YouTube disallowing adblockers, Reddit charging for API usage, Twitter blocking non-registered users. These events happen almost at the same time. Is this one of the effects of the tech bubble burst?

  • designated_fridge@lemmy.world
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    1 year ago

    Most of the aspects have already been covered but I would want to add one:

    This was always the plan, it just wasn’t as highly prioritised as growth.

    I work as a developer at a big tech company. We (the company) had our roadmap and it was mostly about getting more users. The more users you have the day the economy turns - the better off you are (… If you manage to turn an profit).

    So when the economy went to shit and we (and other tech companies) no longer can loan money for free to cover our running expenses - the priorities shift. Working towards attracting more users is only going to increase your costs at the point and you don’t want to run out of money. So all roadmaps changed and cost saving efforts became the highest prio all of the sudden.

  • Rinox@feddit.it
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    1 year ago

    I think it’s a consequence of higher interest rates drying up VC money, meaning that tech companies now have to actually be profitable, rather than just grow.

    If the plan was grow now, profit later, then later has come

    • InverseParallax@lemmy.world
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      1 year ago

      Nailed it, investors are demanding profit increases, it’s not just interest rates (though they’re the main reason) but also the corporate tax cuts in 2018 basically dumped a ton of profit onto corporations because they repatriated all their offshore cash they’d been hoarding.

      That bump lasted 2 years, but the expectation of higher revenue is still there, it doesn’t matter if you got lucky at slots last month, if you make your normal salary this month investors will be absolutely pissed.

      • insomniac@sh.itjust.works
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        1 year ago

        This sounds too stupid to be real but I was working for one of the largest corporations in the world during this period and we were congratulated on 20% growth even though we did nothing. Of course we didn’t get an extra bonus or anything but they acted like we had an incredible year when we really just had an average year with a massive tax cut.

        Then the next year, our goal was to grow at 20% again and when we missed it by 17%, no one got a bonus or raise.

        This timeline is the stupid one.

        • EddieTee77@lemmy.world
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          1 year ago

          This is what irritates me. You still made money just not as much as you wanted or hoped so your company punishes you. You can’t have infinite growth

        • Bautznersenf@feddit.de
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          1 year ago

          Most companies really are that retarded because everyone wants to look good and take credit for every great thing happening. People like that should not be in charge of anything.

    • AgentOrange@lemmy.world
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      1 year ago

      This is also a great example of why higher interest rates aren’t automatically a terrible thing. In general, it’s probably a good sign for the economy that companies are expected to be profitable. Means resources are being used well. The limitless VC money kinda meant any dumb idea regardless of merit got funding.

      • MsPenguinette@lemmy.world
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        1 year ago

        I wish we lived in a society where not everything needed to be profitable. People deserve treats and sucks to have things that made our lives better go awake because shareholders demand money

        • assassin_aragorn@lemmy.world
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          1 year ago

          I think we’d see loads of improvements if the philosophy went from “be as profitable as possible” to “just be profitable”. You’re 15% lower than last year, but still profiting? That’s just a smaller bonus for all employees and a smaller dividend for the investors, after putting a healthy amount of it into savings.

          There’s no concept of “enough”. That’s the big problem. It goes for both economics and career advancement. There doesn’t always have to be a “higher”. It’s okay to say “it isn’t worth it to go further”.

        • cynar@lemmy.world
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          1 year ago

          There are a number of ways things can function that way. Unfortunately, they don’t scale well.

          This is part of my hope of federalisation, it lets a group of small entities act as a single large entity. It also lets non-profit and profit making work together. The for-profit provide the brute force, the non-profits keep them from going off the rails too far. It might be the workaround we need.

          Also, be the change you want. For-profit businesses often win due to the far better returns. More people are willing to pour the effort into a business that could make them rich than a charity that never will.

        • tool@r.rosettast0ned.com
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          1 year ago

          I don’t think the problem is so much profitability as it is the demand/expectation for endless growth. It becomes a positive feedback loop and is completely unsustainable after a certain point.

          You know what else is endless growth? Cancer.

        • AlmightySnoo 🐢🇮🇱🇺🇦@lemmy.world
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          1 year ago

          Whether we like the ongoing enshittification of Reddit or not, I think it’s fair that shareholders expect a return on their investment and they have the right to pressure spez to seek aggressive monetization of the platform.

