Finance:Enshittification

From HandWiki
Revision as of 17:48, 5 February 2024 by Steve2012 (talk | contribs) (link)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Short description: Systematic decline in online platform quality

Enshittification, also known as platform decay,[1] is the pattern of decreasing quality of online platforms that act as two-sided markets. Enshittification can be seen as a form of rent-seeking.[2] Examples of alleged enshittification have included Amazon, Bandcamp, Facebook, Google Search, Reddit, Twitter, and Unity.

The term enshittification was coined by the writer Cory Doctorow in November 2022; the American Dialect Society selected it as its 2023 Word of the Year.[3]

Definition

Black-and-white photograph of a man with short hair and black glasses, wearing a face microphone.
Cory Doctorow, who coined the term enshittification in 2022

The term enshittification was coined by Doctorow in a November 2022 blog post[4] that was later republished in Locus magazine in January 2023.[5] He expanded on the concept in another blog post,[6] which was later republished as an article in the January 2023 edition of Wired, in which he said that enshittification is how platforms die:[2]

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.

According to Doctorow, new platforms offer useful products and services at a loss, as a way to gain new users. Once users are locked in, the platform then offers access to the userbase to suppliers at a loss, and once suppliers are locked-in, the platform shifts surpluses to shareholders. Once the platform is fundamentally focused on the shareholders, and the users and vendors are locked in, the platform no longer has any incentive to maintain quality. Enshittified platforms which act as intermediaries can functionally act as both a monopoly on services and a monopsony on customers, as high switching costs prevent either from leaving even when alternatives technically exist.[2] Doctorow has described the process of enshittification as happening through "twiddling"; the continual adjustment of the parameters of the system in search of marginal improvements of profits, without regard to any other goal.[7]

To solve the problem, Doctorow has called for two general principles to be followed:

  • The first is a respect of the end-to-end principle, a fundamental principle of the Internet in which the role of a network is to reliably deliver data from willing senders to willing receivers. When applied to platforms, this entails users being given what they asked for, not what the platform prefers to present. For example, users would see all content from users they subscribed to, allowing content creators to reach their audience without going through an opaque algorithm; and in search engines, exact matches for search queries would be shown before sponsored results, rather than afterwards.[1]
  • The second is the right of exit, where users of a platform can easily go elsewhere if they are dissatisfied with it. For social media, this requires interoperability, countering the network effects that "lock in" users and prevent market competition between platforms. For digital media platforms, it means enabling users to switch platforms without losing the content they purchased that is locked by digital rights management.[1]

Examples

The word gained traction in 2023, where it was widely adopted by journalists in reference to several major platforms discontinuing free features in order to further their monetization or taking other actions that were seen to degrade functionality in ways intended to thwart competition and increase profits.[8]

Amazon

In Doctorow's original post, he discussed the practices of Amazon. First, Amazon started selling goods below cost to build up a user base. Amazon then introduced the Amazon Prime subscription which encouraged users to shop more exclusively at Amazon. The strong base of clients who had formed a habit of using Amazon exclusively incentivised more sellers to sell their products through Amazon, as Prime users were only searching Amazon for goods. Finally, Doctorow indicated that Amazon then began to focus on its shareholders by increasing profits and introducing fees. In 2023, 45% of the sale price of items went to Amazon in the form of various fees. He described advertisement within Amazon as a payola scheme, in which sellers are bidding against one another for search ranking preference, and identified that the first five pages of a search for "cat beds" were 50% advertisements.[2]

Doctorow has also criticised the near-monopoly of Amazon's Audible service, which controls over 90% of the audiobook market, and applies mandatory digital rights management (DRM) to all audio books. Doctorow pointed out that this meant that a user leaving the platform would lose access to their audio book library. Doctorow decided to independently distribute the audio version of his book The Internet Con: How to Seize the Means of Computation since Amazon's system would not distribute it without DRM.[9][better source needed]

Bandcamp

This term was used retroactively to describe the 2022 sale of Bandcamp to Epic Games, and later when Epic Games sold Bandcamp to music licensing firm Songtradr in September 2023.[10] In October 2023, it was revealed that almost half of Bandcamp's staff were laid off, including many key members of the executive team who apparently "vanished", according to former employees. Following this acquisition, there was a large outpouring of grief and rage on social media from many former employees, users and artists who viewed Bandcamp as an essential service for niche and independent artists to release music while retaining profits from the sale of their work.[11] Bandcamp had also unionized in March of 2023, and Songtradr laid off most of the staff involved in the union, as well as the people involved in negotiation with the union.[12] As of October 2023, Songtradr still has not formally recognized the union.[12] According to music journalist Philip Sherburne, writing for Pitchfork, by specifically targeting both the customer-support department and the editorial department for layoffs, Songtradr was signaling either ignorance or apathy for the reason Bandcamp had been successful.[10]

