Lets take the example of Reddit. Reddit could have kept its costs to the minimum and could have run the site with the ad revenue that came in. In fact they could have talked transparently about their opex and asked for a simple donation drive every now and then like Wikipedia. If need be, they could have removed silly GIF replies and other stuff and focused on text alone. However this would not let them become the next Facebook. That’s what they wanted to be. At some point in their story was a choice to be forums 2.0 or get into a race to become a cash grab. Sadly they went for the latter.

Late stage capitalism You make a business and it goes well, you make some money everyone is happy.

But with time your profits will plateau or even decline. It’s natural, but businesses don’t understand that it is insane to expect a company to always turn crazy profits when the product does not evolve.

Companies like apple and Microsoft don’t worry as much because they are constantly evolving with new product.

Companies like Twitter, Facebook, reddit, Netflix have hit a wall where there really isn’t anywhere else to go so they start making shareholder centered decisions made by people who aren’t even in touch with the user base of their product.

It’s the money.

US Fed has raised interest rates, destroying money for the first time in decades in an effort to stop our inflation problem

The knock on effects is that banks literally have less money to lend to companies. Some companies are affected more than others by this environment. Tech was hit hard, extremely hard.

With hundreds of thousands of layoffs, tech industry is contracting. Silicon Valley bank literally evaporated in the span of 3 days. Twitter was losing money and had to sell out. StackOverflow is losing money and is currently selling out.

In this environment, Reddit is about to launch it’s long awaited IPO, the time when the public is allowed to directly buy Reddit stock and invest into the company. That’s what Initial Public Offering means. If Reddit does well, Reddit will pull in lots of money this year through this IPO.

The CEO of Reddit needs to prove Reddit is profitable, or if not profitable… Will eventually be profitable. Stockholders don’t care about Reddit drama for the most part, but most are smart enough to read financial sheets. Reddit needs to show growing revenue, growing profits and cutting costs to attract money.

As such, all of what Reddit’s CEO has done makes sense in the context of the IPO. He is betting that shareholders won’t notice the drop of high quality content creators from Reddit, since that’s not a financial number that’s reported. He can IPO, raising millions, maybe even billions for himself. The golden parachute outta here when everything gets screwed up in a year or two and collapses.

I think today’s investors are smarter though, and the bearish economy and high interest rates means more investors will pay attention to underlying issues.

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

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Cory Doctorow has some very interesting blogposts on the topic. He call it enshittification. It’s more or less the business model of plattform Capitalism.

This is just what living in late stage capitalism looks like.

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

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

I don’t know honestly, greed probably. But it’s such a shame. It seems like the internet as a whole is heading in a horrible direction, and not enough people care about it for there to be something done about it.

Many tech companies were overvalued for a long time. Everyone was happy to invest and pump money into those companies because “those platforms are going to be the future and I want to be part of it when they are starting to make a ton of money”. It didn’t matter that many of those companies were not profitable because they always promised to make up for that in the future.

This classic idea is starting to break down a bit. Many Tech companies have become profitable in the meantime, but many of them also have various troubles like moderation.

So why are so many media companies making “shitty decisions”? Well, because from a business perspective, they aren’t necessarily “shitty decisions”, they are kinda smart decisions. Reddit makes money by gathering data and by showing ads. They cannot show ads on apps they don’t control. So they have to handle a lot of traffic for which they get nothing back. That’s why they are trying to push as many people to use their app as possible. They know that the hardcore oldschool community won’t like that, but they are probably pretty sure that enough will switch to the app to make it worthwhile for them.

Meta is fighting to stay relevant as well. Facebook was the foundation of social media for a long time, but in the digital space, this can change very quickly, so they constantly have to try new things.

And if we look at games like the Sims, the game who really escalated the whole DLC thing, it’s a similar story. From a consumer perspective, what they are doing is bad. From a business perspective, it’s smart. And that’s what it ultimately comes down to.

Companies’ main goal isn’t to satisfy their customers, it’s making money. If fucking over customers makes them more money, they do it in a heartbeat.

All these companies have done about as much growing as they can. I remember listening to the radio on my drive to work a year or two ago, and they were talking about how Facebook had done internal research and concluded that they had captured something like 95% of the possible user demographics, meaning that they were unlikely to be able to reach new customers because either you have Facebook and you use it, or you’ve already heard of it and you don’t want it/don’t use it anymore.

It was interesting, because Facebook/Meta, like Twitter, Reddit, Discord and Tumblr are all for-profit companies that exist to make money, and yet, the expectation of infinite growth from the market never ceases. There will never be a time when the company has grown “enough”. Enter the short-term smash-and-grab strategies. The idea is that they know that their business model has peaked in terms of growth and profit and they now need to extract value from the company before the market catches up to that fact. Social media is inherently unprofitable. Nobody wants to actually pay for it, and they do not produce a product, so eventually once the ad revenue has reached critical mass, the users become the product and are essentially ransomed off. Reddit just tried to pass the buck onto the 3rd party app developers rather than the users, but since the API restrictions affects regular users as much as it does developers, it had the same effect.

Suffice to say, unless you are a member of a social media platform that is a non profit, this is going to keep happening. Even if you land on a site that prides themselves on being excellent stewards of their company and never prioritize profits and growth over stability and customer satisfaction, eventually they will be forced to make a decision - lose a lot of money or lose some customers. The answer, sadly, is all too obvious to them by now.

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My theory? It’s Musk.

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

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

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

I think the free money train in leaving the station and everyone is scrambling to be profitable. But that’s just an assumption based on twitch and Reddit right now.