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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.
from Cory Doctorow's article on 'enshittification', which has become mandatory reading.
Just to add, the concept of a bait and switch, where you lure a party in with something and then swap it out once they are committed, is not a new idea in the slightest. This is just a modernized, refined tech version.
Uber and Lyft are good examples. Drive out most of the competition with an aggressive early phase where you spend most of your capital to shore up a massively negative balance sheet. You are baiting the customers to you with very low prices.
Then once the competition is eliminated, you raise your prices on the captive consumers that rely on the service to recoup your costs and start making money.
If you, in a video game, have ever lured something in with ranged attacks and then switched to melee to kill it, by plan, you executed this same strategy.
Every single discounted trial period for a subscription is employing a riff on the same concept, where they hope you're too lazy to cancel.
Fools been falling for the bait and switch since ... oh dawn of civilization maybe? Awareness of it defeats it, people don't take bait when they know it's bait. It is not complicated though, and does not require complex understanding to grasp.
IIRC, it's in the article, but what makes enshitification so prevalent in tech is that it mostly involves networks, wherein part of the value of using the application comes from the presence and concentration of other users and providers on it (network effect). Even Amazon, Netflix, and Uber, are subject to that effect because they capture providers, not just users you will interact with. It's a somewhat uniq trait that really exacerbates the problem. This trend will probably continue untill interoperability is legislated.
I had just copied the link to post this.
Read this for an actual answer.
That was a good read, the thing is that it seems that all of a sudden a lot of tech companies are getting more and more anti-consumer. I mean it’s not only the whole Reddit and Twitter thing, now Youtube is getting more aggressive with adblocking, Stackoverflow and their mod protest, Google dropping support for the open source diaper and messaging apps on Android…
Many companies are getting more aggressive against their customers, and in the end it feels like the internet as it used to be is really dying, and we might end up with the whole “dead internet theory” becoming reality. I don’t know it just feels very depressing.
If you haven't already, I suggest reading Stop Talking to Each Other and Start Buying Things: Three Decades of Survival in the Desert of Social Media, a blog post by Catherynne M. Valent. (It's actually referenced in the article above.)
It's long, funny, and angry and damn, did it strike a chord with me. It was written in December, '22 so pre-Reddit meltdown but still very relevant to it.
Some highlights include:
Stop talking to each other and start buying things. Stop providing content for free and start paying us for the privilege. Stop shining sunlight on horrors and start advocating for more of them. Stop making communities and start weaponizing misinformation to benefit your betters... It’s the same. It’s always been the same. Stop benefitting from the internet, it’s not for you to enjoy, it’s for us to use to extract money from you. Stop finding beauty and connection in the world, loneliness is more profitable and easier to control.
Over and over again ... I’ve joined online communities, found so much to love there, made friends and created unique spaces that truly felt special, felt like places worth protecting. And they’ve all, eventually, died. For the same reasons and through the same means, though machinations came from a parade of different bad actors. It never really mattered who exactly killed and ate these little worlds. The details. It’s all the same cycle, the same beasts, the same dark hungers.
All ... gone. Dismantled for parts and sold off with zero understanding that the only thing of any value the site ever offered was the community, its content, its connection, its possibilities, its knowledge. And that can’t be sold with the office space and the codebase. These sites exist because of what we do there. But at any moment they can be sold out from under us, to no benefit or profit to the workers—yes, workers, goddammit—who built it into something other than a dot com address and a dusty login screen, yet to the great benefit and profit of those who, more often than not, use the money to make it more difficult for people to connect to and accept each other positively in the future.
It does end on a hopeful note, though.
Don’t ever stop talking to each other. It’s what the internet is really and truly for. Talk to each other and listen to each other. But don’t ever stop connecting. Be a prodigy of the new world. Stand up for the truth no matter how often they take our voices away and try to replace the idea of reality with fucking insane Lovecraftian shit. Don’t give up, don’t let them have this world.
Don’t get cynical. Don’t lose joy. Be us. Because us is what keeps the light on when the night comes closing in. Us doesn’t have a web address. We are wherever we gather. Mastodon, Substack, Patreon, Dreamwidth, AO3, Tumblr, Discord, even the ruins of Twitter, even Facebook and Instagram and Tiktok, god help us all. Even Diaryland.