          That problem wouldn’t have existed if Reddit was a non-profit though, like the Wikimedia Foundation.

          • hellequin67@lemmy.fmhy.ml
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            1 year ago

            expect a return on their investment and they have the right to pressure spez to seek aggressive monetization of the platform.

            Whilst I agree that investors have everybright to expect a return on investment I think this could have been resolved and a number of ways which didn’t include alienating a large proportion of the user base.

            • darthsid@lemmy.world
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              1 year ago

              Exactly I’m tired of all these capitalism apologists. The aim is to innovate, there must be a more decent way to monetise or profit. If pursuing such hardline tactics means profitable at the expense of your customers and enshitification of your platform, I’d urge you to reconsider your business setup.

              • poVoq@slrpnk.net
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                1 year ago

                The capitalism apologist is going to tell you that this is necessary for innovation as Venture Capital firms fund 100 start-ups of which 99 fail to turn a profit, and thus the 1 that does has to make up for the other 99 by making extreme profits.

                But that that is just as flawed logic as thinking that there can be a “decent” capitalism that doesn’t destroy everything in its path in its pursuit of profit. If you are trying to be “decent” you will be out-competed by someone else under the current economic setup.

                • Steve@compuverse.uk
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                  1 year ago

                  The modern Neoliberal capitalist philosophy of shareholders being the only priority, isn’t the only capitalist philosophy.

                  The Embedded liberalism after the new deal, worked quite well. Since the employees are making the products, and management is making the decisions, while the shareholders don’t directly make anything for the company; People understood that the shareholders were the last priority, in getting profits. It’s why worker wages scaled with productivity until the 80s.

                  That’s when the Neoliberal capitalist philosophy took hold and gained power. First the Republicans with Regan, then Democrats with Clinton, then the global economy, since so much of it is driven by the US.

              • EdgeOfToday@lemm.ee
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                1 year ago

                I don’t think the problem is earning a profit, the problem is the need to earn even more profit than last year. Investors aren’t content to buy into a company like Reddit just to let it continue in a steady state. They want to double their money in a few years and then cash out. They don’t care if they destroy a valuable service that many people enjoy.

              • bodmcjones@sh.itjust.works
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                1 year ago

                I think in part there’s an essential misunderstanding of current events at the core of Reddit’s behaviour (not yours, I mean - spez/investors/etc).

                Historically the rule was supposed to be ‘if it’s free, you’re the product’, which is to say that our attention (and profiles and demographics) were on sale to advertisers. The big recent development is someone figuring out, or thinking they’ve figured out, how to monetise us a different way - specifically, by using the things we create as training data for AI. A sensible organisation would continue to balance these two possible cash flows and, since both really require user retention to remain profitable in the long run, seek a middle ground. But the perception is that there’s more money in the training data than there is in the user attention, so they focus on maximising that and spit on the users. The obvious consequence is that they lose users and their source of training data dries up.

            • I don’t think investors are the ones who told spez how to run things. They likely simply pressured him to make changes as quick as possible to make Reddit profitable. Investors don’t usually specify how to generate that profit though, otherwise they’d run their own companies.

              • Bautznersenf@feddit.de
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                1 year ago

                Twitter has been around for so long, it takes some time to kill. The latest move to allow access only to verified users together with meta may actually kill it though.

      • any dumb idea regardless of merit got funding

        That’s still the case and high interest rates haven’t really fixed that because they are still not high enough. Just look at how any company mentioning “AI” in their earnings call gets extra billions in market cap overnight without having a real product yet.

      • pulaskiwasright@lemmy.ml
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        1 year ago

        This seems like a non sequitur: what is good about only profitable ventures getting funding? These unprofitable ventures were creating good jobs and providing enjoyable and sometimes useful products to consumers for low prices. So why is it good that funding is drying up?

        • andyster@lemmy.world
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          1 year ago

          It doesn’t seem completely crazy to me that it would be better for money to go to successful projects than just be sprayed like a fire hose in hope that you land a Facebook or Google sized moonshot.

