“there was a model that worked ok, and there weren’t enough businesses savvy people who understood enough of the details to really scale the DSO model.”
This applies to a lot of the enshittification of the world. There used to be tons of small/family businesses, where “successful” for the owner was defined as “make a decent living, by working harder than average”. There was tons of value left on the table (or rather, lots of unmeasured surplus went to consumers). When things started getting moneyballed—optimized financially and reframed in terms of capital and returns, that surplus got squeezed out.
Yeah. It’s also my explanation for why the internet became crap: the early internet was very under-monetized. Creators were putting stuff online in a way that most of the surplus value went to viewers. That’s why to early viewers the internet felt amazing, magical: all this value lying around. Then platforms sprang up that redistributed some of the surplus to creators (like YouTube with its ad revenue sharing, I remember how jarring it felt when I first saw creators beg viewers to watch ads), but of course that didn’t make creators better off, because content creation is a business with free entry and exit; instead we got a lot more creators, with the median one still losing money and only being in it for the passion and hope, and the viewers getting not much surplus either.
The frustrating thing is, it’s still very possible to make a platform that will be under-monetized in the same way as the old internet was. But most creators won’t go there, because they understand that content creation is hit-driven and they want the chance of a windfall that the monetized platform offers. Meanwhile the platforms reduce money sharing with creators to just the right amount that they don’t leave en masse, and use network effects to make sure a new less hostile platform doesn’t get traction. A sticky situation, this is what the logical late stage of a market looks like.
Just to add to this, I wanted to give a small example of creator incentives making the internet worse: RSS. If you have a blog, you can make an RSS feed available. It’s just text, tiny in size, costs almost nothing to serve. But then you realize that people will just read your posts in their feed reader and won’t visit your site. So you stop putting the full text of posts into RSS, and put a link to read the post on your site instead. Voila: decentralized enshittification of the RSS ecosystem, purely by the creators themselves, with no middlemen in sight. We watched it happening.
This applies to a lot of the enshittification of the world. There used to be tons of small/family businesses, where “successful” for the owner was defined as “make a decent living, by working harder than average”. There was tons of value left on the table (or rather, lots of unmeasured surplus went to consumers). When things started getting moneyballed—optimized financially and reframed in terms of capital and returns, that surplus got squeezed out.
Yeah. It’s also my explanation for why the internet became crap: the early internet was very under-monetized. Creators were putting stuff online in a way that most of the surplus value went to viewers. That’s why to early viewers the internet felt amazing, magical: all this value lying around. Then platforms sprang up that redistributed some of the surplus to creators (like YouTube with its ad revenue sharing, I remember how jarring it felt when I first saw creators beg viewers to watch ads), but of course that didn’t make creators better off, because content creation is a business with free entry and exit; instead we got a lot more creators, with the median one still losing money and only being in it for the passion and hope, and the viewers getting not much surplus either.
The frustrating thing is, it’s still very possible to make a platform that will be under-monetized in the same way as the old internet was. But most creators won’t go there, because they understand that content creation is hit-driven and they want the chance of a windfall that the monetized platform offers. Meanwhile the platforms reduce money sharing with creators to just the right amount that they don’t leave en masse, and use network effects to make sure a new less hostile platform doesn’t get traction. A sticky situation, this is what the logical late stage of a market looks like.
Just to add to this, I wanted to give a small example of creator incentives making the internet worse: RSS. If you have a blog, you can make an RSS feed available. It’s just text, tiny in size, costs almost nothing to serve. But then you realize that people will just read your posts in their feed reader and won’t visit your site. So you stop putting the full text of posts into RSS, and put a link to read the post on your site instead. Voila: decentralized enshittification of the RSS ecosystem, purely by the creators themselves, with no middlemen in sight. We watched it happening.