[iameli]

The biggest Reddit communities are in open rebellion. Twitter is, charitably, a mess. Twitch started taking a full 50% of the revenue of their top creators, who are furious.

What's going on? What's the bigger trend that's causing all these platforms to go so user-hostile?

[thunderbird120]

People are starting to come to terms with the new reality where tech companies actually need to have a viable business model which takes in more money than it expends. The return of nonzero interest rates means that the runway is no longer infinite, you can't just raise more money to cover costs forever, eventually you have to either take off or crash. This is revealing just how much of a nonsensical anomaly most of the 2010s were for many internet companies. COVID provided a brief return to this period but it couldn't last. The idea that large companies can be run at an operating loss indefinitely is going to be dying a slow painful death over the next few years along with any companies which can't make the transition to actually earning money, and that is the way it should be.

[vineyardmike]

> …and that is the way it should be.

I don’t know, it’s looking like most people prefer businesses that eschew profits.

Yea my business-101 textbook says businesses should run a profit, but my sociology-101 textbook says we should do things that are good for people.

Maybe Reddit (et al) should be recreated as non profits dedicated to community building… before Facebook becomes the sole source of internet social interaction.

[goatlover]

How will non-profit Reddit pay its costs? What makes you think doing things for the good of people is excluded by for profit businesses? They create all sorts of products and services that people want and need. Yes, there are abuses. Same with non profits. Because humans are in charge.

The problem with doing things for the good of people in a general sense is that you still need to have a functioning economy where scare resources are allocated somehow.

[vineyardmike]

> What makes you think doing things for the good of people is excluded by for profit businesses?

This entire thread is proof. The entire thread is platforms that people liked started to suck as soon as they decided to make a profit.

Sure theoretically profitable businesses can be good for people, but I’m not holding my breath for an example.

> The problem with doing things for the good of people in a general sense is that you still need to have a functioning economy where scare resources are allocated somehow.

Scarce resources is a cute textbook term but very few things in society, especially on the internet, are scarce. Profits must come from somewhere, and that somewhere is your customers. So it’s almost tautological that profits are bad for customers.

Reddit was built on free content from unpaid users being moderated by unpaid mods for the benefit of the community. Reddit is discovering that they can’t charge for a scarce resource they don’t own. The scarcity wasn’t internet bandwidth or servers or engineering efforts. The scarce resources were community contributions by users and mods.

[nearbuy]

Continuing to operate at a loss isn't a good option either though. Eventually they'd shut down and the community would lose all of Reddit.

[dbbk]

But they do have to make a profit or they will cease to exist. Money is not some fictional number.

[soundsgoodtome]

I mean… contextually, it kinda has been for the past decade if you’ve been in tech.

It’s only starting to matter now because those fictional numbers are starting to become very real, very fast, given the current state of interest rates.

[roastedoolong]

> How will non-profit Reddit pay its costs?

hmm... if only there were... I don't know... some way to offer users to pay for a quality experience and subsidize that income with advertisements and reasonable API usage fees?

no, that couldn't possibly work! I mean, look at Wikipedia...

oh. right.

[dbbk]

That's literally what Reddit does now and it's not enough

[bsmith]

not enough to cover the costs of running reddit, or not enough to pay back the VC funding?

[lmeyerov]

Yep!

Tech companies over hired for ~10 years wrt efficiency & sustainability, and few want to do layoffs necessary to get 'good' efficiency numbers, instead just close enough that they can maybe reach non-buzzy norms in a few years, and hope things change in the meanwhile to go back to setting money on fire.

It's natural: market funded inefficient growth for years, and tech people want to feel like they are succeeding, which headcount is a power-tripping and physical metric for, even if wildly inaccurate. Cutting isn't easy either. Losing headcount makes folks want to quit, slows growth, and if as deep as needed for efficiency (which the 'standard' 10-20% cut isn't enough for), loses revenue... Which can cause a death spiral.

We have been growing purely on revenue for awhile now, and we have to remind many of our customers that we need to get paid bc we aren't (currently) doing the VC thing. Many have been trained at this point to not think that way, it's bizarre.

[mrtksn]

Amen, I really hate that era because it has turned into a land grab by those who had access to that infinite money. It eroded the web and mobile by consolidating everything into a few platforms.

I'm hopeful that if companies start making money, we will start seeing competition again.

