Because it marks a lack of human empathy, and signifies an absence of intellectual curiosity, it is an unacceptable response to creative efforts in our culture. “Fail!” is the cry of someone who doesn’t create, doesn’t ship, doesn’t launch, who doesn’t make things. And because these people don’t make things, they don’t understand the context of those who do.
Years ago, I worked at a summer camp in the San Juan Islands. I actually met the wonderful person who would become my wife there. And a summer camp, at its best, is this amazing volcano of creativity: you have the energy of hundreds of young campers, counselors who are still young themselves, you have music, you have nature, you have recreation and physical activity, you DON'T have electronic media. It's perfect, really. But there was this one person who, whenever something truly creatively odd would be presented (be it a song or a skit or just a joke) would make a yucky face and say, "Random!" She even made a song for people to sing with the lyrics, "Random, random, that was so random." A song is a creative act, sure, but she just borrowed an existing camp melody and put in her cynical patronizing words.
And, like, go to hell, you know? It's not random, it's a creative act inspired by the environment we're all sharing and that's a beautiful thing that sets us apart from the goddamn insects. I bet she uses FAIL all the time.