Okay, the pizza’s not in the oven yet, but I’ve been thinking about stuff and thought I’d write about it. I’ve been thinking about blogging and social media. Lately, I’ve been hearing complaints about WordPress (WP) from other bloggers, but that’s nothing compared to the complaining about other social media platforms like Twitch, Reddit, and Twitter. Just add whatever platform you use to the mix and the complaints are plentiful. Personally I don’t use much other than WP.
At the moment my only problem with WP is that they keep changing the control interface so when I want to make a change, I have to hunt for awhile to find the control I’m looking for. That and the theme I am currently using is no longer supported and features die off from time to time.
What I have noticed lately about my blog and other blogs I follow is the general trend of few posts and less traffic per post. Not that I get more than a handful of views and comments for a post, but I have noticed a general slowing down. That’s likely just the natural evolution of the blogosphere and nothing sinister. It’s also likely due to the lifecycle of a individual blog – bloggers often post a lot and then stop. I’ve been blogging for about 12 years and my drive to write for the blog is waning a bit.
On the other side is WP’s parent company Automattic and their need to drive sales, revenue and profit. That’s why they make changes to WP that upset the users. When I started out, WP.com had mostly free themes you could use for your site and a few paid “Premium Themes.” Now, it’s different and the themes you’d really like to use are for sale and the free ones are junkie. Why, money – they want your money in their pocket.
Part of that is corporate greed, but another part is that running a computer company is expensive. The average software engineer earns $145,000 per year cash (add benefits, taxes, and other overhead and the true price is closer to $290,000) and Automattic has around 2,000 employees – a lot of those software engineers. Add to that the cost of running data centers or buying cloud services from Amazon, Google or MicroSoft to power the product and costs add up quickly (we’re talking millions of dollars a month).
The real problem is that most social media companies start out with the mindset that they need to build the user base as large and as quickly as possible so at the start they offer lots of free stuff to just get you hooked into their platform. Normally this is funded by first getting venture capital and then going public and selling stock. Selling stock pays back the venture capitalists, but soon the investors who bought stock want to get their share of the profits only to discover that most of the services are being given away and actually income is far less than expenses. That’s when the push to sell stuff really gets going and we users start losing the free stuff we got when the deal started.
Companies like Facebook, take years to make enough revenue to just cover basic expenses and if you’re going to sell stock to Wall Street, you better be profitable. Most social media companies make their money selling advertising and while that’s a large market, it is limited and each year brings a new competitor to the table reducing the slice each company gets. This limited money supply drives companies to look for other revenue sources, like charging for themes.
This and other money making schemes by the high tech folks often put the users of a platform in opposition to the company and if the company does something particularly irksome to the user base (rule change, restriction, etc), it can find itself without users and go out of business. It’s a fine line to walk, you need a lot of users to sell more advertising, and the best way to get users is to offer services for free but then at some point you need to earn enough money to pay the bills and pay back your investors.
The fastest way to piss off your user base is to take away the free stuff. There are also technology shifts that can kill things too. Ever hear of Myspace or AOL? Technology shifts killed both of these because they failed to invest in new technology. Today we’re seeing a shift in a number of social media companies that look like they may kill their platform altogether.
Three come to mind, Twitch, Twitter and Reddit. All three are suffering money problems and all three made changes to improve the bottom line. Twitch, owned by Amazon, quickly reversed its recent police designed to stop users from selling advertising in their videos, but likely the damage is done. By the way, I wouldn’t be surprised if you’ve never heard of Twitch. It was suppose to compete with YouTube, but ended up being a gathering spot for video gamers to stream their games. It’s likely that it would never amount to much but a niche market, but now it’s likely to die out.
Twitter is one that you could write about for years. Much has been said about the sale of the company and most of it wrong. Twitter was in financial and other trouble long before the car guy came by to restore freedom of speech. All the company actions taken since the sale have been about money – reducing the amount spent and increasing the revenue. Fire a thousand engineers and you’ve saved the company hundreds of millions of dollars a year. The other big thing they’ve done is to start charging for access to its API (application program interface) or the way big data users access the platform. If you used to have WP post your blog post to Twitter, WP uses the API to do it. As of May, WP announced that Twitter wanted too much money for access and removed the connector. WP could have passed that cost onto its user base, but I doubt you would have liked that monthly bill on your credit card. Twitter is likely to lose a lot of users, but it’s also going to reduce costs so it just might find a balancing point where it can survive. Not everyone will be happy about that.
Reddit has been an interesting case to watch and just the latest social media company to face possible extinction. The company faces the basic money problem – too many users driving up expenses and not enough income to allow it to go public. Its CEO, Steve Hoffman, seems to be willing to upset his users to get more money. At the limits of advertising income, his team has decided to charge for access to its API which until now has been free.
From a technology standpoint this makes sense. One of the largest infrastructure costs to a company like Reddit is data transfer through the API, terabytes of data can flow through this pipe every hour and that costs money for the servers, databases, internet connections, IT staff, etc. Little of this data transfer benefits Reddit. We’re finding out that companies like Google, are actually pointing AI at Reddit to train things like chatbots to write posts. Reddit basically is saying, “you want our data, you pay for it.” Sadly, the way they are implementing the paid API access locks out everyone who doesn’t pay – including loyal users who have built useful tools on their own time and expense that actually helped build up the Reddit user base to what it is today. Those tools aren’t getting a free pass to the API.
Now you have a situation where many users are offended that their loyalty to the brand isn’t being honored while the company is desperate for cash. The result is a stand off that no one can win without a lot of damage being done to the brand. Reddit is now on a collision course with irrelevance.
I’m not tying to be cynical here, it’s just life in high tech. I can tell you stories of hundreds of other companies who’ve gone under for basically these issues. The sad part is that even with a history in the business, CEOs and boards of directors continue to make the same mistakes over and over again. We users should also accept our small part in the problem. We like free stuff, but when the free stuff stops, we need to understand that it was never free and that the company will always rewrite the rules to benefit them.
And yes, I now have a pizza in the oven – pepperoni, spinach and olive. yum.
Andrew's View of the Week 