It doesn’t matter. They’re just names. It doesn’t matter who owns them. Because we own ourselves and our words and the minute the jackals arrive is the same minute we put down the first new chairs in the next oasis. We make our place when we’re together. We make our magic when we connect, typing hands to typing hands.
Hello, world. Come in from the cold. This will be a good place. For awhile. And then we’ll make another one.
Stop buying things and start talking to each other. They’ve always known that was how they lose.
Interest rates. Money isn't free anymore. It's still not super expensive but it's 5x more expensive than what it used to be since 2008.
Capitalism. Monetise everything no matter the cost to the users
To expand on this, it's not just capitalism - it's greed.
Potato potato
do you think this move will be good for their business?
You ask on Lemmy…
Exactly -- this is almost certainly bad for Reddit's business at this point. The problem here isn't necessarily capitalism so much as it is a egocentric CEO gone mad with power.
In short: money.
Long story is that a lot of these tech companies started as startups funded by VCs.
Borrowing money was cheap so they got dumped buckets of money onto them to burn in an effort to try to get a foothold and/or kill off competition by undercutting them.
Now that they've gained a foothold and in some cases have a near monopoly or duopoly and now that borrowing money isn't cheap anymore, they need to start cutting cost if not outright turn a profit.
And so the enshittification begins.
Specifically for Twitter, Musk needs to cut cost because he bought Twitter at a severe premium and has made it less valuable by the minute ever since he took over. This to the point that he is leaving bills unpaid.
Specifically for Reddit, they've burned through all that VC money and have been eying a juicy exit in the form of an IPO. An IPO would be a payday for everyone who initially invested into Reddit because now they can sell their shares for more than what they invested (or at least that's their hope). In order to get a good price once they go public they want to cut cost and increase revenue to seem as valuable as possible.
Specifically for YouTube, the ad game has been generating less and less revenue over time and advertisers have been burned in the past by having their ads placed next to objectionable content.
So the knee-jerk reaction is to severely tighten the rules for content, lest they be demonetized.
This however made creators realize that their livelihood in the form of the pittance that's called AdSense payout is very fragile, so they started moving to doing sponsorships, soliciting Patreon donations and partnering with Nebula.
Now YouTube is missing out on those revenue streams and often ad revenue as well as creators often turn off ads on their video when they have sponsor deals etc. So what does YouTube do? They started monetizing videos of creators who are not eligible for their partner program (i.e. place ads on videos and not share it with creators) and not give those creators the option to turn off ads, they started severely increasing the amount of ads on videos that do run ads, they started severely pushing YouTube Premium and now they're cracking down on adblockers.
They’re aiming to maximize profit
Their profit centers are advertising and selling api access to content libraries
So they don’t want you to see posts with long narratives, extensive image galleries, long videos, etc. there are some exceptions to this of course like YouTube and other streaming services that embed the ads and as a result want long videos that engage the user. But Reddit, Twitter, TikTok, Insta, etc want page views. Once you take venture capital you’re fucked, they demand a return on their (typically massive) investment and will insist you sell your soul to advertising ghouls. All the socials did that long ago
That way they get maximum impressions and can serve you the most ads. They also get more data on you quickly and can use analytics to develop a profile for more targeted advertising which is more lucrative. The dream is that you view a post for 10-30 seconds, react quickly (like or upvote or whatever) then move on to the next one. This is also why they tweak their algorithms to promote garbage content. They want content that grabs an audience. R/stupidfood, fightporn, diwhy, conservative, politicalcompassmemes, etc plus the spattering of news where people react to headlines without readings are the dream to them. Why do you think they let the_donald fester when it was obviously breaking sitewide rules every single day? Because it drove engagement through ragebait. “Oh did you see what they did now?”. These are Reddit centric but the other networks are largely the same, a push to prioritize content that is ugly and rage inducing to drive engagement. They completely disregard the potential social impacts of this. Maybe it makes people more angry and more irritable, more impulsive, less empathic, more divisive, etc. but they’ll hide behind “we are giving the people what they want” because they have a complete disregard for ethics and no regulatory oversight at all.
