Decentralization is Not, Itself, An Answer to The Money Question

[osteophage]

Whatever the benefits of decentralization may be, hyping it up becomes a problem when it's presented as a workaround for ignoring the money question. The money question (i.e. "how are you funding this thing?") is what actually determines a platform's incentives—a problem that has been touched on but quickly brushed aside by major proponents of decentralization. Decentralization, they say, is supposed to make the money question irrelevant by making it easier for users to switch from one site to another. This argument overlooks the limitations of switching as a strategy, neglects to account for how things actually play out in practice, and fails to propose a less exploitative approach to funding social media.

Crossposted to Pillowfort and Neocities. For off-site linking, I recommend using the version on Neocities.

 

The Hype for Decentralization & Hypothetical Switching

In the most high-profile hype around decentralization, the money question gets handwaved away in favor of talking up a hypothetical scenario of switching, as if switching is all it takes to protect us from exploitative business models. The basic argument goes like this: when big centralized social media platforms mistreat their users for money, those platforms can get away with it because "network effects" (having a lot of people on the platform) can impose "lock-in" via "switching costs" (i.e. if you drop the platform entirely, you lose all the connections that were exclusive to that site). "Switching costs" can be reduced, supposedly, by decentralization and federation, since that's supposed to mean you can still follow and be followed by all your old connections even after you switch. Therefore, the thinking goes, decentralization can facilitate a user boycott by offering a safe "exit" that's socially toll-free.

This argument was largely popularized by Cory Doctorow and his scatological metaphor. See for instance The 'Enshittification' of TikTok, Social Quitting, and Ulysses Pact. This same idea is how "Free Our Feeds" gets pitched as an attempt to make Bluesky "billionaire-proof." All it takes to protect us, we're being told, is decentralization's promise of easier switching.

 

Switching, As a Strategy, Has Its Limitations

The role of decentralization in helping people "switch" has to contend with two major limitations. One of these is general to the premise of switching, which in the grand scheme of things is contingent on your pool of options. The other is specific to the premise of voluntary federation, which we can observe based on how things have actually played out, in practice, in the ActivityPub Fediverse.

The idea that federation lowers our "switching cost" is, simply put, an oversimplification. It might, but this is not guaranteed. In fact, the more deserving a platform is of a boycott, likely the higher cost of a switch. For example, in a scenario where (god forbid) you've built up a social graph exclusively on Instagram Threads, switching away will likely cost you those connections because of how many Fediverse sites have (justifiably) opted to defederate from Threads. This is nothing unique, either—plenty of other instances have been subject to mass defederation, too. Plus there's nothing to stop a predatory site from shutting off federation with anyone who dares to criticize it. All together this means that no two federated sites are guaranteed to be federated with each other, especially not when a site turns evil, and so switching from one site to another continues to risk some tradeoffs, even within the Fediverse.

In general, the value of switching as part of a consumer boycott is dependent on more than just the access to competitors—because competition does not guarantee differentiation. If you decide to boycott Uber for being scummy, you can't get away from the scumminess by switching to Lyft if Lyft does the same thing. If you decide to boycott Instacart for being scummy, you can't get away from the scumminess by switching to DoorDash if DoorDash does the same thing. If you decide to boycott Amazon for being scummy, you can't get away from the scumminess by switching to Walmart if Walmart does the same thing. To actually get away from the scumminess, what you need is options that aren't so scummy.

This same principle applies to websites as much as anything else. If what you want is alternatives to platforms that persistently mistreat their users, it's not enough to have options in the abstract. What you need is options that aren't liable to do the exact same thing, which means you need to engage with the money question.

 

The Money Question

The money question (i.e. "how are you funding this thing?") is a fundamental starting point for assessing and addressing the problems with social media. Answers to the money question fall into three basic categories: 1) business models based on user exploitation, 2) personally paying out of pocket, and 3) business models depending exclusively on user goodwill. Since all three of these are compatible with Mastodon-style federation, federation itself tells us nothing. At the end of the day, the only thing that can make a platform beholden to its users is if the users themselves control the funding.

1) Business models based on user exploitation are what motivate platforms to make the user experience worse. Whether that means cramming more ads onto your feed, giving you less control over what you see, or subjecting you to worse moderation as a means of cutting costs, it all goes back to the financial incentives that operate independently of (if not diametrically opposite to) the quality of user experience. These business models are not mutually exclusive with federation, as already demonstrated by Instagram Threads. In fact, Threads is a great example of how federation can make the problem worse, since federation allows Threads to collect data on people on whole other sites, thereby nullifying the potency of a federation-based boycott.

2) Paying out of pocket is the kind of thing where if it works, it works, but in the grand scheme of things this approach introduces certain limitations and precarity. There are only so many people who are both willing and able to launch, run, and personally cover the costs associated with a social media site—and out of those, there's an upper ceiling to the number of users those people can support. Comfortably maintaining a self-funded site is contingent on that site not attracting too much attention, as illustrated when a surge of signups left the owner of Cara facing a $100k bill. So while this approach can work out, a limited number of low-capacity websites are never going to be able to absorb more than a minority of social media users, which means we can't look to this arrangement as a broad solution to the problems of the web.

3) Business models that are exclusively contingent on user goodwill are what motivate platforms to cater to their users. Whether that means users are invited to make donations or purchase premium features, either way, users control the purse strings. When users control the purse strings, then it becomes possible for users to express dissatisfaction en masse by canceling subscriptions or ceasing donations, and so the users can send a message that necessarily demands a business sit up and take notice. In many cases this a user can even continue to use the site in the meantime, in contrast to sites where a boycott would require more drastic action.

Accordingly, boycotts via withholding money represent the complete opposite of a "switching cost." There is no impact to your followers/following list at all, and it's also literally the opposite of a cost, in that it means choosing to stop paying money. Instead the costs are moved up front in the timeline, when users choose to financially support a website and contribute to its future. Only by making this choice can users arm themselves with a weapon of any real substance.

 

The Short Version

In light of the money question, an over-emphasis on decentralization can be short-sighted. Decentralization hype promises a hypothetical scenario that decentralization may not actually deliver, since A) not all federated sites are federated with each other, and B) the actual value of switching is dependent on having something less-scummy to switch to. To deal with the root of the problem, at some point we have to engage with the money question, which has three possible answers: 1) business models based on user exploitation, 2) paying out of pocket, or 3) business models dependent on user goodwill. Out of those three, it's only that last one that fundamentally puts direct financial leverage in the hands of ordinary users.

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