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You're seeing a bubble burst.
The VC money is drying up and the current social media funding paradigm is breaking because of it.
It's a bit like witnessing the Dot Com bubble burst again tbh.
It's about time we moved on to a better way of doing things anyway, I'm pretty good with moving away from the old ad-based, exploit your community for profit model, personally.
It'll be interesting if any of these "owned by the people" platforms will establish themselves the same way the private social media companies have in the past. Mastodon is probably most successful when it comes to a decentralized platform but it's not the there for me at the moment when it comes to the user base.
You can argue that it's not supposed to be Twitter or whatever but you can't deny the usefulness of everyone being an user under the same address or the wealth of information that comes with being giant. Decentralized platforms have an inherent handicap since there will always be moderation that's up to the admin so every instance will differ in some way (and let's not get to the technical problems that at least here are prevalent). It's harder for companies, countries and other official sources to establish themselves because they subject themselves to moderation of a private third party and jumping from instance to instance, forgoing the extra work it is, is just disruptive and confusing to their audience. They could always start their own instance but that's also a lot of work compared to just creating a Twitter account. There might be some business angle here though but it all just seems too convoluted at least for now.
Maybe internet will be just different and less-centralized in the future. At least it's good that the profit seeking private companies have less power.
The internet used to be more decentralised. There were lots of smaller websites, blogs, forums etc, which people discovered via word of mouth, search engines, and forgotten things like webrings. It's only recently that big monolithic social media platforms took hold.
Tech is often cyclical, we could now be swinging back to a more decentralised web, but with the benefit of newer technologies. Right now it's almost a new "wild west" as new platforms appear and new ideas like federation are experimented with. Some will rise, some will fall, some will go off in the corner and do their own thing. While all that happens it's going to be a bit messy, much like it was in the 90s with the initial rise of the web.
I hope you're right, sounds quite exciting!
Could you describe what "webrings" were? I've read about them in a similar thread, but couldn't find any info on them.
I’ve been online since circa 1993 and for the first decade or so, discoverability was a challenge due to the lack of efficient search engines like Altavista or (later) Google.
Webrings consisted in individual website owners (e.g., on Geocities) placing one or more banners at the bottom of their webpage linking to other like-minded sites, typically in quid-pro-quo manner (I link to you, you link back to me), or to a manually-curated directory of like-minded sites.
This was when “surfing the web” meant exactly that - you would surf from one site to another using hyperlinking within web communities. Bookmarking was then how you kept track of the most interesting sites you came across.
Now there is hardly a need for hyperlinking and bookmarking, since much of the content is centralized on a few platforms, and search engines take care of the discoverability of niche content.
Phew I feel old remembering webrings lol. Crazy to think how much the internet has changed since those early days thirty years ago.
Anyone else remember Infoseek? It was my favorite search engine because you could select to search within results to refine your search down to a single page of relevant results.
those early days thirty years ago.
I misread this ad thirteen and though, “haha silly it was 20 years ago.” Then re-read it and realized it said thirty.
Then I had to go sit down for a minute and contemplate my impending demise.
Could you describe what "webrings" were?
Oh god I feel old
It's ok, we're all gonna die.
Getting old sucks, but everyone's doing it.
Damn peer pressure!
Also all the people who think Usenet is just an obscure piracy mechanism.
Usenet was the greatest medium for discussion back in the early Internet days, and I'm excited that it's finally being recreated in the form of this Fediverse thing.
I feel like I should be yelling at those damned whippersnappers to get off my lawn, with all their Instagrams and Spotifies and Youtubes
Yes! All of those interesting little nooks and crannies to explore. I'm glad that's coming back by way of the fediverse.
Don't fear decentralization Millennials, embrace it.
On the other hand, I think Fediverse is perfect for companies that want to be closer to their customers, as rare as that may be.
Another possible use case if Fediverse become popular enough is potential for companies like Nintendo setting up their own instance as the new Miiverse or something.