Wrt Reddit specifically at the same time they do want some engagement with commentary because they want their cake and to eat it too. But they want this for the benefit of being able to add an additional revenue stream with selling API access to commercial clients. The biggest example is LLM stuff like chatgpt. If you need to train your AI language model you needs tons of naturalistic colloquial writing. Reddit is a perfect place for this. I mention chatgpt because they were using Reddit for this already and Reddit had mentioned them numerous times to the point that they’re clearly pissed about it. They think chatgpt owes them money as part of their success. They realize they missed that boat so this is likely another driving force in the api changes.
Additionally the content drives traffic. Reddit specifically shows up organically in tons of twitter searches and this is because of the massive amount of content they have. Other social networks have this content but they don’t make it as accessible and searchable so they’re not as concerned here.
The solution is to continue to decentralize. Imo lemmy/kbin are good but as an old head I think we need a return to the late 90s/early 2000s internet where communities were completely decentralized from each other. If the administration of your community goes to shit then only your community is fucked. This whole thing where a “platform” for communities lowers the bar which is nice but if the administration fucks up a lot of people get fucked over and a lot of communities get wrecked
Tldr advertising is cancer that will do anything for a few more dollars even if it’s destructive, the us government does basically nothing to regulate them, and we actively tolerate and invite it to our lives so expect it to get worse
Capitalism. The incentive for any large, profit-motivated firm will always be to get the most people to pay as much as possible for as little as possible.
A tale as old as time
The growth of online advertising revenue slowed in 2022 for the first time since 2009.It still grew, just slower.
Interest rates went up.
With the collapse of crypto and Silicon Valley Bank (which was overleveraged in crypto), VC money isn't as free flowing. There really wasn't that much institutional money in crypto, but it's still a destablizing force and has had a ripple effect.
AI is making more people aware of bots. This is related to point #1. A huge, unknown percentage of of FAANG revenue is selling online ads to bots instead of real eyeballs and once the word gets out, ad revenue will slow even more for any service depending on online ads (eg reddit).
The interest rate hike in the USA by the federal government caused this. The companies can't borrow money for nearly free any more. All the entities who would have been offering these loans are now able to buy government bonds with a much more guaranteed return on investment. This means the corporations must squeeze more profit out of their products to pay back loans. There are an enormous amount of large money transactions like this used to run a large business. They do not operate on cash reserves all the time. They have assets and are always evolving to stay relevant. Most businesses have enormous asset holdings but limited liquidity.
This best answers the OPs question. We know why it happens in general, but this is why everything is doing it in overdrive right now.
I also think Spez is trying to rush into an IPO before the bottom truly drops out and the company folds.
Money was basically free until now, making promises of infinite growth to investors possible. Not anymore.
Billionaires are circlejerking all push backs against wealth redistribution mechanisms. They want to use the fallout of any apparent mechanism shutdown as swag within billionaire soundbite circles. The ultimate tool is a flamethrower, or something similar. It's all a flex!
Sycophants, cronies, and useful idiots will be doing shout outs on handouts, commies, vox populi, failures, freaks, basket cases, lay offs, recessions, leftists, parasites, leaners, blah, blah, blah -- weird ass rich people lickboot enshittifications.
Interest rates go up. Quantitative Easing go down.
They might have to play with real money lol
This is it. For nearly 15 years money was basically free for tech companies. Banks don't pay anything, bonds don't pay anything, the stock market is overheated and investors are still looking for return. So if your tech company was already public you could borrow in the form of bank loans or bonds for dirt cheap and if it was still privately held you can get money from individual and corporate investors.
Now that the free money era is over a lot of companies have had to finally think about making a profit so that they can keep the lights on. This is why there have been tens of thousands laid off in the tech sector in the last year or so.
As far as Reddit goes I have no idea what they've been thinking. It seems like they've been spending money developing features nobody wants or needs: locally hosted images and video which have to cost a fortune, live chat, and NFTs, to name a few. They've got the ~20th most popular website in the world with millions of daily active users and they can't figure out how to make it profitable?
