Ask Lemmy
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Well, Mastodon has been around since 2016 IIRC which is nearly 8 years and it's still growing and expanding. There's no reason to suppose Lemmy will be any different.
A large part of the issue of sustainability is intent. Meta, Twitter, Microsoft, Google etc are profit driven. By that standard, no fediverse software is sustainable because for-profits only care about continual growth leading to continual profit.
Lemmy is open source. No one who develops it or hosts an instance really cares about it being financially profitable so there's not that motivation. The motivation is more akin to doing something positive for people and at the same time, indulge in a hobby/interest they have. If the people who benefit from it (you and me, the users) recognise that benefit I would hope they donate to its development and the instance they're on. This in turn enables the users who can't afford to donate to still be able to participate in a system where profit is not King.
So sustainability in the fediverse really means 'can I afford to keep doing something I enjoy doing?' As long as they can, it's sustainable.
Just to add to this, to my knowledge the Lemmy model does not prevent monetization. So, if you want to try to start an Instance and someday monetize it, you can try if you want.
You'll be competing with all the other Instances still, but if yours is unique and offers great value, you could potentially turn this into a job.
I would have no issues if Ruud decided to quit his day job and admin LW full time, paying himself a reasonable, middle class salary from the server donations. So long as he remained transparent about it all like he has been so far.
Honestly, I actually hope this happens someday, because it would make a different kind of far more common monetization a tiny bit less likely. That's just selling the Instance. It's his, on his hardware, so if someone offered him 5 million for it, he could just sell it. But if he's drawing a salary from it, and he loves it, he may not be so willing to sell out. He wouldn't necessarily need the money, because we'd already be paying him directly.
I wouldn't have an issue with this either - within reason. But I suspect making an instance a de facto business from which an admin draws a wage would raise so many issues about a whole raft of things it probably wouldn't be worth it.
I actually hope that some dev work goes into providing "premium features" for paying subscribers. Things like profile cosmetics, awards, "superlikes", gif embeds, maybe sub only communities/threads. I view all of these as perfectly acceptable premium features that folks pay for on platforms like Discord that don't deter free users. If it helps make instances sustainable and keeps high quality admin & moderation in place, I would argue it would be a big community benefit.
Another possibility is instance - as - affiliate where the admin sets up affiliate accounts with services like VPN, Amazon, a web host, etc. To enable users to buy things they would already and give a kickback to the instance.
Thanks for your comprehensive answer, it explained a lot for me!