          Of course it sucks for the people that lose their job, but presumably that money should go towards sustainably growing things where they could work.

      • damnYouSun@sh.itjust.works
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        1 year ago

        That rather assumes that it actually matters that VC money is being wasted.

        After all it keeps the money in circulation and keeps people employed. They then get paid and will then buy useful things from companies that do make profit, so in the end it all works out. It’s only bad for the investors, but that’s always been the thing about investment, it’s always been a risk, and it’s never been guaranteed.

        • Confused_Idol@lemmy.fmhy.ml
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          1 year ago

          If the goal is simply to keep money circulating and people employed, there are more efficient ways to do that.

          Reddit, as a whole only has about 2000 employees.

          • bionicjoey@lemmy.ca
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            1 year ago

            “only 2000 employees” Reddit should have maybe 200 employees. 2000 is an insane number of people for a single relatively simple piece of software.

            • can@sh.itjust.works
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              1 year ago

              Especially since they have free content moderation. What are all those people even doing? They couldn’t even keep Victoria for AMA’s.

    • zos_kia@lemmy.fmhy.ml
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      1 year ago

      No. I don’t mean to be rude but most of that message is wrong.

      VC Money is very much not drying up. 2023 has seen record rounds in most markets. What is drying up is “VC Money for early stage startups with no revenue, no traction, and barely a functional idea”, but even that is not new it has been going on since at least 2018. Remember that guy who raised 1.5M$ with an app that just let you say “Yo” to your contacts ? That was 10 years ago. Those times are dead and buried.

      Then the link between VC markets health and interest rates is… contentious to say the least. VCs don’t borrow money - they raise funds from family offices and individual investors, every 2 or 3 years. So every change to the financial landscape will have a progressive effect over 3 years, not a brutal one after a few months. Also you have to bear in mind that the people who bankroll VCs are looking for performance of at least 2X over 10 years. Interests would have to go up to 7% to even be in competition with VC investment. Of course there’s a psychological aspect to investment so the effet is not ZERO but it’s not as automatic as saying “interest go up => vc dry up”.

      Finally, the companies we are talking about are in vastly different situations and not necessarily looking for VC money. There is no explaining their behaviour with a single cause, what we’re seeing is probably a cluster effect, because executives are like fish they always follow the movement of the other fish in their field.

      • Youtube has been profitable for years and is part of Google which is massively profitable. VC Money has no bearing on their decisions - they are in a quasi-monopoly with no credible competition and want to squeeze their users out of greed
      • Reddit has a long and complicated cap table including some very powerful institutional investors so they are aiming at an IPO rather than more VC money. They’re in a pretty good place actually with 1.5 billion MAU, and in the process of shaking off the 10% of hardcore users who are super hostile to monetization. Their monetization is so low (<2$/month/user, when the competition is 10 to 20 times higher) that they could bear to lose 50% of their userbase and still make bank with the remaining ones. They don’t need VC money right now.
      • Twitter is… uh… well there’s no telling what Elon is up to but he is absolutely not raising any VC money especially after the shit he’s pulled off since the buy-off. I think it’s just a bunch of bad moves because he’s inept at the social media game.
      • dhork@lemmy.world
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        1 year ago

        Their monetization is so low (<2$/month/user, when the competition is 10 to 20 times higher) that they could bear to lose 50% of their userbase and still make bank with the remaining ones.

        What’s left unsaid here (but I’m sure you realize) is that these same users whose monetization is so low also provide most of the content and moderation on the site. When you spread out the value of that among the (human) userbase, the total value returned to Reddit by each human is higher.

        Steve thought he was targeting the AI with this move, but in reality he has been charging his most engaged users. If he’s upset that Apollo has turned a profit, the correct move was to acknowledge that one guy has done a better job than Reddit’s team, not tell all the users that Apollo helped bring to Reddit that they were no longer welcome

        • zos_kia@lemmy.fmhy.ml
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          1 year ago

          I think they’re operating under the assumption that there is no shortage of people willing to work for clout on a leading social media. They think the users they lose are replaceable and you know what it’s not an unreasonable expectation. It sucks but that’s just the way it is, there will always be people willing to post memes and delete nazi comments.