Facebook

According to Doctorow, Facebook offered a good service until it had reached a "critical mass" of users, and it became difficult for people to leave because they would need to convince their friends to go with them. Facebook then began to add posts from media companies into feeds until the media companies too were dependent on traffic from Facebook, and then adjusted the algorithm to prioritise paid "boosted" posts. Business Insider agreed with the view that Facebook was being enshittified, adding that it "constantly floods users' feeds with sponsored (or "recommended") content, and seems to bury the things people want to see under what Facebook decides is relevant".[13] Doctorow pointed at the Facebook metrics controversy, in which video statistics were inflated on the site, which led to media companies over-investing in Facebook and collapsing. He described Facebook as "terminally enshittified".[2]

Google Search

Doctorow cites Google Search as one example, which became dominant through relevant search results and minimal ads, then later degraded through increased advertising, search engine optimization, and outright fraud, benefitting its advertising customers, which was followed by Google's collusion to rig the ad market through Jedi Blue to recapture value for itself. Doctorow also cites Google's firing of 12,000 employees in January 2023, which coincided with a stock buyback scheme which "would have paid all their salaries for the next 27 years", as well as Google's rush to research an AI search chatbot, "a tool that won't show you what you ask for, but rather, what it thinks you should see".[1][2][14][15][16]

Reddit

Reddit users protest the changes on r/place. "Spez" is the username of Reddit CEO Steve Huffman.

In 2023, Reddit announced that it would begin charging fees for API access, a move that would effectively shut down many third-party apps by making them cost-prohibitive to operate. The CEO, Steve Huffman, stated that it was in response to AI firms scraping data, although The Verge provided an alternative explanation that the move was intended to increase revenue ahead of the platform's initial public offering. Moderators on the site conducted a blackout protest against the company's new policy, although the changes ultimately went ahead. Many third party Reddit apps such as the Apollo app were shut down because of the new fees.[17][18][19]

Twitter / X

The term was applied to the changes to Twitter in the wake of its 2022 acquisition by Elon Musk.[20][14] This included the closure of the service's API to stop interoperable software from being used, suspending users for posting (rival service) Mastodon handles in their profiles, and placing restrictions on the ability to view the site without logging in. Other changes included temporary rate limits for the number of tweets that could be viewed per day, the introduction of paid subscriptions to the service in the form of Twitter Blue,[20] and the reduction of moderation.[21] The increase in hate speech on the platform, particularly antisemitism and Islamophobia during the 2023 Israel–Hamas war, led to some organisations pulling advertisements from the platform.[22] According to internal documents seen by The New York Times in late 2023, the losses from advertisers pulling out may amount to $75 million by the end of the year.[23] Musk delivered an interview on November 29, in which he told advertisers leaving the website to "go fuck yourself."[24][25]

Unity

The Unity game engine's 2023 changes to its licensing model were described by Gameindustry.biz as an example of enshittification, as the proposed changes would have applied retroactively to projects which had already been in development for years while degrading quality for both developers and end users, while increasing fees.[26] While the Unity Engine itself is not a two-sided market, the move was related to Unity's position as a provider of mobile free-to-play services to developers, including in-app purchase systems.[27] In response to these changes, many game developers announced their intention to abandon Unity for an alternative engine, despite the significant switching cost of doing so, with game designer Sam Barlow specifically using the word enshittification when describing the new fee policy as the motive.[28]

