Investors are worried about t
he future of Facebook and Twitter:
...No product is more reliant on network effects than social media...
Think of a product that doesn’t have much in the way of network effects — say, a 2018 Nissan Rogue. Now, maybe you’d like it if a bunch of other people bought the same car, because it would be easier to find after-market parts, and you could give each other knowing waves as you drive past yet another “Roguey” on the highway. But if no one else buys the car, you’re still going to be able to make your morning commute just fine.
Compare that with how you’d feel if your friends started leaving Facebook. Probably you’d check the site less often, giving the company less opportunity to sell ads against your news feed. And maybe eventually you’d decide to delete your own account.
"Every additional person who joins these networks makes it more valuable for the people who are already there and more attractive to potential users."
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It is a social network's drive toward ever-increasing volume that weakens its network effect. All it will take is a developer with a better sense of content depth plus an easy way to port photos and Facebook will have a serious competitor.
I literally dumped 75% of my 'friends' last month because I couldn't stand missing posts by people I actually care about due to today's 85th picture of my 8th grade science partner's 18 month old.
I hate that 'more people' is where the value is for investors and advertisers. There are 25 people I really care about and 80 people I find interesting who reciprocate the desire to be 'friends' with me on facebook. About 100 others are handy to have around just in case….or out of guilt. I couldn't be happier with those 800+ former 'friends' now gone from my feed.
On the other hand, if Facebook really dug into creating ways for me to get new insights into the people I care about, I would go online more, and maybe get sucked into an ad every now and then. But Facebook doesn't care about me and helping me deepen my connection to the people that matter to me. To them, I am a number.
The novelty of catching up with old acquaintances is long gone and has been replaced with horrifically embarrassing Facebook video creations and regurgitated posts I made years ago. The extra interesting people are already gone, and none of my teen daughter's friends have any use for the site that their parents use. I'd say the author is right that Facebook's clock is ticking…rapidly.
Contrast that with Amazon - both of my daughters have found new uses for Amazon in the past couple of months - my oldest asked to be given her allowance via Amazon (not sure how long that feature's been around), and my youngest started building out her Christmas wish list.
For social networks, the end game should not be volume. Volume should be a result of useful products/services with their own sustainable business value prop. Facebook is missing their opportunity this very moment.
How crazy is it to say that even though every person I care about in the world is on Facebook, other than it being an easy way to share pics of my daughters with my mom, I don't have much use for Facebook.
Nice post thank you. You have perfectly articulated what is known as the "library of Babel," (literary allusion that I cannot recall) which has all available information but it is very costly to find what you want.
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