The web is barren, the web 3.0 went nowhere and social media is an outrage machine. I'm sure it could be better.

[ls612]

The other major issue is that the ability to start a major reddit competitor has been regulated out of existence. Same with any other large platform. The EU especially (although the US has also done this to a lesser extent) has created regulations and laws which are near-impossible technically to fulfill, so anyone operating a new website is in violation of them if you look hard enough. And believe me for a new social media app with linking news/politics/etc stories as a major feature everyone in power will be incentivized to look as hard as possible.

[jdiez17]

> The EU especially (although the US has also done this to a lesser extent) has created regulations and laws which are near-impossible technically to fulfill

Which regulations specifically are you talking about and what makes it “near impossible technically to fulfill” them?

[yamazakiwi]

Twitch revenue was 2.8 Billion last year. In what way does prioritizing more revenue mean they will achieve a viable business model when they're already generating billions.

Business types want you to think they're tidying up, but most are using this zeitgeist as an opportunity for greed and the chance to shift more power away from workers.

[thunderbird120]

To state the obvious, total revenue does not tell you if a company is actually making money. If operating costs exceed revenue you lose money. It doesn't matter how much revenue you're making. Given the costs required to run twitch, they are likely still losing money, not making it. Losing money is not a viable business strategy.

[yamazakiwi]

I am aware that revenue is not profit, we are on HN after all.

While it is possible to run a company at a loss with extremely high revenue, contextually, you're making excuses for a company that could easily keep running with 2.8 Billion dollars yearly.

It's likely that after they extract more money from creators they will increase their spend more to maintain operating at a loss. At what point does it end?

[viknesh]

If your claim is "2.8 billion in revenue is enough to run twitch profitably", I'd love to see the numbers backing that up. What's the cost of serving videos, acquiring advertisers, etc.

Otherwise it's just wild speculation.

[yamazakiwi]

If you were looking at the product and that number reasonably, you would realize that it doesn't take wild speculation.

[DangerousPie]

Revenue != profit

[yamazakiwi]

If you're making 2.8 billion in Revenue with no profit on a Twitch-like product, that's a you problem, not the creators problem. They already extract a ton of money from creators and generate revenue with ads. Twitch is spamming ads like it's TV in the 90's.

[hn666]

Without knowing the operating costs your sentence really makes no sense, this single number doesn't matter, what matters is its relation to the operating costs.

[yamazakiwi]

It's not as simple as costs vs revenue and you are wrong, it is trivial to speculate in this case.

[marklar423]

I would add on - enshittification driven by money, as coined by Cory Doctorow https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys

[TeMPOraL]

That's not a new trend, though. It's the bait-and-switch startup ecosystem has been built around for over a decade now.

There may, however, be some underlying trend that's the reason why so many social media companies are pulling the bait-and-switch right now, simultaneously.

[soundsgoodtome]

The simple reason is usually the best - it works

[Exuma]

This is a very stupid question - but can someone explain what the "interest rates" and "no more free money" replies mean? Is it because reddit isn't profitable so relies on constant money supply from investors? Or is it something else

[iaw]

I'll try to be quick and simple:

- The US government sets a base interest rate it will pay if you buy bonds from them

- Bonds are basically loans

- People with money want that money to make money so they buy bonds and invest in stocks/companies

- When bonds aren't giving any money rich people put more into companies

- When bonds are giving money rich people shift money into bonds, less money for companies

This is a gross simplification but hopefully gives the idea.

[Exuma]

Ahh, thank you. That helps a lot. I suppose it's interesting that the return from companies is even remotely comparable to the return from bonds. That's probably a dumb realization but I don't know much about this stuff.

[iaw]

Not dumb, this stuff isn't really taught unless you explicitly pursue it.

One note: the return on some companies may be higher and others lower, the issue is that the risk for money in companies is higher.

Very simplistic example: the US government can offer you a flat 5%, a company investment offers 10% half the time, 0% the other half.

One is a sure thing, one is a gamble. The more the 'gamble' the more risk and that is a driving factor in investments. People are willing to take huge risks if the payoff is very large (Look at Michael Burry and the big short)

[gregw134]

You can roughly calculate yield from a stock investment. If a stock has a P/E ratio of 20 (i.e. the value of all stocks issued is 20x its annual earnings), divide 72/20 to get a yield of 3.6%. If US government bonds offer 1% yield this stock looks like a deal, but when safer government bonds yield 4% this stock now looks unattractive.

