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?
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.
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I’m curious to see how each server owner will defray the cost of running an instance, especially the ones that start gaining popularity/users.
There’s a buymeacoffe.com/kbin donation page, where you can donate. I think Ernest should set up a patreon. I’d totes set up a monthly donation
In fact they could have talked transparently about their opex and asked for a simple donation drive every now and then like Wikipedia.
This reminds me of when Reddit used to show their monthly server costs and ask that people get gold to help offset it.
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.
Generally the drama isn’t a big deal. But in a specific case the only value of the site is in the community moderation and the depth of data on the site.
He needs investors to buy in but he also needs advertisers to buy in. Advertisers do not love paying for negative drama.
U just enlightened me sir. Thank you.
The VC money is drying up and they’re demanding a return on investment as the world’s economy struggles on at the moment.
Indeed. VC is going into “AI” instead so now services have to be financially sustainable. And that is not really the problem, it’s when companies intentionally do it in a way that fuck the user.
Sustainable as interpreted by a non-techie bean counter looking at maximising next quarter’s profits and ignoring everything past that.
They’re doing an IPO so yes, that is what sustainable means nowadays, as shitty as it is.
Pretty good answer tbh
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.
Reddit, Twatter etc never made any money
Twitter made 44 billion dollars. Pretty sure it didn’t cost that much to run. Ergo Twitter made money.
That’s the big hurdle. That’s the big catch. Social media companies are contingent on speculation to drive profits. Facebook isn’t worth what it is without speculative buying in the markets. Twitter, same story. That’s where reddit is at, they want a payday and to move on. The funny thing is this same reasoning exposes just how awful a businessman Elon Musk is. Twitter is going to literally drive him from the top ten richest in the world list all on its own. Give it time.
The funnier thing is Steve Huffman is such a loser he is looking up to Elon in this past week. The guy wants so desperately to be able to buy popularity like Elon did.
Profit. Not revenue.
Twitter was profitable only in 2018 and 2019.
Twitter was purchased at 44 billion in late 2022. It did not cost Twitter 44 billion to run for the years prior. That is very much profit for those shareholders considering especially that 44 billion was a significant percentage higher than the value at the time. It cost less than half a billion to keep Twitter’s lights on every quarter. They started in 2006. So assuming from the get go it cost half a billion a quarter (and you know it didn’t right?) … that’s 32 billion to run Twitter the years it was open. And they sold for 44 billion, meaning 12 billion in profit in a windfall.
Still following?
And for a social media company’s primary shareholders, selling that company is the ultimate goal and only way to realize true profits. That’s the social media scam. Zuckerberg right? You think he wants to run Facebook? He has to, he’s an employee at this rate. Well compensated sure but he doesn’t pull the strings.
What’s hilarious is Elon didn’t understand all that. He bought Twitter for cash money. There is no way on God’s green earth he manages to turn a profit with it because no social media company has been able to either - not with an entire board and public stock, so certainly not with a private company either. All the profit mechanisms they had before were contingent on the stock market, on speculation. That’s all gone now. It’s private. There is no public stock price to affect.
Absolutely, this explanation is on point. A case can be made about the economy of profit or burst, vulture capitalism and all that sbut that’s not the point here. There’s simply only so much room to grow and social media are a fickle thing by it’s very nature.
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.
This is the answer. There was a lot of free money and now there isn’t. Companies gotta cough up profits or go bust.
Search for ‘Enshittification’ if you want a pretty good analysis of what’s going on. But basically greed, capitalism and the never ending pursuit of growth.
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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You’re right, I should have specified I was referring to the platform. My point was against the dumb narrative that capitalism creates anything.
Capitalism is good at creating things, but terrible at maintaining their quality over time, because at the end of the day profits don’t always go hand in hand with product quality
The sad truth. For example, Insta Pot has gone bankrupt recently because they built their stuff too well, and no one needed to buy more than one. Capitalism is the reason we have planned obsolescence and deliberately poor build quality of products.
This is just what living in late stage capitalism looks like.
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So what you’re saying is we should ban money
I’ve never seen a more stupid comment. Your attempt at a satirical remark is at a kindergarten level. From reading it I deduct you believe there are no other solutions to it.
There are solutions to it. You’d find them if you used your cognition beyond playground squabble
I don’t miss r/rareinsult
Almost like it’s impossible that was the least bit sarcastic.
There is the “enshittification theory” — https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys
Article specifically mentions TikTok but is relevant for Reddit.
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.
this. oh god this sums it up so well. any platform that features a “feed” and the company offer to “personalise” it for you - that’s where enshittification will occur.