          Only time will tell, but it’s not uncommon to kick out power users when they get uppity and think they run your platform. Way easier/cheaper to fire unpaid volunteers than tech-bros with Silicon Valley salaries.

      • cryball@sopuli.xyz
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        1 year ago

        Couldn’t it be argued that it’s a mistake from reddit to think of themselves as being comparable to platforms that make more money per user?

        For example reddit and youtube are completely different in terms of the nature of the platform. Could attempting to monetize an average reddit user to the level of those using youtube might be a mistake? Keep in mind that reddit has much lower overhead for keeping the service running.

        The mental image I’m going after is a country that exports mainly wheat arguing that its’ exports should be valued the same as a country that produces complex electronics. The products are at a different realm of complexity. Commodities should be valued for what they are and not be confused with higly refined products.

        • zos_kia@lemmy.fmhy.ml
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          1 year ago

          Couldn’t it be argued that it’s a mistake from reddit to think of themselves as being comparable to platforms that make more money per user?

          You’re right it could very much be argued. I mean isn’t that the whole underlying question ? I would imagine that anybody who invests in reddit has the assumption that yes, you can monetize comparably to other platforms. Or even cut the pear in half and sit comfortably at 10$/user which would already be a fucking money printer at >400M MAU.

          Now whether they are right or wrong in their thesis is anybody’s guess. Even after the recent debacle reddit is still in a very good position, but social media is such a clown world that you can never really tell.

      • suspecm@lemmy.world
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        I’m not so sure about Google nowadays. What started out as an everyday product killing, ended up as the first of many. They killed Stadia from one day to the other, and then started to basically sell and kill everything that is not massively profitable to the point they sold their domain distribution as well to Squarespace. That does not seem like something a massive monopoly with no regards to investor opinion does.

        • zos_kia@lemmy.fmhy.ml
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          Well i don’t know about that. They still generate 15B$ in profit every quarter. Sure they’re losing some growth, but even amid a historic advertising budget bust they are still beating expectations.

          When i mentioned their monopolistic position i was talking more specifically about Youtube, but anyway buying and killing off products is standard operating procedure for a company this size on a market this mature. There’s nothing alarming about Google’s health.

          • BelEnd@lemmy.world
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            99% of their profit comes from their search engine ad revenue though. Google has only ever had one truly profitable product and the advent of chatgpt, driven by their only true rival in Microsoft, has them scared shitless. They are way behind in the AI department and it’s the only thing out their that fundamentally threatens Googles goose with the golden eggs: their search engine.

        • zos_kia@lemmy.fmhy.ml
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          1 year ago

          Google in panic mode cause they don’t know if they’ll be able to close their 10M$ round from local VCs 😱

    • leanleft@lemmy.ml
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      8 months ago

      maybe inflation.
      just because U don’t see a price tag doesnt mean its not there.
      if you cant see the product, then you are the product!
      the state of wellbeing had never really been that great to start.

  • RIotingPacifist@lemmy.world
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    Part of it is the standard crisis of capitalism, the profit you get from doing the same thing always declines, so over time you have to push up revenue (increasing prices, forcing people to pay, showing more ads, gathering more data, etc) & push down costs (fire engineers, run on less hardware, etc)

    Part of it is capitalisms natural tendency to create monopolies, and the lack of competition in a given field causing the company to then lose sight of what it’s good at to compete in a bigger field.

    Part is that interest rates mean loans are no longer cheap, so taking on debt to get customer, to at some point down the line make money, is a less viable plan. Twitter is a special case where the bad loans are because that was the original deal not interested rate related, and Musk is trying to pull all of the enshitification levers at the same time.

    Part is that CEOs generally don’t have a fucking clue about their products or what they are doing (it’s a circuit job about who you know/blow, not what you know), so once one CEO starts firing/enshitifying, the rest just copy them so as to not be left out.

      • Sploosh the Water@vlemmy.net
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        1 year ago

        Capitalism is a system built on greed as a foundation to function. In a capitalist system, you must always continue to grow, expand, engulf, absorb, and acquire. This is why it is such a toxic and destructive system. Capitalism will always incentivize companies to get the most people possible to spend as much as possible on as little as possible, that’s literally the core principle of maximizing profitability.

