News of Facebook's Death is Greatly Exaggerated

With Facebook’s audience share of some demographic groups reportedly in decline, the inevitable industry chatter has started: “Facebook is about to go the way of MySpace” or “Facebook is a Friendster waiting to happen.”

But comparing Facebook to such faded social sites is like comparing the national gas pipeline to your local utility. The difference has nothing to do with size – it’s all about the interconnections.

Social used to mean community and not much else. MySpace and Friendster were self-contained destinations where groups formed, content was housed and members shared activities. Like the pre-Internet AOL, nothing occurred outside those domains, so one of MySpace and Friendster’s key tasks was holding users’ attention. In other words, getting them to stay on-site as much as possible. Eventually they lost the battle as users drifted away to other activities, resulting in rapid declines in these social communities.

Facebook is using an entirely new playbook. It too started life as a community, and has indeed become the biggest community of any kind in history. But it’s also moved well beyond its own domain by installing the piping that brings the power of this community to millions of sites and apps across the Web — 10 million of them were connected to Facebook as of March 2012.

Services like Facebook Login make “identity” portable, so consumers can log into favorite sites rather than via countless username/password combinations. Facebook’s Social Plugins have fundamentally changed “discovery” by enabling consumers to share, like and comment on content wherever they surf. By providing these services, Facebook has solved the primary problem that doomed MySpace and Friendster. It no longer needs to keep users on its own domain to command attention.

In the process of commanding that attention, Facebook has created what is arguably its most powerful asset: data. As consumers voluntarily give up personal data to use these services, Facebook gathers metrics on who is paying attention to what, who’s doing the sharing, how others respond, and so on. This incredible combination of attention and data allows Facebook to monetize the entire social Web’s pipes through advertising.

Facebook’s pipes are now growing beyond even attention and data. For example, utilizing consumer information stored on its service, it recently began working with mobile app developers to facilitate retail purchases through pre-filled checkout forms.

All this, however, hardly makes Facebook invincible. As numerous dominant companies have learned over the years, nothing lasts forever. But Twitter, LinkedIn, Foursquare, Pinterest, Google+ and other social communities have similarly stretched out across the Internet, so if Facebook were to fade away, developers could easily switch their identity and discovery tools to any one of these numerous other players.

What Facebook’s vast pipes ensure, however, is longer staying power than MySpace or Friendster had.

For one thing, Facebook gets more time to innovate at its original community level — when demographics do decline it has the resources to buy assets, say Instagram, to build them back up. Whatever community takes shape can then be plugged back into the overall piping of identity, discovery and whatever tools lie in the future, such as access control and personalization.

As with so many popular Web properties before it, Facebook is sure to undergo many permutations. But even if Facebook’s domain and destination follows MySpace and Friendster into decline, the vast network of pipes Facebook has laid to drive the current Web will make its descent much, much slower than was true for any predecessor.

Pipelines may leak, but they don’t implode.

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