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posted by janrinok on Wednesday January 25 2023, @03:02PM   Printer-friendly
from the circle-of-life dept.

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.

I call this enshittification, and it is a seemingly inevitable consequence arising from the combination of the ease of changing how a platform allocates value, combined with the nature of a "two sided market," where a platform sits between buyers and sellers, hold each hostage to the other, raking off an ever-larger share of the value that passes between them.

[...] Search Amazon for "cat beds" and the entire first screen is ads, including ads for products Amazon cloned from its own sellers, putting them out of business (third parties have to pay 45% in junk fees to Amazon, but Amazon doesn't charge itself these fees). All told, the first five screens of results for "cat bed" are 50% ads.

This is enshittification: surpluses are first directed to users; then, once they're locked in, surpluses go to suppliers; then once they're locked in, the surplus is handed to shareholders and the platform becomes a useless pile of shit. From mobile app stores to Steam, from Facebook to Twitter, this is the enshittification lifecycle.

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  • (Score: 0) by Anonymous Coward on Thursday January 26 2023, @02:44AM (1 child)

    by Anonymous Coward on Thursday January 26 2023, @02:44AM (#1288639)

    From a companion article []:

    But Wall Street and the Friedman doctrine never stop screaming for more. You must “maximize” your profits for shareholders in that short term window, even if it means you’re going to destroy your shareholders in the long term. And thus, you see any excess value as “money left on the table,” or money that you need to take.

    The legacy copyright industry is the classic example of this. We’ve provided plenty of examples over they years, but back when the record labels were struggling to figure out how to adapt to the internet, every few years some new solution came along, like music-based video games (e.g., Guitar Hero), and they’d be crazy successful, and make everyone lots of money… and then the old record label execs would come in and scream about how they should be getting all that money [], eventually killing the golden goose that was suddenly giving them all this free money for doing nothing.

    And, thus, that last leg of the enshittification curve tends to be when these legacy industries refuse to play nice with the wider ecosystem (often the ones enabling your overall business to grow) and seek to capture all the value for themselves, without realizing that this is how companies die.

    Of course, one recent example of this is Elon killing off third party Twitter apps []. While no one has officially admitted to it, basically everyone is saying it’s because those apps didn’t show ads to users, and Elon is so desperate for ad revenue [], he figured he should kill off those apps to “force” users onto his enshittified apps instead.

    But, of course, all it’s really doing is driving not just many of the Twitter power users away, but also shutting down the developers who were actually doing more to make Twitter even more useful. In trying to grab more of the pie, Elon is closing off the ability to grow the pie much bigger.

  • (Score: 2) by istartedi on Thursday January 26 2023, @09:03AM

    by istartedi (123) on Thursday January 26 2023, @09:03AM (#1288684) Journal

    This is part of it, and emphasizes the irrationality of the actors rather than the fallacy of corporate personhood. Spock: "To hunt a species to extinction is not logical". That's exactly what happens though. It's all too common for people to maximize short-run profit at the expense of ongoing revenue. The only way we've ever pulled it back from the brink is regulation, and even that doesn't always work. At least regulated hunting is somewhat of a success story. I'm not sure how we could apply that model to tech companies... A license to acquire, and an annual bag limit on companies, LOL.

    Appended to the end of comments you post. Max: 120 chars.