See also

References

  1. ↑ 1.0 1.1 1.2 1.3 Doctorow, Cory (2023-05-09). "As Platforms Decay, Let's Put Users First" (in en). https://www.eff.org/deeplinks/2023/04/platforms-decay-lets-put-users-first. 
  2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Doctorow, Cory (January 23, 2023). "The 'Enshittification' of TikTok". Wired (Condé Nast). https://www.wired.com/story/tiktok-platforms-cory-doctorow/. Retrieved 1 June 2023. 
  3. ↑ "2023 Word of the Year is “enshittification” – American Dialect Society". 5 January 2024. https://americandialect.org/2023-word-of-the-year-is-enshittification/. 
  4. ↑ Doctorow, Cory (November 15, 2022). "Social Quitting". https://doctorow.medium.com/social-quitting-1ce85b67b456. 
  5. ↑ Doctorow, Cory (January 2023). "Social Quitting". Locus 90 (1 #744): 29, 49. https://locusmag.com/2023/01/commentary-cory-doctorow-social-quitting/. Retrieved 2023-12-13. 
  6. ↑ "Pluralistic: Tiktok's enshittification (21 Jan 2023) – Pluralistic: Daily links from Cory Doctorow". 21 January 2023. https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys. 
  7. ↑ Doctorow, Cory. "Twiddler: Configurability for Me, but Not for Thee" (in en). https://cacm.acm.org/blogs/blog-cacm/270721-twiddler-configurability-for-me-but-not-for-thee/fulltext. 
  8. ↑ Multiple sources:
  9. ↑ Doctorow, Cory (31 July 2023). "Kickstarting a book to end enshittification, because Amazon will not carry it" (in en). https://doctorow.medium.com/kickstarting-a-book-to-end-enshittification-because-amazon-will-not-carry-it-7585250dabaf. 
  10. ↑ 10.0 10.1 Sherburne, Philip. "Is Bandcamp as We Know It Over?". pitchfork.com. https://pitchfork.com/thepitch/is-bandcamp-as-we-know-it-over/. 
  11. ↑ Gach, Ethan (2023-10-16). "Epic Games' Messy Bandcamp Sale Ends With Mass Layoffs [Update"] (in en). Kotaku. https://kotaku.com/epic-games-bandcamp-layoffs-songtradr-fortnite-music-1850931222. 
  12. ↑ 12.0 12.1 Council, Stephen (October 17, 2023). "Every member of Bandcamp union bargaining team was laid off in huge cuts at Oakland firm". SFGate. https://www.sfgate.com/tech/article/bandcamp-bargaining-union-layoffs-songtradr-18432047.php. 
  13. ↑ Zitron, Ed (March 27, 2023). "Google, Amazon, and Meta are making their core products worse — on purpose". Business Insider. https://www.businessinsider.com/tech-companies-ruining-apps-websites-internet-worse-google-facebook-amazon-2023-3. 
  14. ↑ 14.0 14.1 Naughton, John (11 March 2023). "Users, advertisers – we are all trapped in the 'enshittification' of the Internet". The Guardian. https://www.theguardian.com/commentisfree/2023/mar/11/users-advertisers-we-are-all-trapped-in-the-enshittification-of-the-internet. 
  15. ↑ Yang, Mary (20 January 2023). "Google is cutting 12,000 jobs, adding to a series of Big Tech layoffs in January". NPR.org. https://www.npr.org/2023/01/20/1150234270/google-layoffs-12000-jobs. 
  16. ↑ Godfrey, Lisa (20 April 2023). "Scams, conspiracies, and surprising theories on why we fall victim to them". CBC.ca. https://www.cbc.ca/radio/ideas/scams-fraud-credulity-1.6816036. 
  17. ↑ Plunkett, Luke (June 28, 2023). "Minecraft Subreddit Loses Support From Devs Who Disapprove Of Reddit Changes" (in en). Kotaku. https://kotaku.com/minecraft-reddit-protest-huffman-ceo-subreddit-mojang-1850589115. 
  18. ↑ Breland, Ali. "Why Reddit is destined to turn to crap" (in en-US). https://www.motherjones.com/politics/2023/06/reddit-blackout/. 
  19. ↑ Ashworth, Boone (17 June 2023). "The Reddit Blackout Is Breaking Reddit". Wired. https://www.wired.com/story/the-reddit-blackout-is-breaking-reddit/. Retrieved 18 June 2023. 
  20. ↑ 20.0 20.1 Ball, James (July 4, 2023). "The slow, sad death of Twitter". The New European. https://www.theneweuropean.co.uk/the-slow-sad-death-of-twitter/. "That means lots of blue ticks stop paying – but everyone else is forced to read the low-quality content that the remaining blue ticks produce. This is what is powering the enshittification of Twitter." 
  21. ↑ Masnick, Mike (5 July 2023). "It Turns Out Elon Is Speedrunning The Enshittification Learning Curve, Not The Content Moderation One". https://www.techdirt.com/2023/07/05/it-turns-out-elon-is-speedrunning-the-enshittification-learning-curve-not-the-content-moderation-one/. 
  22. ↑ Cooban, Anna (22 November 2023). "EU stops advertising on X over hate speech. Fines could follow next year | CNN Business" (in en). https://edition.cnn.com/2023/11/22/tech/eu-advertising-x-hate-speech/index.html. 
  23. ↑ Mac, Ryan; Conger, Kate (24 November 2023). "X May Lose Up to $75 Million in Revenue as More Advertisers Pull Out". https://www.nytimes.com/2023/11/24/business/x-elon-musk-advertisers.html. 
  24. ↑ "Elon Musk tells advertisers: 'Go fuck yourself'". The Verge. 30 November 2023. https://www.theverge.com/2023/11/29/23981928/elon-musk-ad-boycott-go-fuck-yourself-destroy-x. 
  25. ↑ "Elon Musk Just Told Advertisers, 'Go Fuck Yourself'". Wired. 29 November 2023. https://www.wired.com/story/elon-musk-x-advertisers-interview/. 
  26. ↑ Sinclair, Brendan (15 September 2023). "Unity's self-combustion engine | This Week in Business" (in en). https://www.gamesindustry.biz/unitys-self-combustion-engine-this-week-in-business. 
  27. ↑ Vilberg, Petter (2023-09-14). "Unity's Just Not Into You, Indie Developer" (in en). https://www.gamedeveloper.com/blogs/unity-s-just-not-into-you-indie-developer. 
  28. ↑ Kerr, Chris (13 September 2023). "Rust creator tells Unity to "get fucked" in response to runtime fees" (in en). Game Developer. https://www.gamedeveloper.com/business/rust-creator-tells-unity-to-get-fucked-as-developers-left-seething-by-new-fee. 
    Citing: Maiberg, Emanuel (12 September 2023). ""This Is a Disaster:" Game Developers Scramble to Deal With Unity's New Fees" (in en). 404 Media. https://www.404media.co/unity-new-fees-prices/. 

Further reading



Retrieved from "https://handwiki.org/wiki/index.php?title=Finance:Enshittification&oldid=3315662"