I wouldn't count on big companies ever going that route, to be honest. The decision-making people there will likely never trust Lemmy or similar software enough because it's not like them - not proprietary, not closed source, so they'll keep wasting money on making their own shitty websites with their own shitty forums if they ever want to give their communities an official place to hang out.
Do we want companies using Lemmy/kbin/mastodon to advertise to us? If it’s useless to them, that’s awesome
I agree that investors requiring demonstrable returns has played a role in this cycle. Steve Huffman is desperate to show profits ahead of Reddit’s IPO, and Musk is desperate to recoup his $44B investment in the blue bird.
However, I believe that there’s also another consideration. Many of today’s platforms started out with a somewhat idealistic intent. Jack Dorsey wanted Twitter to be an open protocol, though never quite achieved his vision. Aaron Swartz contributed to the open design of early-days Reddit. Facebook was meant as a non-profit university community builder. Google had (and abandoned) a “do no evil” motto. Etc.
The original user-first approach of these platforms created organic growth and encouraged ambassadorship by motivated users who became frequent contributors, unpaid moderators, etc.
Over time, however, people moved on (Dorsey, or very sadly Swartz) or got greedy from success (Huffman, Zuckerberg). The focus shifted from user-first to advertiser-first. Platforms like Reddit still used a loss-leader approach of losing investor money on frills such as API because it helped sustain growth for a while longer.
But once critical mass was reached, there was no longer a need to coddle the most enthusiastic and long-time users. They had exhausted their usefulness. The platforms could finally embrace the advertiser-first model in which the user, not the content, becomes the product.
So here we are with the worst of both worlds. Reddit could have offered a reasonable paid API plan that would have allowed the thriving third-party ecosystem to retain the power users and contributors. Instead, it went all-in with a walled-garden approach buoyed only by advertising money, even if it means that the content quality dwindles. Twitter also went “private” in the sense that an account is now required to even view the content, and aggressively promotes its paid plan to users –who are still subject to interstitial ads and promoted content– even for basic hygiene features such as 2FA.
As for why Reddit, Twitter, and Discord shit the bed at almost the same time, part of it has to do with VC pressure (as mentioned by the parent), and part of it is they are the same generation (more or less) of social networks and are reaching an equivalent stage where buyout (Twitter) or IPO (Reddit) is the next logical step.
The writing is on the wall that a paradigm shift is in order. The pendulum has considerable momentum, though, and will allow the centralized, walled-garden web to thrive for a while longer, just like Facebook survives catering to mostly an audience of unsavvy boomers. But the swing back will gradually enable alternative models to grow that are based on open platforms and federated content. We’re just very, very early in this cycle.
Oh, and sorry for the long-ass essay, I got a bit carried away.
Yeah this. We're all boarding the ship before it sails out for new lands. It'll be a bit before we finally depart... but it's nice to get a cozy seat here while the city we've been living in begins it's chaotic descent into what MySpace became lol.
It's about time we moved on to a better way of doing things anyway, I'm pretty good with moving away from the old ad-based, exploit your community for profit model, personally.
Yes, you're exactly right with that. Even if Reddit at the moment lacks a major competitor which actually threatens to take its place but rather, numerous smaller competitors, I guess the resultant peace that comes with everyone being divided after fleeing the website is something that I can't deny I have been real happy with. I have found this peace through coming to Kbin. If it stays small, I will continue to enjoy this peace, and if it actually overtakes Reddit, then let us be known as the veterans of Kbin/Lemmy.
The way a lot of dot-com startups work, they have high fixed costs -- stuff you pay no matter how many users you have, like programmers -- and low marginal costs, stuff you pay based on how many users you have.
That means that it's good to be big, because you can spread those fixed costs over many, many users. One programmer writing software used by five hundred million users can make a lot more money than software used by five users. The resulting effect is called economy of scale.
So the typical model is to take in a lot of investor money, operate at a loss, and lose money while offering a very compelling service to grow the userbase as quickly as possible.
