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?
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.
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).
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.
U just enlightened me sir. Thank you.
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.
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.
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.
You can donate to Ernest to help defray costs for kbin. The link is in the about section. Wish it was better known. I donated yesterday.
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?
Lemmys developers mostly fund themselves by a grant of the Dutch NLNet Foundation, they have talked about it in the past.
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
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.
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.
So I guess you’re saying this is Powell’s fault, huh. 🤔
What did twitch do now?
Capitalism, babyyyyy!!!
It was capitalism all along…
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
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.
Yes. Doctorow also talked a lot about platform economics in this recent book-tour interview.
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.
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.
@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.
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.
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.
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.
Higher interest rates means they have more pressure to start being profitable is my guess.
