this post was submitted on 02 Jul 2023
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The Great Internet Recession™ has begun
Forreal, what's going on? Why does it seem like so many separate sites are suddenly so much worse/going downhill quickly?
Apparently they have been living on life-support.
I can't claim to fully understand how it worked, but apparently as long as sites could show user growth they could attract investments, but with inflation causing interest rates to go up (and other economy hocus pocus) , that money is quickly drying up.
I don't know if the investors believed that if the user base could grow large enough, someone would buy the companies, or they suddenly could come up with some fantastic monetization of said user-base.
Now as companies are listed on the stock exchange, and facing the falling investor interest, they are expected to react (aggressively) to secure future revenue.
Adding to what you said about interest rates: We're at the end of a long period of cheap borrowing (very low interest rates) during which overvalued assets were used as collateral to secure loans for investments. These propped-up assets are beginning to drop to their true (intrinsic) values. In other words, speculation and irresponsible practices were propping up a house of cards that's starting to collapse, and now investors are scrambling to cash in or cut losses wherever they can. So they're deciding that time has run out for online platforms that promised to grow but still haven't hit their numbers/monetization goals.
tl;dr: Infinite money glitch got patched (because it was wreaking all sorts of financial havoc) and now investors need to end life-support for risky/unprofitable investments.
This is an amazing way to describe things. Lol
Same thing is happening to streaming services
Streaming fell apart quickly, it's so hard to find anything decent on most of them. It's become clear they can't curate new content as readily.
It'll be even worse when there are no new series to watch because all of the people who write them are on strike. The content mines are drying up.
The internet was far more enjoyable 20 years ago, so if content goes back to being user hosted instead of corporation hosted I'll be happy.
I agree. But I think spam-bots, especially backed with ChatGPT or better level AI will prevent real user generated content, on that level from 20 years ago, to resurface.
Our entire Internet enjoyment has been heavily subsidized by venture capital for the last 30 years which hoped to monetize us more than they have been able (believe it or not).
Now they are calling in their bets...
How will enjoying the internet look like in the future? Lots of things we took for granted clearly weren't, and now we're used to a kind of internet that might just not be sustainable.
I guess things aren't looking too good.
Billionaires bought the internet and now they're realizing that it isn't profitable.
Question is what do you do then? First, you try to reach profitability. Get out of the red by milking users and reducing costs, but there is little chance to get that really sweet ROI that you dreamt of in the last decade. What do you do next? My guess is that we will see some websites change ownership into some shadier hands in the next years. The personal data collected could still be worth something after all.
Do websites even make much from collecting data? There are so many trackers and only so many people. Ads are obvious, but it's clear that relying on those two isn't enough for revenue.
I'm guessing that websites with a large userbase will start charging for access to their sites. It might look like the NYT, where you get your 3 free articles, sign in for more, then you're required to pay. Free tiers won't be a reasonable compromise like they are now.
Will people stay and pay, or will they migrate? Most likely the former, especially for the older demo. Moving to the fediverse has been confusing enough for many of us who actually committed to learning about it. An average Twitter user wouldn't put in this much effort.
I’m skeptical that ads themselves actually have a return on investment. There are so many, they are almost entirely ignored. Of course the advertising companies have done a good job convincing people to buy ads. But do they work well enough to justify the cost?
Ads don't make enough. I play a solitaire game that pays out money for sitting through the ads. Those ads are highly targeted and very likely to drive traffic to those other apps that say they will also pay you to play solitaire or even Candy Crush! I still only get maybe $.10 per game and sit through around 3 ads. I accidentally click ads a lot, too.
What else are web companies going to do for revenue, though? It doesn't really cost them anything to host ads.
They are unable to find investment funding because boomers are retiring and taking their money out of stock market.