this post was submitted on 07 Jun 2023
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All these websites have almost always been net cash flow negative. They bleed venture capital to provide a service below cost in order to build a user base.
The problem now is interest rates have spiked. Rates have been basically zilch for much of the internet's history over the past 20+ years, so sites could actually operate for quite some time on super cheap debt that they almost never had to repay. And venture capital firms would just keep pouring money into the "next best thing".
Now that debt is rapidly becoming much more expensive to maintain, and those VC investors want their chunk of the pie back in their pockets. And they are going to extract it from every single one of these centralized services by whatever force is necessary. It's only just getting started, you watch.
You can't lose money forever, not as a business. What's great about the Fediverse is that it makes social media something that can be done as a hobbyist project. Money is nice, but the hobbyist isn't necessarily out to make money.