The last era of software was based around zero marginal costs.

· Bits and Bobs 1/27/25
  • The last era of software was based around zero marginal costs.
    • In a world of zero marginal cost, there are only three consumer business models[adz].
    • Hardware.
      • Charge a premium on the hardware, and lock people into your ecosystem.
    • Media.
      • Proprietary copyrighted content the user can't get anywhere else.
    • Ads.
      • This is the default catchment basin nearly all of consumer fell into, an inescapable pull.
      • But to have a sustainable ads ecosystem requires a critical mass.
      • This is a heavily centralizing force, especially with things like Apple's ATT which traded off a small increase in privacy for massive centralization.
    • The ads business model leads, inevitably, to engagement farming.
      • Giving users not what they want to want, but what they want.
      • The old saw "You are the product" has some truth to it.
      • Incentives between the software and the users are somewhat at odds.
    • LLMs have too high a marginal cost to be supported solely by advertising.[aea][aeb][aec][aed]
    • Good!
    • That means the next era will be free of that default catchment basin, and hopefully we'll find some more user-aligned incentives in the LLM-native catchment basin[aee].

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