been the reasoning from Reddit. I believe it's one of those business conveniences where yes, he's not wrong, and gives them an excuse to kill something they think is extracting revenue from them (3rd party apps). Convenient excuse, but no one believes it.
I mean the purpose of a commercial platform is to create profit for the owners of the platform. I find it kind of funny that people are all outraged that these platform are pursuing their business interests. The mistake people made was to rely on these platforms to build their communities thinking that made them stakeholders.
Ultimately a for-profit social platform can only make money via advertising. If you are depending on advertisers to be profitable you become beholden to those advertisers. Advertisers do not care about "community," "sustainability," or what made the platform attractive to users in the first place. But they do care about "public perception," and "number of users," and most importantly number of impressions per user, per hour. The advertisers customers care about things that hurt their branch, so they dont' want NSFW content, they don't want violent content, they don't want controversial content, they don't want anti-capitalist content, they want "quality" impressions.
So if you are twitter or reddit, or facebook, or whatever, if your advertisers make a demand that will piss off your users and make it worse for them you will always do it and you will continue to do it until the platform dies.