        It’s why enshittification keeps happening, the system isn’t broken, it’s working exactly how it’s supposed to.

        • jwagner7813@lemmy.world
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          1 year ago

          Wouldn’t capitalism be relatively fine without the function of the Stock Exchange? I feel like the stock Exchange is what causes the issue with the need for continual growth. I feel like capitalism without the overarching need to continuously grow due to the demands of the stock exchange system, could work perfectly fine as you wouldn’t need to continuously grow but to maintain a profit and adjust for inflation where needed.

          • Sploosh the Water@vlemmy.net
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            1 year ago

            Capitalism codifies the acquisition and control of capital by an owning class separate from the workers (employees). The owners always want to see their profits grow, because in a system that is zero sum, where competition is glorified as the primary mechanism for fair pricing and business success, if you aren’t growing, then other competitors will eventually extinguish you.

            Capitalism mimics evolution in that way, where all organisms compete against each other in a winner-takes-all setting. Talk to any hardcore Capitalist and they will talk about Capitalism being the “natural order”, “human nature” etc. I know, I used to be a hardcore free market capitalist.

            A system that places profit and private ownership of capital above all else will always result in the kinds of oppressive systems and company practices we see today.

            It’s like how fundamentalist religious institutions are having abuse scandals over and over for literal centuries. They are built in such a way that makes abuse easy to get away with. Even if it starts out perfectly clean, safe, and incorrupt, eventually the very structure of the organization itself will cause abusers to join or allow already abusive people to commit those acts without significant consequences. It is a negative feedback loop that perpetuates itself until it collapses totally or is extinguished by an outside force.

      • RIotingPacifist@lemmy.world
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        1 year ago

        It’s not pure greed though, if companies do not push down costs & push up revenues enough, they get replaced by those that do.

        It is capitalism doing what it does “best”, here’s a clip from I’m A Virgo that explains it better than me: https://youtu.be/lpagmvYZKRc?t=84

        There are niches where companies can hide out for a while, especially if they provide a service that needs local implementation, but social media isn’t one of those niches, if you get outcompeted, your toast, no matter how big you peak, MySpace, Tumbler, Digg, Slashdot, etc, this is the monopolization effect of markets.

  • I Cast Fist@programming.dev
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    Not really “all of a sudden”, this has been a long process. The often repeated enshittification thing is fully valid. The short version is:

    • start out
    • grow and expand as much as possible
    • bring in advertisers
    • make everyone depend on your service
    • abuse your powers, since everyone “needs” your service

    Google, Amazon, Facebook, Twitter are the more obvious culprits, but every big tech company does something similar, one way or another, even hardware companies like Intel or Nvidia

    • Shadywack@lemmy.world
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      nVidia was very popular as the scrappy upstart during the Riva128 and TNT/TNT2 Ultra days. Their popularity with users was very high at the time. Enshittification really got started with them during the early Geforce days and just spiraled around Geforce 3. When they got their asses spanked by ATI with the R300 series they had to de-shittify for a brief time.

  • cantstopthesignal@sh.itjust.works
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    Interest rates go up > VCs can’t barrow free money and demand a return on investment > companies try to demonstrate profitability > enshitification

  • SulaymanF@lemmy.world
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    1 year ago

    It’s a process known as Enshittification.

    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.

    The rest of the read is quite good.

  • kromem@lemmy.world
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    1 year ago

    No tech burst.

    It’s just a cold recession. No one is admitting it, including consumers who keep spending away savings.

    But companies are aware of it enough they are tightening purses preparing for harder times ahead.

    Of course, it’s a self-fulfilling prophecy.

    If everyone makes their products worse chasing this quarter’s dollar, and people leave, those companies are going to have a harder time.

    Especially as it becomes easier and easier to compete against them at scale.

    Just wait until new feature requests and bug reports for something like Lemmy can be handled within moments by AI at dirt cheap pricing.

    A very interesting future awaits around the bend.

  • Clown_Tempura@lemmy.world
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    1 year ago

    The ‘trust thermocline’ occurs when an organization repeatedly takes their customers for granted, and they reach a critical point of ‘no trust return’ and just leave. Essentially, if you gradually provide less quality while charging more money, you erode trust- and if you lose trust, you don’t actually ever get it back. See: Twitter. And possibly now Reddit. Great term, I love it even, but I hate that the lesson these people are learning isn’t ‘hey maybe we should stop pissing people off without good reason’ and is instead is “this is acceptable risk and we should continue playing chicken with dissatisfied users to make our shareholders happy.”

