this post was submitted on 16 Jun 2023
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No Stupid Questions

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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?

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[–] [email protected] 19 points 1 year ago (4 children)

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.

[–] [email protected] 7 points 1 year ago (1 children)

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.

[–] [email protected] 2 points 1 year ago

I don't think that Reddit can compete against Youtube, Facebook, or TikTok with regards to ads.

They can make some money, yes. But Reddit will never have high-end ad revenue, not with its current model (or any changes they're making).

[–] [email protected] 5 points 1 year ago* (last edited 1 year ago)

I disagree in it really making sense (at least long term, but I recognize this is also "normal" for these corporate types) - it destroys long term viability for short term goals.

Happens all over the corporate world. They are encouraged to operate this way usually the guy there when the actions were taken getz out well before those long term consequences arrive. Hopefully Steve does bear the consequences himself, he dezerves it for being a horrible person in general.

[–] [email protected] 3 points 1 year ago

U just enlightened me sir. Thank you.

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[–] [email protected] 12 points 1 year ago (1 children)

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.

[–] [email protected] 5 points 1 year ago (1 children)

Reddit, Twatter etc never made any money

[–] [email protected] 2 points 1 year ago* (last edited 1 year ago) (2 children)

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.

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[–] [email protected] 9 points 1 year ago (1 children)

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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[–] [email protected] 9 points 1 year ago (3 children)

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.

[–] [email protected] 2 points 1 year ago (2 children)

Do anyone knows how lemmy survive? Are we a product?

[–] [email protected] 5 points 1 year ago* (last edited 1 year ago)

Lemmys developers mostly fund themselves by a grant of the Dutch NLNet Foundation, they have talked about it in the past.

[–] [email protected] 2 points 1 year ago (2 children)

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.

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[–] [email protected] 2 points 1 year ago (1 children)

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

[–] [email protected] 4 points 1 year ago

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.

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[–] [email protected] 8 points 1 year ago (1 children)

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.

[–] [email protected] 3 points 1 year ago (1 children)

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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[–] [email protected] 8 points 1 year ago (2 children)

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.

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[–] [email protected] 7 points 1 year ago (1 children)
[–] [email protected] 3 points 1 year ago

It was capitalism all along...

[–] [email protected] 5 points 1 year ago

@VoidCrow Everywhere you look you see overpaid executives and CEO’s who think they are actually brilliant enough to deserve their astronomical wages/compensation, and thus think they can do no wrong. Their ideas are always brilliant, and when the shit hits the fan, they blame their staff for a bad implementation and fire them first.

[–] [email protected] 5 points 1 year ago

My theory? It's Musk.

He's going around saying he only lost bots and scammers, that he's made Twitter profitable, and that advertisers are back and happier than ever

He isn't showing his numbers and there's no way his claims are true, but he's saying what they all want to hear. "Don't worry guys, you can squeeze your users for cash hard as you want, and they might grumble about it but they'll soon come crawling back"

There's also increased pressure to become profitable ASAP, much of it is likely due to the economy, but Musk lying through his teeth is probably getting to the other billionaires. It's worth mentioning, if you're a billionaire the only reason to still care about money is for bragging rights

[–] [email protected] 5 points 1 year ago

It's corporate greed. They're just trying to get (more) money out of their users pockets. They're starting not to design their products in a way that the most people use it, but in a way that they get the most money, time and useful, valuable data from their users. That's less people but more profit.

Netflix is showing similar behaviour at the moment.

It' simple: Greed is the reason.

[–] [email protected] 4 points 1 year ago

I think it’s the fallout of allowing private companies to monetize the internet. Way back in the early days of the internet, it was a pretty de-centralized experience. Then we started centralizing things, companies realized there was revenue to be made, and those companies (because they were corporations) valued the money over the people. Capitalism, basically. Only way to fight this is to take the internet back to what it was in about 2006.

If people don’t use Reddit or Twitter or Facebook, those companies have very little value. The value in any social media is generated by the people who use those things. If there’s no people, there’s no value.

[–] [email protected] 3 points 1 year ago (6 children)

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.

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[–] [email protected] 3 points 1 year ago

Higher interest rates means they have more pressure to start being profitable is my guess.

[–] [email protected] 3 points 1 year ago
[–] [email protected] 3 points 1 year ago

One thing is chain reaction, another is that these media mostly came to existence in the same period of time. So they were aging synchronously.

This was predictable and predicted many times. Just like a building constructed with violations is not going to collapse immediately after it's finished, these things were not going to break (in various ways) immediately after being launched.

They are breaking now. Oopsie.

I hope XMPP makes a triumphant comeback. It's not dead yet.

[–] [email protected] 2 points 1 year ago (1 children)

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.

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[–] [email protected] 2 points 1 year ago* (last edited 1 year ago) (3 children)

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."

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[–] [email protected] 2 points 1 year ago

A lot of technological flux going on right now, what with an entire generation partially trained to do WFH and job mobility that brings, the retirement of the tech-phobic boomers, the extremely tight labor market, Russian money going to "more important endevors" (which might also be why bit coin is down), and AI threatening to automate 80% of the workforce. Tech company owners are frightened and making random dumb or scared decisions because of it.

[–] [email protected] 2 points 1 year ago

Running out of VC dollars, now they gotta actually make a profit.

[–] [email protected] 2 points 1 year ago (6 children)

Related question: why does it feel like hollywood is intent on completely destroying all of our beloved franchises? It's not like the place isn't overflowing with incredibly talented artists, writers, actors, producers, etc. I just don't understand why it's so hard for them to make something that isn't garbage.

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[–] [email protected] 2 points 1 year ago (1 children)

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

[–] [email protected] 2 points 1 year ago

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.

[–] [email protected] 2 points 1 year ago (3 children)

The VC money is drying up and they're demanding a return on investment as the world's economy struggles on at the moment.

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[–] [email protected] 2 points 1 year ago

Because they all saw that Elon repeatedly shat all over Twitter and users praised him for it instead of running away. Now all of them are firing half their staff and putting all pretense of caring overboard.

[–] [email protected] 2 points 1 year ago (1 children)

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.

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