Once you're big enough, you can spread your costs around many users, so it's easier to make money. You switch from growing your userbase to making money from it. Because you aren't trying as hard as possible to draw in new users, the service is probably gonna get worse from a user standpoint.
If money becomes tight, then it's harder to get investor dollars to operate at a loss with to grow userbase.
My understanding is that due to elevated interest rates in the post-COVID-19 situation, it's more-costly to get investment money. So that will tend to push companies from the "growth" phase to the "monetization" phase.
That affects a bunch of companies, including Reddit.
This is not true in most cases.
It's not about being profitable, it's about always making more and more and more and more - the so-called growth.
Let's take the case of reddit inc. Their revenue grew from just $25 million in 2016 to over $500 million in 2022. If they can't make a profit with that, I don't know what to say (I'd say the leadership buys a new ferrari every month, probably).
According to this thread, reddit operating costs were around $35k dollars back in 2011. Even if you were to multiply that by a factor of 10, it's still just a couple million dollars per year. Multiply it by 100, and still
They. Are. Fucking. Profitable. As. Fuck.
No, the problem is not profitability and paying the bills. Fuck no. The problem is them wanting more than what is remotely reasonable, and of u/spez being a greedy fucking pig and wanting not simply a big, but instead a spectacular cashout in their coming IPO. Well, fuck the greedy little pig boy and fuck reddit.
This is a great write up, but what I don’t get is why do these companies stick to these idiotic measures instead of turning to their users for help in an open dialogue.
Like, I get that Reddit needs to make profit, and I actually wouldn’t have minded paying for Reddit premium to use my api key with Apollo. Instead Reddit made me and I’d guess a lot of people like me leave and never want to return. Just left with a lingering bitter aftertaste.
Did they think that they wouldn’t get enough funding that way? Well then how about giving it a test run to see if it works? Didn’t work? Well how about asking your users what they might be missing and what they might want to be more happy to subscribe, and adding features/addressing those issues? Working with developers to establish a revenue sharing agreement? There were so many alternative paths.
No, apparently nfts and shitting on your users is where it’s at.
Have a conversation, run polls, A/B test, etc. And be transparent while you’re doing it. These tools are nothing new when developing a service. Why ignore everything?
I mean, is it really just a competence/arrogance thing alone?
Exactly this. Companies like Reddit these days are so disconnected with their userbase it's insane. Of all the millions of things Reddit could do to make their platform a better place, they choose to basically remove the services that everyone liked (the 3rd party apps) and not only that, lie to their users (as with the case of Apollo "blackmailing Reddit for $10 million") and double down on them. It sickens me how ignorant they can be, but I guess that the hard lesson we can all take away is that with money and power comes corruption.
Have a conversation, run polls, A/B test, etc. And be transparent while you’re doing it. These tools are nothing new when developing a service. Why ignore everything?
I mean, based on how dramatic the increasing in price the API was, I wouldn't be surprised if Reddit already knew what the public reaction would be, considering they'll probably also receive considerable hate for even contemplating the decision. Of course they just didn't give a second thought and just went with it.
I stopped using reddit after spez's AmA. If all of this would have been handled in a more mature and open way, I would probably have moved to the reddit app, complained about it for a while, but kept usind reddit. But after what happened in the last weeks, reddit is no longer something I want to be associated with.
For lack of a better description, I simply don't 'like' reddit anymore. It's like a friend who treated you like shit.. Sure, you could still go to a party together and have fun, but it's just not quite the same anymore.
It's not so much about what they did, most people understand reddit has to make money at some point. It's the how that is driving people away imho. At least it is for me.
I think it's more of an ego thing. The people with healthy egos probably never end up as execs in companies as big as Reddit, and the people that do are likely driven by something else other than the desire to actually build a platform that respects its users and works well in cooperation with them - "I'm smart, I'm sexy, I know better than these plebs making us money".
