> but rather a monetized, competitive space that competes on user experience. More akin to music streaming than movie streaming

I'll be honest, I don't know what this means, and comparing a service like Spotify to a social network like Lemmy doesn't make a ton of sense to me.

> Centralization is easier for mass appeal

Which is by definition a single point of failure.

As for mass appeal, I'd argue the issue isn't centralization, it's network effects. I.e. I'll use the service people I'm interested in use. If you have a lot of fragmented communities, that becomes a problem, and thus Reddit dominates. And it's the problem federation is specifically intended to solve, by stitching those individual communities into a larger network.