GigaOm and Center Networks commented today on the history of social networking. Reading some of the comments on both posts, I realize just how subjective social networks are, as the name would imply.
Facebook was clearly the company of 2007 and social networking remains a very hot space in 2008, no doubt. But much the same way that Friendster was trumped by MySpace in 2005 and to some extent MySpace’s mindshare was stolen by Facebook in 2007, I am not sure if Facebook will remain as relevant in 2009 as it was in 2007 (I presume it will to varying degrees in 2008).
But ultimately, for the very same reasons that some criticize MySpace today, Facebook has become a victim of its own success. Here are five reasons why Facebook will fare no differently than previous leaders in the social networking space:
Mass vs. Niche
If you look at the evolution of social networks, niche has always trumped mass. MySpace initially blossomed (at Friendster’s expense) because it was used by many artists, first the independents, then the mainstream ones. Because more or less everyone (big time generalization, I agree) likes music, then that served as a common interest which drew in the masses…
MySpace today and in the future will be a largely entertainment oriented media platform. This is not a bad thing, we’re just saying that this is where its future and focus should be.
Facebook, in turn, began to grow because it was a student-only tool. As the name implies, it was a directory of people. When it opened up to non-students in Fall 2006, naturally all recently-graduated-students (myself for example) signed up. Facebook’s PR team consistently highlights that the 25-34 demographic is the fastest rising one… but guess what, by landing all of these “old fogeys” the student crowd begins to find it creepy… let alone once your parents, uncle and teachers start to have pages too.
Don’t get me wrong, I am not arguing that Facebook’s utility falls to zero by opening up, I am simply saying that by opening up, the site diluted its value proposition and suffers slowly, but surely.
If you doubt me, imagine if LinkedIn was littered with every employee from every industry in every country. At first you think “great” but is it really? LinkedIn’s value lies in serving executives only.
Cr-App Overload
After Facebook opened up its network to all, inevitably, it opened its platform to all developers. Initially I said “be careful what you ask for” and to this day I wonder if this is smart. Slide is one example of a company who has parlayed its succedd to a $500M valuation, but it’s too early to cash in the check just yet. Slide will have a very challenging time monetizing its audience. As someone with more experience told me: “it’s smoke and mirrors”.
But because of Facebook’s massive audience, developers rushed to create applications… and I could care less what any fanboy says: Facebook has become a landfill of cr-app as a result. The regular invites to connect get lost amongst all of the invites to useless applications…
Privacy
A lot of people eventually realize that narrowcasting your life to others is not smart. It’s one thing for you to know who sees your profile, it’s another for others to see you, privately.
This is a privacy issue at the first level. More importantly, there are privacy issues with Facebook’s platform, Beacon.
Monetization
The biggest challenge, no doubt, will be with regards to how Facebook will monetize over time. I’ve covered this aplenty, but Beacon has so far been a failure and Facebook has some serious questions to ask on this front.
Management & Leadership
Mark Zuckerberg is a great talent. There is no doubt that Zuckerberg deserves a special spot in the history of the Internet, but he has also demonstrated a lack of judgment - or simply poor judgment - a handful of times.
His communications skills are perhaps his Achilles Heel… and if Facebook is aiming for an initial public offering (IPO) as an exit, then you can imagine that this will indeed be his undoing as shareholders will add or erase billions of dollars in market capitalization based on every breath he takes.
I am not sure if Mark’s days as CEO are numbered, but eventually, the Board will consider bringing in a media-oriented, advertising-experienced person (maybe even a female).
Let me be clear: I am not saying Facebook is doomed or anything like that. With $340M in funding, a partnership with the world’s most valuable technology company and backed now by strong partners in Germany and China, Facebook will remain a force for some time to come… but it will not remain the darling it is within 12-24 months and in many ways, the $15B deal it did with MSFT will surely come back to haunt it before long.
Update: This should be Six reasons… fitting for Six Degrees of Separation, since Facebook is the Database of Connections.
Anyway, reason 6 simply is Common Sense.
99% of the people we lose touch with, we do so on purpose. Yet Facebook allows us to reconnect. The problem is that over time, we reconnect with people we really do not even know… in 1% of cases, this is welcome and actually creates new relationships… but as we end up with hundreds of connections, the incessant apps, the news feed, the wall posts and all that other noise makes Facebook a junkyard not worthy of any sane person’s time. Inevitably, 20% of people might create 80% of the noise on Facebook, but for Facebook to succeed, it takes the remaining, mainstream 80% that advertisers actually need to reach. Facebook - very much like MySpace - will fail as a result of its success. And bear in mind, with Facebook, right now, the definition of success is an exit considerably higher than $15B.
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January 20th, 2008 at 7:13 pm
great post - let me ask you this:
if kevin rose was replaced at digg as “leader” - would digg remain? my answer is no.
facebook is in a very tough situation - the valley loves mark - enough to give him 2 awards at crunchy. if he goes, would facebook go? im not sure.
i do think that facebook went to crap with the platform - how many of the apps on the platform are time savers?
and if we are in an economic downturn, time savers are where it’s at. i wrote about this in my predictions post:
http://www.centernetworks.com/2008-predictions
and as we see in blogging - there will always be movement
January 20th, 2008 at 7:18 pm
Allen, for a New Yorker, you suffer from the Valley’s tunnel vision
No knock against the Crunchies, but that was as much of a demonstration of an echo chamber phenomenon as I can imagine.
The most successful companies don’t please the 4% that are early adopters, but the 96% that matters.
If a marketer wants to succeed, they need to win over everyone outside of Madison Avenue.
If a programmer wants to succeed, they need to win over everyone outside of Silicon Valley.
By focusing on Silicon Valley, most of these companies are not businesses.
Digg and Facebook are just two of the companies that will have to do some soul searching in 2008… you are right about Facebook losing value with the platform… but greed is a powerful force.