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You forgot the biggest one. Advertising revenue. That’s what Facebook and Google were supported by. And it has been a zero sum game in a race to the bottom fo

by EGreg 4y ago

You forgot the biggest one. Advertising revenue. That’s what Facebook and Google were supported by. And it has been a zero sum game in a race to the bottom for years. They just didn’t diversify much, same as Russia or Venezuela with their oil economies. Most companies built around zero-sum games are eventually going to stop growing as you run out of other people’s money. But that’s OK — they are already HUGE! The real problem is the public stock market (also a zero-sum game, mostly) creating a bubble and pushing them to extract rents from their ecosystem harder and harder. It’s fine to raise money in order to grow, but investors end up reselling shares for more and more money and represent a class of people who extract rents from a multi sided market. (By contrast, true utility tokens pegged to the dollar that can be sold to actual customers and are a way to raise money that is more economically sustainable and doesn’t create speculative bubbles.)

haliskerbas 4y ago
Search ads and social ads are two different games I would say.
- asah 4y ago
  And google didn't fail to diversify for a lack of trying !!! It's just that ads continued growing faster than anything else could catch up.
  - deleted 4y ago
    [deleted]
- EGreg 4y ago
  Either way, it’s a zero sum game. The productive sectors of society (businesses with goods and services) spend on advertising to attract customers away from each other. The majority who don’t have massive budgets for optimizing soon realize the ROI is negative on ad spend, and stop. Same as traders who get liquidated after trying futures.
MilStdJunkie 4y ago
There's a general fear that customers eventually will realize that the Google / FB ad dollars aren't actually creating new business. These gatekeepers - the Googles/Apples/FBs/etc - can predict where consumers are about to go[1], but the total numbers don't go up. It's sort of like the difference between coupons in the local paper, versus coupons that your ad man hands out next to the front door of your business. Everyone who gets a coupon was coming here anyway. The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot. [1] Giving them something that looks like magic powers to individual businesses, particularly those that aren't particularly computer savvy. "Holy smokes!! 95% of the people who Google reaches went to my pizza place! They must be soooooo good at convincing people my pizza's the best!"
- FormerBandmate 4y ago
  > The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot. Soooo… ads provide substantial value to businesses?
  - EGreg 4y ago
    In the same way a protection racket provides substantial value to them as well. But only if the platforms mess with their rankings on organic listings and ratings depending on how they pay for ads. Yelp likes to do that, for instance. Alternatives to ads include: Referrals / word of mouth Organic rankings In a way, ads are similar to speculators pumping a token they think will eventually justify the hype by recouping the speculative spend. There are diminishing returns the bigger the ad spend gets. The only difference is that there is no secondary market to keep reselling ads and scalping them higher — or is there? But there is certainly the element of a large supply of greater fools to try out ad spend on various speculative ventures.

by EGreg 4y ago

haliskerbas 4y ago

Search ads and social ads are two different games I would say.

asah 4y ago
And google didn't fail to diversify for a lack of trying !!! It's just that ads continued growing faster than anything else could catch up.
- deleted 4y ago
  [deleted]
EGreg 4y ago
Either way, it’s a zero sum game. The productive sectors of society (businesses with goods and services) spend on advertising to attract customers away from each other. The majority who don’t have massive budgets for optimizing soon realize the ROI is negative on ad spend, and stop. Same as traders who get liquidated after trying futures.

MilStdJunkie 4y ago

There's a general fear that customers eventually will realize that the Google / FB ad dollars aren't actually creating new business. These gatekeepers - the Googles/Apples/FBs/etc - can predict where consumers are about to go[1], but the total numbers don't go up. It's sort of like the difference between coupons in the local paper, versus coupons that your ad man hands out next to the front door of your business. Everyone who gets a coupon was coming here anyway. The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot. [1] Giving them something that looks like magic powers to individual businesses, particularly those that aren't particularly computer savvy. "Holy smokes!! 95% of the people who Google reaches went to my pizza place! They must be soooooo good at convincing people my pizza's the best!"

FormerBandmate 4y ago
> The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot. Soooo… ads provide substantial value to businesses?
- EGreg 4y ago
  In the same way a protection racket provides substantial value to them as well. But only if the platforms mess with their rankings on organic listings and ratings depending on how they pay for ads. Yelp likes to do that, for instance. Alternatives to ads include: Referrals / word of mouth Organic rankings In a way, ads are similar to speculators pumping a token they think will eventually justify the hype by recouping the speculative spend. There are diminishing returns the bigger the ad spend gets. The only difference is that there is no secondary market to keep reselling ads and scalping them higher — or is there? But there is certainly the element of a large supply of greater fools to try out ad spend on various speculative ventures.