Social Media Saga: How the Headlines Read Once the Thrill Is Gone
If it weren’t for what happened in Wisconsin, or the latest headlines in the Greek tragedy, social media probably would have led the news in the category of doom-and-gloom this week. A sampling:
2. LinkedIn Confirms That Passwords Stolen, Leaked by Hacker (the hacker behind it also allegedly did the same with 1.5 million eHarmony passwords -- but who’s counting?)
Wow, this social media thing is so over, ain’t it?
As I cogitate over what to change my LinkedIn password to, begin to imagine a World Without Facebook, and wonder whether, like that last story says, I am being slowly “rendered immobile” by my computer use, I can’t help but acknowledge that the social media backlash has begun. Given that’s the case, the best thing we can do is not run screaming from the building -- even if that would benefit the cardiovascular health that apparently is being so compromised by social media.
Social media enthusiasts, it’s time to remain calm and keep a level head.
As to what caused this, I lay it firmly at the feet of the Facebook IPO, while giving a hat tip to General Motors. Frankly, it was the “Facebook Will Disappear” headline that got me the most. Much as I’ve gone on in this space about the immaturity of Facebook’s business model, this struck me as, at best, a complete misread of Facebook -- and, at worst, a desperate grab for notoriety.
The analyst in question, Ironfire Capital’s Eric Jackson, appeared on CNBC’s "Squawk Box" the other day and compared Facebook to deadbeats like Yahoo and Myspace (and even Google!), without seeming to acknowledge the underpinnings that make Facebook different from its predecessors. Jackson had already opined about this in a Forbes post in April, where he said: “The bottom line is that the next 5 – 8 years could be incredibly dynamic. It’s possible that both Google and Facebook could be shells of their current selves – or gone entirely.”
Jackson’s premise is that each new iteration of digital -- from portals, to search, to social, and, now, to mobile -- has resulted in companies that can’t transfer their success to the next iteration. Take Google and its attempts to build a social strategy, or monetize mobile, to the same extent it’s been able to on the desktop.
But the essential piece that Jackson misses when it comes to Facebook is switching costs. As a user, the “cost” of me switching to another search engine, or portal, or a mobile app that serves those functions, is close to zero. Those kinds of sites, for the most part, are one-to-one experiences between the user and the property.
Facebook is not like that. While it proudly points to its 900 million users, that number, in fact, says a lot less about Facebook than the same metric applied to other kinds of sites, and predecessor social networks that have never reached the same number of users. Those 900 million users are, of course, interconnected. Therefore, the switching costs of finding another, comparable service are formidable. It’s akin to moving to the next state over, and asking all of your friends to come with you. It would take a long time for that to happen, if ever.
The closest comparison you can make is to Myspace, but at its height, it still only had somewhat over 100 million users. Myspace never really got past early adolescence; Facebook is far more mature.
So, to get back to Jackson’s theory, he predicts that Facebook won’t crack mobile, which is right, except for one thing: it already has cracked the most important part of it, which is demonstrating that consumers use Facebook on their mobile devices. If fully half of your users access your platform from a mobile device in a given month, you’ve got something to work with.
And, by the way, it’s not as though Facebook is alone in not having figured out mobile; just ask almost any company that isn’t either a carrier or a device maker.
Which brings me to another interesting headline, from Wednesday: Mobile Ad Problem? Not at Twitter, Says Dick Costolo
In fact, when pushed by a CNBC reporter, Jackson backed off his headline-making prediction about Facebook. He said: "In five to eight years they are going to disappear in the way that Yahoo has disappeared. … it's still profitable, still has 13,000 employees working for it, but it's 10 percent of the value that it was at the height of 2000. For all intents and purposes, it's disappeared." Except to all the people who use it, I guess.
So, I repeat: as the social media backlash begins, remain calm and keep a level head. A lot of people around you won’t.