My biggest struggle with this question is that "going bad" sometimes coincides with not just financial incentives, but also more people getting value out of it. For example Spotify gradually shifting from "we make it easy to curate and share playlists" to "we make them for you to use as background music constantly." Sometimes what's bad for the early power user is great for the late adopter, and it's difficult to make any kind of broad judgment about whether the change is better or worse.
What do you say to this interpretation? In particular do you think most cases could be framed as "the key audience/customer/market has shifted"? Is it possible to find greater financial success while doing things the primary audience doesn't like?
I don't have the link in front of me, but someone who used to work at Spotify wrote a really nice reflection about this change through the lens of incorruptible over on LinkedIn. If someone can find it and post it here, that'd be great. If not, I'll try to remember to come back and post it later.
I think these changes very rarely have to do with what customers want shifting, but when people say "the market," they are often confused about whether they're talking about customers or our financial markets. Frankly, it's far more often for this kind of correction to originate in the pressure from financial markets than any other single source.
They study aspects of this phenomenon in UI design. There is a constant struggle between power users and novices, and a good UI absolutely cannot cater to both. Which means that over the life of a product, its UIs will tend to get more complicated and inscrutable as your user base levels up. Adobe products are often cited as prime examples.
This, of course, makes on boarding and new user acquisition harder, and can severely limit product growth. And this also leaves space for simpler products to come along and cater to the novice market. Or, companies can fight this tendency, and remove features, or make them harder to use, in order to cater to less demanding demographics.
What I'd be curious about is what spotify looks like as their market share levels off. Do they keep catering to the automatic playlist crowd, or does their average user get more sophisticated over time?