      • _Tom_@lemmy.world
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        Reddit only started hosting images and videos a couple years ago. That alone would massively add to costs. It’s self inflicted and seems it was planned in an effort to keep people on the platform instead of linking to imgur to view the picture.

        They brought the added overhead on themselves

      • rookie@lemmy.world
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        1 year ago

        well, they hired thousands of devs in the last few years, only to direct their efforts to self-hosting videos, chat features, customizable snoo avatars you can sell NFTs for, etc. (you know, things people wanted)

        so I can understand the loss potentially growing in recent years, given what they’ve been spending on

  • Quill0@lemmy.digitalfall.net
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    1 year ago

    I find it the ad bubble is bursting so companies are increasing costs for api access and divert people into using their own apps (so they can’t block ads and such)

  • danboy4@lemmy.world
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    1 year ago

    Because investors are tired of the model where they dump a shit load of cash into something that has no good path for monetization. So they’re forcing them all to make money which hurts users.

    • cavveman@lemmynsfw.com
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      1 year ago

      This worked when there was basically no interest on money that was lent from banks. But now when the interest is on the uprise. Well, naturally investors and banks pull the plug.

      To be fair. I’m quite surprised that the plug wasn’t pulled several years ago. Twitter has almost never being in the black, always in the red. Reddit has never publicly showed it’s numbers, not yet. But would not surprise me if it was red numbers every year.

    • NutWrench@lemmy.world
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      1 year ago

      Yup. You can’t monetize something whose value is determined by the whims of the people who use it. There are a million websites streaming porn that do a better job of monetizing content than YouTube.

      How did the “investors” think this business model was going to work, again? “Let’s get millions of people to donate their time and content . . . pay them pennies in return, monetize all their content for ourselves and here’s the good part . expect them to PAY for the privilege of accessing it?”

    • Chalky_Pockets@lemmy.world
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      1 year ago

      You joke, but Reddit did something to piss me off a few months before the current fuckery, and I decided to find an alt and there weren’t really any, like I found Mastodon but that’s more of a Twitter replacement, never encountered this site while searching. What I ended up doing was downloading a bunch of books and putting them on my phone, then putting the books app where my Apollo app used to be on my homescreen. Now, more often than not, when I go to scroll, I end up just opening a book. I’ve got a little over 40 on there, they keep my progress, even across devices, and they work when there’s no signal so I no longer have to fear public toilets with shitty cell signal lol.

      • HamalaKarris@lemmy.world
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        1 year ago

        I would also love to know the app! I actually did the exact same thing except I used my To-Do list app where Reddit is Fun used to be and it has honestly helped already.

        • mapiki@discuss.online
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          I used Libby. (Just go grab a local library card and see if you can dig up any old library cards from anywhere else you’ve lived… You can have multiple libraries linked.) Also great for audiobooks.

      • Ithi@lemmy.ca
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        1 year ago

        That’s a good idea. There’s so much stuff I should/could be reading in the time I’m browsing social media.

        Especiallybas a software dev with all the new tech that is coming out, will hopefully get myself to do the same (with Lemmy as a backup of course)

        • Chalky_Pockets@lemmy.world
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          Yeah, I did download a few SW engineering books, but I haven’t gotten to them. I’ve been reading Chris Hadfields books, the Apollo Murders and and Astronauts guide to life on Earth, a few cooking books like The Food Lab, The Wok, Salt Fat Acid and Heat, Mi Cochina, and some books on playing pool like The Pleasures of Small Motions.

          • Thymos@lemm.ee
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            1 year ago

            The Pleasures of Small Motions

            That’s such an awesome title. I just wish it wasn’t about pool but more like a meditative guide on how to enjoy life through slowing down and relishing everyday things or something.

            • Chalky_Pockets@lemmy.world
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              1 year ago

              Having read the book, if you read it for that purpose, it would work, it just uses playing pool as a medium for that.

