Five Rules as Facebook Goes Down; and what next?

Image representing MySpace as depicted in Crun...

Image via CrunchBase

We’ve now had a number of these stories. Is Facebook really on the verge of becoming MySpace? It seems absurd on the face of it, as global numbers keep climbing and any company which can recruit over 1 billion users is in an enormously powerful market position. On the other hand, when numbers plateau or drop slightly – as these latest stats drawn from more than one reliable source suggest – it’s a handy reminder that not even Mark Zuckerberg’s clever creation lies beyond the effect of market forces. And, very specifically, beyond the logic of disruptive innovation.

Five observations, nay, emerging rules.

1.Whether seen as a bubble or not – the current crisis in the U.S. Postal Service offers a slow-motion parallel – Facebook is not forever. It is not “different this time.” True, some companies stick around for many years (though a comparison of top listed companies decade-by-decade is a revealing and sobering exercise). And we do need to face a special factor that I have suggested on more than one previous occasion: that the extent to which a company’s core technology and/or business model is digitally derived, that company will “age” faster. A disruption variable, perhaps. Think Built to Last – and add an accelerant.

2.Of course, Facebook’s very dominance has set it up as a target. Around the time of the IPO, I recall observing that the various global governance authorities in telecommunications, and indeed back of them the governments themselves, are unlikely to sit back while a single American company, controlled Murdoch-like and more by one individual, develops an essential monopoly of a major slice of global communications. Meanwhile, we have begun to see the slow growth of interoperability, which seems to me to ensure the doom of economic profit in social media – at least in so far as the business model depends on “social.”

3.While the lock-in impact which is the obverse of the network effect remains powerful –at least, sans more comprehensive interoperability – the entry of very large numbers of users into a multiplicity of platforms has begun to chip away substantially in this advantage which Facebook the first-mover monopolist has built. So, I was just chatting with my daughter in Google chat. She actually thought she was using Facebook. Whatever.

4.I have argued repeatedly that it is a thoroughly bad thing for Facebook and other social media to have chosen the IPO route instead of seeking innovative governance and financing models which would preserve the integrity of their alignment with their users and with their proclaimed social goals. Market pressures, and – as in this case – the increasingly intrusive and sometimes offensive presence of advertising, now interposed with messages from friends as well as making up that margin down the right-hand side, are substantially altering the Facebook experience.

5.It is of course the case as Facebook and others will argue that Western and some other markets have matured, which is a proper explanation for numbers in a report such as this. This raises various questions. One is whether “maturing” explains the drop in minutes of exposure to the site on the part of those who continue to use it. That is, does maturing mean that our interest has matured and is now declining (that is, we are getting bored)? For other, the success in China of alternative social media in the context in which many Western companies are blocked suggests that network effects are still largely confined to homogeneous language/cultural/social groups.

———————————————————————————

The bubble, at least, is contorting. We may feel for the people at HQ who live under market pressures to grow and grow and grow at a time when, that a remarkably, they have grown and come close to saturating the markets most accessible to them and in which there is a strong cultural match.

Next up?

Meanwhile, some of us expect before very long there to be the kind of services Facebook offers available either for a modest subscription or free of charge from entities designed on open principles for global interoperability, using innovative finance/governance models in which users have ownership, which will replace the flailing US Post Office and much else from the old economy with organizations that do not look as if they were built and governed by the high-tech grandchildren of Rockefeller, Vanderbilt, and Chase.

https://futureofbiz.org/2013/01/15/state-of-social-a-report-card-for-2013/

 

Numbers don’t lie: The Facebook bubble may finally burst | Digital Trends.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s