Of course this is a gross oversimplification: earnings can grow, stocks can pay dividends, companies can go bankrupt, and companies have to pay their own bondholders as well as stockholders. But hopefully it shows that a tradeoff between stocks and bonds does exist.

[rpep]

Bonds are much less risky too. So when interest rates were low, it made sense for investors to put money into companies because with bonds you got a tiny return guaranteed vs a high risk but potentially large payoff.

Now, bonds are guaranteeing a 5%+ return, so a non-profitable business is much less attractive as a proposition.

[metabagel]

Actually, the Fed sets the Federal Funds Rate, which is the rate at which commercial banks borrow and lend their extra reserves to one another overnight. Increasing the Federal Funds Rate increases borrowing costs across the board, which subsequently will tend to decrease the money supply.

I believe that U.S. bonds are priced at the market.

[mynameishere]

It's not all about rich people switching their portfolios around. When rates rise, operating expenses for companies go up, and so they pass that cost down. This is a bigger deal for companies perennially in debt than startups.

[dehrmann]

This is a good explanation, but the real, inflation-adjusted bond yield is still negative.

[buzzy_hacker]

Is it? The 12-month inflation rate for May 2023 was 4% and the federal funds rate is 5%.

[dehrmann]

Remember that the move away from VC started over a year ago, but... Once you factor in corporate taxes, you're still at 0%.

[yazaddaruvala]

> Is it because reddit isn't profitable so relies on constant money supply from investors? Or is it something else

Roughly.. but more accurately even if they are profitable they are not profitable enough.

Its not just that Reddit (Twitter, Twitch[0], etc) needs the money, the investors likely also have loans that need to be repaid sooner-than-later (or just other places with better returns). As such there is a large push for higher short term profit, to get higher short term share price, to "diversify" some of their Reddit stock.

The reality is none of these people care about the long term of Reddit. They have effectively "pumped it", they now need a good way to quickly "dump it". I'm sure none of them have any explicit motivation to destroy Reddit's future cash flows in the process, but that long term health is definitely not their focus.

[0] Twitch as an Amazon subsidiary doesn't exactly fit this model. However, the execs within Amazon do have Profit targets to meet for their orgs. This directly reflects in their bonuses, size of orgs, etc. So likely a similar enough analog.

[crystalmeph]

The Federal Reserve, the central bank of the United States, has been raising interest rates very aggressively for the past year and a half to fight inflation. This has ended a very long-lived policy of near-zero interest rates which has been in place since 2009, the Great Financial Crisis.

When you borrow money from the bank, i.e. to fund the operations of a money-losing site like Reddit, ultimately the interest rate you pay on that loan is affected by the interest rates set by the Federal Reserve.

While interest rates were near zero, investors in money-losing companies like Reddit could justify just borrowing more money to keep the companies going, as the money was cheap.

But now with higher interest rates, the investors in Reddit, and other money-losing ventures, can no longer afford to just borrow more money to make up for the money they lost last year, they actually have to show a return or at least cut the losses to a level that the investor will tolerate. That means monetizing everything they can.

[Exuma]

So this is more along the lines of what I was thinking, where borrowed money had higher interest, but many other replies in this thread make it seem like because treasury bills are better people are just investing in that instead.

Is it both of these factors combined? Is it more one factor than the other?

[iaw]

Based on your comment I think you may be missing one aspect:

The money you get lent at the bank is the money people are investing.

Both of the things you describe in this comment are two halves of a market. There's someone borrowing money and someone lending money. The borrowing becomes more expensive because the lender has better alternatives.

[Exuma]

Ahhh, do you know what's funny is after I wrote that comment I went to the bathroom and while peeing I basically had the intuition they were 2 halves of the same thing, but I couldn't even articulate it. I was going to come back and try to ask again and I saw this comment. Thanks!

All this stuff I've tried to learn a few times and it's just so open ended, my mind is very more technically oriented and vague hand-waving statements on investopedia drives me crazy. Other people seem to understand it so easily but after the multiple attempts that I have made, I just have given up.

[iaw]

Read "A Random Walk Down Wall Street" by Burton Malkiel

It's the best non-biased primer I've found on finance.

[cragfar]

3 month T-Bills are 5.2% (was .04%). 2 years are 4.7% (was .15%). Hypothetical future profit for companies that have been around for 10+ years is no longer good enough.