    • CodeInvasion@sh.itjust.works
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      1 year ago

      This is the only response required. I’m quickly becoming exhausted of reading everyone’s epiphany on “enshittification” as if it’s some natural eventuality. Yes the money must eventually come, but not always at the expense of platform quality. If anything the results we see from “enshittification” are due to the fact that most businesses fail eventually due to poor leadership.

      Just to echo what you have already said, money today is simply more expensive than it used to be. We even see the impacts of macro monetary decisions on households.

      Buying a house or a car on loan is far more expensive than it would have been a year and half ago. A $500,000 house in 2021 would cost $2,000 a month at 2.75% interest and 20% down. Today same that payment is $2,800 or 40% more expensive at 7.75% interest.

      Modern companies live on revolving debt, so if their suddenly gets 40% more expensive and that same amount of money is also less valuable at the same time (inflation), then they need to make up the difference somehow.

      Corporations are trying to find the balance between squeezing more revenue to pay their ever increasing debt bills while also not destroying the environment that attracted the users (their products) in the first place. Twitter and Reddit are just going about it horrifically because of poor business leadership and decision making. Netflix’s approach appears to be sustainable, and there is no doubt that YouTube will be fine in the long run.

      This is not meant to be apologetic to the decisions made by Twitter and Reddit. They’ve made their bed through their own horrible decisions, and now they’ve got to sleep in it.

      • I Cast Fist@programming.dev
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        1 year ago

        I remember a video, I think from ColdFusion, explaining how the economy has been working on debt on top of debt since the 2008 crisis. The whole idea of “grow first, profit never later” is only possible thanks to endlessly rolling debts. A bubble begging to burst

        And the irony is that the same motherfuckers responsible for that problem will be responsible for this next one AND they’ll still stay rich, while we slave away having to deal with “economists” complaining that we want to own houses.

      • dragontamer@lemmy.world
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        1 year ago

        Buying a house or a car on loan is far more expensive than it would have been a year and half ago. A $500,000 house in 2021 would cost $2,000 a month at 2.75% interest and 20% down. Today same that payment is $2,800 or 40% more expensive at 7.75% interest.

        Note that mortgages are not what companies pay for loans.

        https://fred.stlouisfed.org/series/BAMLH0A3HYCEY

        CCC bonds yield is the “low-quality” bond market, and is closer to what you might expect a no-profit internet company to be borrowing money at. 2021 was 6%ish interest rates, but today is ~12%+.

        But 2016 was ~18%+ rates, its much more volatile than the mortgage market.

        • CodeInvasion@sh.itjust.works
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          1 year ago

          You are absolutely correct! I just couldn’t think of a way to further dive into that nuance, but I also wanted the example to be relatable and tangible. Thank you!

    • Ramaniscence@lemmy.world
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      Couple this with the idea that Elon is proving you can do something drastically unpopular to increase profit, and most users still won’t abandon the platform. Tech companies, traditionally, move quickly off of FOMO to make a profit. Elon has brazenly validated many choices that other companies have generally considered risky up until his point.

      I would expect this to get even worse now that spez has doubled down. Many people talk about how Elon and spez are ruining their platforms, but at least for now, they have seemingly gotten away with it. Some users have migrated to other platforms, but many have stuck around.

      • ChiefestOfCalamities@partizle.com
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        Hit the nail on the head. Elon and spez don’t need to keep anywhere close to all their users for this to be a success. From a business perspective, they could lose a quarter of their users and still come out stronger if it means they’ve monetized the rest. Then add in the additional bonus of getting rid of all your ideological, principled troublemakers, leaving you with a platform full of high quality, addicted users that are easy to take advantage of. I don’t like it, but it really is a sensible strategy from a monetization perspective.

        • wolfpack86@lemmy.world
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          1 year ago

          This is as accurate of a take as you can get. I did a scroll of reddit yesterday. It ain’t dead.

    • cosmosaucer@reddthat.com
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      1 year ago

      Very interesting, thanks!

      Any chance you know of any papers, ideally academic, that go into this, for further reading?

  • Sanctus@lemmy.world
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    1 year ago

    We have reached the stage where the snakes have grown large enough that they must prey on their own tails, for there is nothing left to eat.