Excellent writeup
"That means that it's good to be big, because you can spread those fixed costs over many, many users. One programmer writing software used by five hundred million users can make a lot more money than software used by five users. So the typical model is to take in a lot of investor money, operate at a loss, and lose money while offering a very compelling service to grow the userbase as quickly as possible.
Once you're big enough, you can spread your costs around many users, so it's easier to make money. You switch from growing your userbase to making money from it. Because you aren't trying as hard as possible to draw in new users, the service is probably gonna get worse from a user standpoint."
This kind of reminds me of how Legos are made. Creating the plastic molds from a molding machine to make a single Lego is extremely expensive, but if you make millions of Legos in mass production it reduces costs to make them dramatically to a point where the Lego Group has basically no operating costs to make them anymore. That turns Legos into an investor's dream.
if you make millions of Legos in mass production it reduces costs to make them dramatically to a point where the Lego Group has basically no operating costs to make them anymore
That's how economies of scale work in general, across many, many industries.
On a somewhat related note, your Lego example is more gloriously intricate than you may realize. So, you're spend a lot of money to make a machine to produce Legos at close to zero cost. What happens if someone the next city over thinks they can make a better machine and undercut you?
One way to protect yourself is with the law. You set up intellectual property protection for your Legos and sue everyone who makes "Lehos". This works for a while.
But problems come up. Intellectual property protections have a time limit. They also have a jurisdiction limit, as some guys in a different country, say, Xhina, don't respect your country's laws and start making those Lehos.
What do you do? How does your company survive?
Well, you can leverage the other valuable part of your company, the brand reputation, to do things that Lehos can't, like make deals with other intellectual property holders to make themed Lego sets. So, you strike deals with Disney to make Star Wars and MCU sets, with Warner Brothers for those Harry Potter designs, with Microsoft/Mojang for Minecraft Legos (because they're a perfect fit). That's something that some random plastic injection mold company in China can't do. You're motherfucking Legos, not dipshit Lehos. You can do that, as well as open company stores and theme parks that are tourist destinations.
So, Legos survives, and not just that, but prospers.
Twitter's rate limiting has been reported as perhaps being a failure to pay bills or otherwise properly manage their servers, and not some specific policy change. So that particular example might not be what you were focusing on or what you meant to focus on. Obviously Twitter made many other decisions, and the recent big one is cutting off access to tweets for people who are not logged in.
As for Reddit, the price of the API is not the point. Rather, the price is so high that nobody's going to use the API, and that's the point. But they want to pretend that it's still possible to be used. And we know this is true because if the API really has such high value, then presumably some of the popular clients out there would have been worth it for Reddit to purchase, and the purchase price would presumably have some correlation to API usage.
On a more general level, though, I think what you're talking about is the process known as "enshittification". It's possible for social media companies to avoid this end result, but it requires great care especially in the early stages.
As for Reddit, the price of the API is not the point. Rather, the price is so high that nobody's going to use the API, and that's the point.
Yea ik that I just didn't wanna make my post too long haha.
On a more general level, though, I think what you're talking about is the process known as "enshittification".
Spot on.
We are at the end of the "free lunch" era of tech. Before, there was a lot of investment in tech because it was very easy for rich people to get loans, and sink it into tech companies or startups. With inflation at its high pace, banks failing, (esp. CV bank for our case) and the hike of interest rates, many tech companies are trying to make up the loss of revenue in anyway they can. Either by cutting staff and laying off people, or squeezing every dime out of every customer they can.
Before it was just accepted that some users would not monetarily engage with a platform, either by just lurking, blocking ads, mooching off a friend's account, or never buying any of the monetary perks being offered. Now they are doing their best to apply pressure to these people. Either they will go away entirely, and not expend anymore of the company's resources, or they will cave and put some money into the system by making purchases and consuming ads.
This has been growing trend since late last year, but this year in particular has caught many tech companies with their pants down. The days of burning free money for tech are over, and they are trying to scrounge together cash by any means necessary.