[Exuma]

I see, so reddit being around for quite some time, people are just going with high interest treasury bills to put their money. Thanks

[cragfar]

Yeah. Before investors had basically no other option. Now the baseline has moved from virtually 0% return to 5%.

[superfrank]

Super simple EIL5:

Rates are low: I can borrow money at 1% interest and my bank pays me 0.1% interest on any money I leave in my account. I'm getting basically no return on my money in the bank, so it makes sense to start a project that might make me money. If I have to borrow money, I only need to make a 1% return for it to be worth it.

Rates are high: It now costs 7% to borrow money and my bank pays me 4% on any money I leave in my account. 4% is a decent return and if I borrow money I need need a project that returns >7% for it to be worth it. Leaving my money in the bank seems like a much better option now.

How this applies to Reddit: VCs and investors are trying to figure out which projects are worth putting more money into, but the bar to make an investment worth it is much higher. Reddit (and many other companies) now need to show that giving them money is more profitable than leaving money in the bank (or other "safe" investments).

[ddorian43]

Low interest rates make people do very high risk bets (stocks,startups,crypto).

Increasing rates will make people more risk aware.

[bbor]

> Is it because reddit isn't profitable so relies on constant money supply from investors?

A lot of replies to say "yes" lol

[ALittleLight]

Imagine you could have $1 now or x 1 year from now. How big would x have to be in order for you to prefer it?

Well, if you were planning on buying a $1 savings bond at a 2% interest rate than x would have to be 1.02 or bigger. If the interest rate increased then x would need to increase as well. In other words, an increase in the interest rate is a decrease in the future value of money - it takes more future dollars to be worth the same amount of present dollars.

When interest rates are low, companies prefer earning money in the future. They prefer growth. When interest rates are high then companies shift their preference to present dollars. What we are seeing is companies choosing to pursue money now rather than money in the future because of what interest rates are doing.

[0x_rs]

Discord also is in the process of asking 200 million users (monthly active as of 2023) to change their username, previous ones they will inevitably lose due to the uniqueness requirement, something nobody seems to have ever asked and might be unheard of on this scale. There's a few other examples of platforms going against their users too. It definitely seems to be an industry-wide movement, perhaps racing to be ahead of the changing economic climate with very poorly though out, short sighted steps, possibly to maximize revenue. (on paper, as advertised by some management before being approved and put into motion, but some corpos might still get away with it)

[paulmd]

discord is most likely well-aware of the criticism that it's an unsearchable black-hole and that people are nonetheless bashing it into being a docs/wiki system despite the poor product fit.

when your customers start doing weird shit with your product, they're telling you what they want the product to be, and as a result discord is pivoting towards being a forum or at least having the option for communities to have public wikis/forums associated with them.

this is probably only intensified now that reddit is teetering in the middle of their own pivot and leaving this opening for low-friction community building. like why not have a reddit replacement for the public content, built on top of the discord communities that already exist?

but, reddit with non-unique usernames would kinda suck, wouldn't it? to make a global public forum work, you have to require that they're unique and migrate the existing usernames to the new schema somehow.

You don't have to use the new username, discord's legacy functionality isn't forcing you, but if you don't you probably won't get access to disreddit features when it launches, because replying to paulmd#0069 on a reddit-clone would be an awful experience.

but the reason the username change is happening "even though nobody asked for it" is very simple. nobody is asking for username changes, but lots of people are asking for discord to step into the gap that reddit is leaving, and provide more powerful public-facing tooling for non-ephemeral content that's searchable and discoverable. And unique usernames are kind of a mandatory part of that model.

I haven't really used Lemmy/Mastodon much but it seems like an inherent disadvantage of that model too. [e-mail] is not the same user as [e-mail] and people will have to get used to the idea of looking at the whole username rather than reddit's unique usernames.

It's also going to be tough when there's not a 1:1 correspondence between "subreddits" and the discords underneath them. I guess your discord.gg URL is now your canonical subreddit URL... hope you boosted your server and squatted that custom invite URL a couple years ago, because it's your "domain name" now!

[WesternWind]

The username thing makes sense for discord, in that few people can remember the number that comes after it.

I snagged a four letter username that was my username without the number so I'm happy about that.

[SoftTalker]

> What's the bigger trend that's causing all these platforms to go so user-hostile?

