I mean there’s Reddit ofc, as well as Twitter in its entirety, Discord is implementing some dumb updates, there are issues with Tumblr as well as everything to do with Meta, and I’m sure there are plenty more (and I haven’t even touched other digital media, for example the Sims). Why is it all happening in the span of about a couple months?
Late stage capitalism You make a business and it goes well, you make some money everyone is happy.
But with time your profits will plateau or even decline. It’s natural, but businesses don’t understand that it is insane to expect a company to always turn crazy profits when the product does not evolve.
Companies like apple and Microsoft don’t worry as much because they are constantly evolving with new product.
Companies like Twitter, Facebook, reddit, Netflix have hit a wall where there really isn’t anywhere else to go so they start making shareholder centered decisions made by people who aren’t even in touch with the user base of their product.
It’s the money.
US Fed has raised interest rates, destroying money for the first time in decades in an effort to stop our inflation problem
The knock on effects is that banks literally have less money to lend to companies. Some companies are affected more than others by this environment. Tech was hit hard, extremely hard.
With hundreds of thousands of layoffs, tech industry is contracting. Silicon Valley bank literally evaporated in the span of 3 days. Twitter was losing money and had to sell out. StackOverflow is losing money and is currently selling out.
In this environment, Reddit is about to launch it’s long awaited IPO, the time when the public is allowed to directly buy Reddit stock and invest into the company. That’s what Initial Public Offering means. If Reddit does well, Reddit will pull in lots of money this year through this IPO.
The CEO of Reddit needs to prove Reddit is profitable, or if not profitable… Will eventually be profitable. Stockholders don’t care about Reddit drama for the most part, but most are smart enough to read financial sheets. Reddit needs to show growing revenue, growing profits and cutting costs to attract money.
As such, all of what Reddit’s CEO has done makes sense in the context of the IPO. He is betting that shareholders won’t notice the drop of high quality content creators from Reddit, since that’s not a financial number that’s reported. He can IPO, raising millions, maybe even billions for himself. The golden parachute outta here when everything gets screwed up in a year or two and collapses.
I think today’s investors are smarter though, and the bearish economy and high interest rates means more investors will pay attention to underlying issues.
Yeah, investors are going to be even more inclined to identify exactly why the platform might be successful in the future. They’re not going to blindly throw money at new IPOs (as much) because debt isn’t free anymore.
Lets take the example of Reddit. Reddit could have kept its costs to the minimum and could have run the site with the ad revenue that came in. In fact they could have talked transparently about their opex and asked for a simple donation drive every now and then like Wikipedia. If need be, they could have removed silly GIF replies and other stuff and focused on text alone. However this would not let them become the next Facebook. That’s what they wanted to be. At some point in their story was a choice to be forums 2.0 or get into a race to become a cash grab. Sadly they went for the latter.
n fact they could have talked transparently about their opex and asked for a simple donation drive every now and then like Wikipedia.
Let’s remember this about Kbin and the Fediverse.
I would donate to help counterbalance the wave of migration that brought me here.
Start making alternatives, open source alternatives.
Cory Doctorow has some very interesting blogposts on the topic. He call it enshittification. It’s more or less the business model of plattform Capitalism.
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Capitalism created reddit.
Workers created Reddit, like everything else. Economic systems don’t create anything, only determine who profits from those creations.
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I think the free money train in leaving the station and everyone is scrambling to be profitable. But that’s just an assumption based on twitch and Reddit right now.
Because easy money from a decade of low interest rates is disappearing.
Economy is going bad, interest rate are up, and all Silicon Valley’s company are built upon VC loans and expansion goals. Scale economy is bound to fail, and it’s happening now.
Because of capitalism, no seriously these decisions are based on money and growth. But both of these things are relatively finite. You can’t keep have exponential growth year after year. Eventually you will plateau but there isnt a mechanism in capitalism to accept that. So companies start forcing monetary gain.
Growth for the sake of growth is the ideology of cancer.
And like cancer, it will eventually kill its host once things are beyond saving.
A lot of these companies have never been profitable and have been running on VC money on speculation alone until they reach critical mass and can turn on the monetization streams.
What were the bad decisions discord is making? Im out of the loop
Digital Sharecropping:
“What’s being concentrated, in other words, is not content but the economic value of content. MySpace, Facebook, and many other businesses have realized that they can give away the tools of production but maintain ownership over the resulting products. One of the fundamental economic characteristics of Web 2.0 is the distribution of production into the hands of the many and the concentration of the economic rewards into the hands of the few. It’s a sharecropping system, but the sharecroppers are generally happy because their interest lies in self-expression or socializing, not in making money, and, besides, the economic value of each of their individual contributions is trivial. It’s only by aggregating those contributions on a massive scale – on a web scale – that the business becomes lucrative. To put it a different way, the sharecroppers operate happily in an attention economy while their overseers operate happily in a cash economy. In this view, the attention economy does not operate separately from the cash economy; it’s simply a means of creating cheap inputs for the cash economy.”
As a phenomenon you’ll see a lot of people call it “enshittification.” The term seems to originate with Cory Doctorow who writes, “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.”
The whole article on his blog is worth a read here: https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys. His Mastodon handle is @pluralistic if you’d like to follow his work there (woohoo federation!).
Reductivist, boring, and accurate. I’m impressed
The main sticking point is profitability. Not many platforms have managed to create a business model that’s sustainably profitable. Reddit certainly hasn’t. Now they’re basically looking for a way to cash out so they’re prioritising short term profitability over everything.
They’re just trying to survive until they IPO. Then they can cash out and who gives a fuck about reddit after that.