Capitalism slowly shits up everything. Even the things it helps create.
I mean this in the most general way possible. Not just platforms. Even if reddit was profitable it would still continue. It’s just part of the cycle of seeking not just profits but ever rising profits.
It’s just more obvious lately on digital platforms because it has been kind of compressed into smaller amounts of time.
That which is free must find a way to cost.
That that makes money must find a way to make more.
And slowly but surely its takes on a fine shine. A glean seen from a distance. But when you get close you realize. “oh, its fucking shit all over it.”
I swear every problem in the modern world is like two degrees separated from capitalism.
Yeah… I mean, we on one hand, we now grow plenty of food to feed almost 8 billion people, cured polio, greatly extended lifespan all over the globe… But on the other hand (waves hand at everything).
Eternal growth on a finite planet ain’t possible, but capitalism demands it. ¯\_(ツ)_/¯
I’m all pro-tech and pro-advancements myself but I agree we’re reaching a stage where we need to start degrowing
Hard for it to be otherwise, considering it affects almost everything.
I’d rather focus on publicly traded companies as the main root of evil before dealing with capitalism itself. Private companies tend to not be so destructive - many are fine staying where they are, instead of growing infinitely like cancer, eating everything around them.
This! It is not like private companies per se are the problem, but rather megacorporations that are pressured to generate unimaginable and entirely unsustainable profits that required to increase from year to year. Private companies must not necessarily be more unsustainable than publicly-owned (by this I mean state-owned) corporations.
Silicon Valley Bank collapsing is putting pressure on tech companies to actually turn a profit, so they’re turning to slimy tactics just to survive IPO
I don’t think it’s from a specific bank, but it is probably related. From being inside the tech world, the general sense is that the “macroeconomic environment” is different, because of the interest rates, so companies are getting pressure from all of their investors and banks to behave differently. At a lot of places, this has led to layoffs, trying to reduce costs, etc. It also manifests as trying to squeeze out more profit at all costs.
I like the “enshitification” term for the actual process that Reddit and others are going through.
I learned a lot from reading that article; thanks a lot! It’s something I had an intuitive sense about, but the cynical moves these platforms have been making are much less mysterious now
That’s an interesting thought, seems potentially plausible. Is this something you’re spitballing yourself, or is this an idea that’s been flying around?
I work in tech startups and it’s well known that equity is much harder to come by and comes with much more strings since the SVB collapse. The VCs are hurting and SVB was a wakeup call for them to be more active about getting value from their ventures.
was SVB a big investor in these companies or is there some other reason it’s collapse is having an effect?
I read that SVB was often the only bank that would do business with tech companies and their execs because of their weird balance sheets
I think also we’ve become so dependent that they can just do whatever the fuck they want.
I’ve lived in a bunch of countries and FB messenger is the only way for me to keep in touch. FB can do whatever they want to me because I’m never going to persuade a bunch of people to all move to signal or something.
Reddit has communities that simply don’t exist on any other platform.
They have the critical mass.
It’s basically the lifecycle of any big corporation.
When the industry is new and there’s tons of new users to reach, everyone tries to be the most friendly corporation to build a name for themselves. Positive press and the halo effect helps bring in more people.
Once an industry matures and growth slows, the focus shifts to nickle-and-diming customers to squeeze more profit out of them.
I was going to say that I wish there was a decentralised way of sending messages… And then I remembered text messaging is a thing.
Incredible how quickly these things become embedded in everyday life
Unfortunately this doesn’t really work with international mates
Oh yeah good point
Doesn’t matter to me - most subreddits on reddit are not relevant to me… a time suck and waster mostly. The most interesting subreddits and users I like to follow have all pretty much left for kbin and lemmy instances, and mastodon as well. Thank god Tech people tend to be ahead on the curves instead of flailing around behind them.
Public companies are legally required to always do their best to grow year over year. Eventually these companies get so large they can’t realistically get more market share so they have to figure out how to make more money from their users. This leads to them squeezing users for cash in the hunt for short term gains because they’ve already realistically capped out on how much money they can make per year. It’s a dumb system that can’t work in the long term.
A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the nondistribution of profits among stockholders in order to devote them to other purposes.
This was pulled from Case law on the fiduciary duty of directors to maximize the wealth of corporate shareholders with a few more cases sometimes in favor of the business and others in favor of the shareholder. If anyone else wants to read some more on this. Reading some more based on what searches I find it seems like in reality it complicated. But I’m just a individual contributor all of this is above my knowledge grade.
I do agree though that this model is not realistic long term. Eventually you need to jump into other markets to continue your growth or just squeeze your user base / customers dry.