The economy has changed and now they actually have to try to make money.

[dcchambers]

> What's going on? What's the bigger trend that's causing all these platforms to go so user-hostile?

These companies need/want to start making money. Either due to investors wanting a return on their investment (Reddit IPO, Amazon buying Twitch), or poor decisions which have lead to lots of debt (Elon buying Twitter). Companies can't get free/cheap loans any more since interest rates are high.

Many of these social media companies all followed the tried-and-true "embrace, extend, extinguish" methodology... Offer a free/cheap product until you gain the network effect that kills your competitors, then crank up the prices to turn a profit.

[monnok]

Inflation and rising interest rates sure seem like they can explain so much of the puzzle... especially timing.

But Twitter is an especially interesting piece of that puzzle. It seems to be immolating itself in a deliberate enshitification, closely mirroring every other mega site - yet I doubt it can be related to debt in any way.

I don’t think we can just shrug and chalk it up to a poor decision by eccentric Elon, either. There are only a handful of mega sites. Some (Meta) have had bots between users for a long time. Some (TikTok) were born that way. The rest, including Twitter, seem hellbent on racing to get bots between us as fast as they can.

I think this undermines the debt-urgency argument. I suspect it, instead, highlights a recent growth spurt in the market value for mega sites with bots between users. We’re getting bots everywhere, not because time’s up and bots were the best idea they had, but because bots are exploding in value. We might even look back and shake our heads because Elon so clearly underpaid for Twitter.

[ls612]

Interest rates go up.

[masklinn]

VC money has dried out, platforms suddenly try to extract money, and they go at it way ham-fisted with little rhyme, reason, or respect for the user base.

[kart23]

they’re not profitable. twitch probably loses money, reddit definitely loses money.

economy has changed to where money is harder to get, and investors are probably much more skeptical now. and in order to get profitable, they have to start some user-hostile practices.

[faangsticle]

The funny thing is that reddit could be rolling in cash if they hadn't decided to become a (very crappy) video and image host

[ahahahahah]

> The biggest Reddit communities are in open rebellion

No, the __mods__ of __some__ of the biggest Reddit communities are in rebellion. Of the top 20 subreddits by subscribers, only 6 are currently closed. For the most part, the users of those subreddits dgaf about this issue, and even if the mods hold these subreddits hostage forever, the users will just move on to some similar subreddit that will take its place. The only loss here will be in smaller subreddits where some mod takes their toys home and nobody cares enough to start up something similar, and in that case, it's honestly not a big loss to reddit.

[californical]

Idk,

> it's honestly not a big loss to reddit.

Even though there are some giant subreddits that will probably all return, those are the least interesting part of Reddit. I feel like even the people who just want to scroll memes and rage content on the big subreddits still get a lot of value out of a few smaller subreddits related to their hobbies.

I feel like that’s what made Reddit special compared to TikTok or others, was that you could join those niche areas that were specific to you. Reddit still has the same garbage as other internet sites, but you could also find the really interesting and insightful content related to your hobbies.

And in many of my niches specifically, almost entirely the mods have resigned from those smaller communities. And since I’m not interested in the rage memes of the major subreddits, Reddit has nothing for me at this point.

But even the people who do like that stuff, I would guess also have their own niche hobbies that they enjoy, and if that part of Reddit goes away then they might as well just be on TikTok or whatever. And then why would they stay on Reddit when it’s so similar to those others?

To phrase more elegantly: the big subreddits may have the bulk of content, and will probably still be around. But the long tail of tiny subreddits is what made it interesting, and it would take a gargantuan effort for Reddit to restore the community of all of those little subreddits that are individually only valuable to a few, but everyone has some tiny subreddits that are really important to them.

[ayemel]

Plenty of users are in rebellion too, you are glossing over the reality to fit your narrative.

[ddingus]

I logged out, plan on never logging back in.

Already, life changes, new places, people, appear interesting. Won't be long and it will be just like before I used Reddit.

[seydor]

also social media saturation. With the coming AI personas and deepfakes next year, it will be impossible for humans to compete

[hiddencost]

Interest rates

[jesuspiece]

> What's going on?

VC money is drying up and these companies need to turn a profit now finally

[stiltzkin]

Twitter is still working fine, even community notes are a huge welcome.

[xmonkee]

no more free money

[dmitrygr]

The end of free money from the fed?