The API the third party applications used doesn't serve ads. All they had to do for a bump in revenue is to insert ads and require third party applications to display them or risk losing their API access. Users would grumble but it's a pretty reasonable ask. The fact that they didn't do this demonstrates to me that they don't think the money is in serving ads, they think it's in data mining and they can only get the data they want from the official app.
They are trying to squeeze as much money out of their platforms as possible, regardless of the fact that it's at the expense of users and will downgrade users experiences.
Honestly they do it so consistently that i'm starting to wonder if they have a choice.
A common way to do things for tech startups is that they get venture capital funds, use them to run the business at a loss hoping to acquire market dominance, and then use market dominance to turn a profit. I think a lot of tech startups that we know are currently in phase 2, meaning they've thrown money out the window for years and are now trying to recoup their investments.
Also, Reddit wants to go public and Twitter already is. This is relevant because investors are animals, all they see is short-term profit, and they use their voting power to make the company behave that way.
There's a common thread between both my theories: it's shareholder capitalism. I say this as a lifelong shareholder myself, shareholders ruin everything.
Can't fight the class war if they have us either fighting the culture war, or not talking to each other intelligently.
I think they always need one company that people will forgive anything to normalize a practice and then everyone will start doing it. There was Twitter killing their API in all but name: Twitter still alive -> we can do that too without dying. Apple stopped including chargers and charges people extra if they actually want to use fast charging: People still buy iPhones -> we can do that too. This is like reverse competition. Someone will check how far they can push things and everyone else follows suit.
Enshittification and the raising of interest rates.
These are old era internet companies from when it was considered fiscally fine to be unprofitable as long as you were growing. Those days of the internet are over and the last few companies clinging to that model now have to plan their shift toward either profitability or being sold off for parts.
The tech markets have tightened.
To take Reddit’s case: so far, they could raise money at increasing valuation, and that’s how they’d fund their operations without having to have solid monetization. Now that all valuations are down including theirs, they can’t raise anything anymore, leaving them with four (non-exclusive) choices: running out of money soon and closing shop, exiting as fast as possible to get capital injection that way, letting go of most of their staff quickly in order to get leaner, or finding aggressive ways to monetize shortly.
I think Reddit’s monetization situation was grim enough that they’re making precipitated moves towards all the last 3 options, in order not to pick option 1 and die soon. For having been a part of it, a startup looking to exit will choose some very specific metrics that they’re choosing to market their exit on, and then they’ll make all their subsequent moves based on ruthlessly optimizing for those metrics alone. Since those metrics can be way different from the ones the company was using to raise money so far, that by itself can turn a company’s ethos on its head.
I think that’s what we’re seeing across the board in tech companies; except Twitter, which was a rare case of being driven by political calendar, and one person’s political goals. The acquisition agreement was signed just before the markets tightened, and in fact, Musk tried hard to wiggle himself out of it when the market started tightening, because that kind of wasteful ownership doesn’t make sense in the new climate. But this is really specific, and I believe the timing is a coincidence; unlike all the other ones.
Dr. Capitalism, or How I listened to stop worrying and love the dollar.
In the case of reddit, I've heard a theory that the company's planning to go public, and so the API changes were designed to make the platform look more appealing to shareholders (no more 3rd party apps blocking ad revenue).
I'm wondering if it's a domino effect. Now that one major company made an announcement that fucks over their users, they're all doing it. We even now have YouTube cracking down on Adblockers. The Golden Era is coming to an end imo
$$$
As always, $$$
They want money. Capitalism strives to constantly grow.
Deleted.
Twitter had experimented and had a fair system in place through previous trial and error. Elon thought it wasn't good enough and then ran into the wall face-first thinking he was smarter than the average guy. Spoiler: he wasn't.
Money. It really is that simple.
Reddit wanted to kill third party apps because they have ad blocking features and don't show unwarranted sponsored posts. Reddit wants to serve users as much ads and sponsored content as possible, which was not really able to happen with third party apps.
Because they want people to be aware of open source alternatives but they don't want to say it directly. Poor companies 😕
The companies want to make more money, and they have (what they think) a captive audience that will put up with the increase in costs. Pull off the bandaid all at once to maximize the probability that everyone will shrug and take it.