Solid point. One thing that these companies will realize quickly if they plan to move from ad based to subscription services is that a lot of them won't make it. Especially when the price of everything is so high. It no feasible for people to sub to 8 streaming services between film and music, add on a VPN, the odd Patreon, lots of people with ring and other camera and security subscriptions. I get that people will shuffle between services, but that might not be enough, and the more they go for the customers throat, the more likely people will realize it's a want and nowhere near a need.
Successfully monetising a platform means doing it in harmony with the the user base though, at least to some degree. A platform can't make money from users if it scares them all away. Social media platforms are especially vulnerable too because they rely on users to create their content. Nobody comes to Twitter to marvel at the system infrastructure, they come to read tweets.
The way certain tech companies are behaving currently is too knee-jerk and heavy handed. They are panicking and damaging their platforms in the process.
I think the dirty secret is that social media is both an incredibly vital part of people's lives and businesses, but it's free and ad revenue doesn't really make anyone the crazy profits their valuations suggest it should. That it's happening all at once is I think partly attributable to financial tightening -- higher interest rates mean people have less patience with money they've floated, partly that Twitter going weird gave everyone else cover to do the same, and my personal opinion, the Writer's Strike gives a little room for the companies to do dumb shit without having to worry about getting roasted on late night.
I feel like the VC/investor money that's kept huge swaths of the internet afloat for the last 20 years is finally starting to run dry. All these huge platforms who have been in "burn mode" since they were founded never figured out how to become profitable earlier on, and are now scrambling to keep themselves sustainable.
It's hard to feel sorry for them, even in the midst of their downfall. They've all had plenty of time to prepare for the day the their corporate sugar daddies leave them, and instead sought short-term profits over long-term sustainability.
I do feel bad for the communities, though. We've basically seen the Walmart-ification of the internet, where a few big corporate entities moved into the neighborhood and basically took over the landscape with their presence, effectively strong-arming smaller competition out of existence. So it'll be good to see more homegrown communities sprout back up in their place again.
Maybe we can see something like this happen with actual Walmarts soon, too. :)
Twitter and Reddit both want to get profitable fast - which doesn’t work, as both companies have never been profitable and don’t have any experience with actually making money.
The reasons behind this are different (Elon just wants to make some money after he bought Twitter, Reddit wants to be somewhat presentable for an IPO), but the effects are similar and make me question if we’re at the end of the "free corporate social media" era of the internet.
Discord has two possible reasons for that specific change. For one it wants to get more mainstream and therefore loses parts of what made it special as a social network (e.g. the special username system).
I also think Discord (over-)reacts to its spam/scam problem here and tries to make usernames more distinctive.
I rlly feel like 2023 is a year of a lot of things coming to light. Not just because of this but there was some stuff that happened earlier in the year and i got the impression that that'd be the 'theme' for this year (it feels like since 2020 every year has a 'theme' in some way.) This isnt super related tho but i feel like if there was any doubt that these companies are profit driven and WILL put that above user experiences, even if only for pennies, is largely been confirmed this year.
For reddit and twitter it's also induced by the threat of AI. Twitter and reddit host a lot of content, organized, sorted, coherent. It's invaluable for training an AI and these companies don't want to let it go for free. They want control over it, therefore they are making it very hard for AI companies to farm their content. The fact that it's happening now is because AI companies are probably rushing to copy as much data as possible before laws are voted to put a limit over them.
It will be the same for the fediverse, our content will be scanned by AI's. Our content is freely visible, organized, sorted and scored. We should be careful about that. If you are not a professional publisher or a public person then you should probably think about rotating your username as often as possible.
edit: But also, with the rise of tiktok, a lot of countries are now suspicious about the soft power of those apps, and are ready to legislate against them. The EU already did, they did vote fines against them and are regularly getting money out of them. The taboo is gone, you can attack those companies, it works. They were supposed to be out of reach, but they are not.