Just search Dodge v. Ford Motor Company, the case that enshrined this doctrine…
I know the system prevents it but they should just be happy with making a steady amount of income each year
Private companies absolutely can, what sucks is alot of owners are looking for a public exit so they can make a ton of money and step away from the company. Valve is a great example of a private company happy to sit back and rake in cash. They have no plans to go public and can continue slowly improving their product because of it.
Fiduciary responsibility of the company to their shareholders.
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.
you’ve got it
We did it, fedifriends!
This is the root of it. Reddit is not profitable (like twitter) and between my experience of Reddit over the years and stuff spez said in recent interviews, and the whole blackout situation recently, it’s obvious that profit is the main driver for the business. It’s funny referring to Reddit as a business, but that is now its primary purpose and descriptor.
I imagine the past few years have had a knock-on effect on social media businesses including Reddit, just as it has for the energy, food etc industries. What are the margins per user for ads served? It’s got to be razor thin these days especially when Reddit employs thousands of people doing who knows what. I know they had to hold off their IPO due to the market and recently laid off some staff, they are clearly in bad shape as a business.
Interest rates went up and investors aren’t able to get cheap money. So investment is drying up. A few banks collapsed. Tech companies are trying to make a profitable business. Instead of a zombie company
This is it in a nutshell, without any “late stage capitalism” nonsense.
Reddit, like Twitter and other prominent tech companies, was supported largely by outside investment. The company didn’t make a profit, but investors continued to put money into it in hopes that it would eventually net them a return. Low interest rates make investment capital easy to come by and relatively low risk, but higher borrowing rates have dried up a lot of that funding. This forces the company to find other ways of sustaining itself.
All these companies have done about as much growing as they can. I remember listening to the radio on my drive to work a year or two ago, and they were talking about how Facebook had done internal research and concluded that they had captured something like 95% of the possible user demographics, meaning that they were unlikely to be able to reach new customers because either you have Facebook and you use it, or you’ve already heard of it and you don’t want it/don’t use it anymore.
It was interesting, because Facebook/Meta, like Twitter, Reddit, Discord and Tumblr are all for-profit companies that exist to make money, and yet, the expectation of infinite growth from the market never ceases. There will never be a time when the company has grown “enough”. Enter the short-term smash-and-grab strategies. The idea is that they know that their business model has peaked in terms of growth and profit and they now need to extract value from the company before the market catches up to that fact. Social media is inherently unprofitable. Nobody wants to actually pay for it, and they do not produce a product, so eventually once the ad revenue has reached critical mass, the users become the product and are essentially ransomed off. Reddit just tried to pass the buck onto the 3rd party app developers rather than the users, but since the API restrictions affects regular users as much as it does developers, it had the same effect.
Suffice to say, unless you are a member of a social media platform that is a non profit, this is going to keep happening. Even if you land on a site that prides themselves on being excellent stewards of their company and never prioritize profits and growth over stability and customer satisfaction, eventually they will be forced to make a decision - lose a lot of money or lose some customers. The answer, sadly, is all too obvious to them by now.
Do anyone knows how lemmy survive? Are we a product?
Good news.
Computers are much cheaper and text is very low bandwidth. A $100/month server will be able to host a large chunk of us, and donations will likely be able to cover these meager costs.
Without a need to grow exponentially, we can mostly sit happy on single physical server and $100/month (or so) independent instances.
No need to build $million+ data centers like the big boys. We can take advantage of our small size instead.
That being said… I think that we as users should monetarily support our instances. I do support the instance I use for Mastodon. I will do the same for Lemmy once I settle on one.
Thanks
Lemmys developers mostly fund themselves by a grant of the Dutch NLNet Foundation, they have talked about it in the past.
Yep. Once capitalism completes the growth phase of the latest boom-bust cycle, companies start focusing on increasing revenue. Turns out when the economy starts declining people aren’t willing to spend money on random shit. People didn’t want to spend money on it during the boom, they’re even less likely to do so as their expenses go up and wages stay stagnate. A truly idiotic economic system.
Social media is inherently unprofitable. Nobody wants to actually pay for it, and they do not produce a product
i miss when people were just excited to be able to chat with others online
Oh, I agree. Sometimes I yearn for the halcyon days of “Web 1.0”, before the corporations muscled their way in and took what regular people built from the ground up and perverted it into a mechanism of capitalism and corporate greed. It was like the wild west and every session was an adventure.
Maybe I just have rose tinted glasses on, but it seemed to me like the internet was a more pleasant place when things were more decentralized.