Also there is no genius in Twitter, as far as I know they have no patent over anything. If someone manages to become more popular than them on the same principle then twitter is done. Gravity will do the rest and users will move to a different platform. People are using it because people are using it. So the model is fragile and the value is questionable.
What’s so bad about giving AI models something to learn on? Add LLM-tier accounts to your social media company and have at it. And fix data/traffic issues by giving users the ability use their own tokens/api keys/whatever to limit bandwidth without affecting end users as significantly as they did with current decisions.
That way you could detect and address rogue scrubbers while still working with LLM creators who are open to an honest training integration. And if your company can’t really detect the difference between users and LLM crawlers after implementing something like this, well, then those crawlers don’t really affect the company as much as the CEOs would like to pretend.
The fuckwits at reddit and twitter HQs think they own that data. Data they didn't create, or even contribute to. They imagine that by providing server space, they somehow own the content. As if the government owned the cars that use the roads, or if an airline claimed they owned the travelers' baggage. Greedy bastards without shame.
What’s so bad about giving AI models something to learn on?
From a user point of view? A lot. So far the AI has made itself the champion of the creation of fake. Fake news, fake pictures, fake videos, fake history, fake identity. Do you think that the AI will be used for your own good? Do you think that your private data are farmed for you own good? I don't.
I posted an example about fake identities and fake posters on Twitter. This is the end goal. This is where the money generated by the AI will come from.
That way you could detect and address rogue scrubbers while still working with LLM creators who are open to an honest training integration. And if your company can’t really detect the difference between users and LLM crawlers after implementing something like this, well, then those crawlers don’t really affect the company as much as the CEOs would like to pretend.
Twitter and Reddit probably want to be their own LLM creators. They don't want to leave this market to another LLM. Also it doesn't take a lot of API calls to generate the content that will astroturf your product.
Anyway the cat is out of the bag and this data will be harvested. The brands will astroturf their products using AI processes. People are not stupid and will realize the trick played on them. We are probably heading toward platforms using full authenticated access.
It seems as if there is a bubble about to pop tbh. Along with twitter/reddit, it seems that even youtube is desperately trying to squeeze profit from a dried lemon by testing to see if users will stop using adblockers.
Silicon Valley is feeling the backlash of not being able to deliver on their promise. The entire sector has been funded off the promise of forever growth, inflated valuations based on easily manipulated numbers and the concept that tech is the future.
Which yeah, tech IS the future - but it's not the future because some sociopathic individuals are good at social engineering.
It's a panic. Musk never intended to buy Twitter but was essentially forced to... and has ego issues. So instead of allowing it to function and making edits to the business model (that was already failing) he has simply shown that he has no idea how to run a Social Media platform. So he tries to exert force on his userbase so that he can monetize them. Reddit's CEO sees this powerplay, and that a vast majority of Twitters userbase stuck around, and didn't immediately leave, and decided to play the bullish part as well. Twitch has always suffered operating at a loss, so I can only assume Daddy Amazon has forced them to start making bigger changes to make a profit finally. Discord... well Discord is still mostly in its infancy. It's not completely a dominating force in the industry and it knows it. That's way their changes come much more incrementally.
If it's one thing you'll notice about big tech, it's that they have always operated at a loss. They grew, and their services kept expanding because Venture Capital kept coming in at the promise of this future mythical profit. Their model was never sustainable though.
The number one lesson to learn from all this is that investments are just a game for the rich... and I'm going to be real, they're often just as stupid as your average moron.
Moving on to the ActivityPub protocol will be for the good of everyone. It's a bit of a return to the old net... We lose some convenience for the benefit of freedom.
So yeah, they'll continue to make stupid decisions and ruin their companies... but keep in mind that ActivityPub and the Fediverse isn't immune to these sociopaths. We may well see a well funded VC backed venture that uses the protocol.
We'll just have to see how this holds out.
It's the inevitable enshitification of platforms due to capitalism, explained here: https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys better than I ever could