social media

Death of social media greatly exaggerated

on Jan 19 in social media, technology, trends posted by

Thought of the Day, Jan 18, 2009

Michael Fitzgerald in Technology Review, asks the question “Are social networks sinking?” — an interesting question, to which the answer is simply “No.”

To paraphrase Oscar Wilde, the death of social networks is greatly exaggerated.

A couple of points from the article are overly pessimistic, or put a negative spin on what would be seen as normal consolidation in an emerging market.

For example, the acquisition of Pownce and Twitter’s acquisitions indicate that the microblog industry is coalescing and maturing, not dying. Likewise, Google’s January 14 announcement that they are shifting their position on Jaiku (releasing the open source “Jaiku Engine”) suggests that the company is retrenching and evaluating its options, not abandoning social media altogether.

As for revenue, some pundits argued that Facebook would never have a revenue model. So it is surely too early to say that Twitter never will.

There is much going on in social media and Web 2.0 that is new and experimental—to characterize it as a bubble (alluding to a similarity with the housing bubble) is, to my mind, just plain wrong. Look at the Internet just after 9-11. A lot of big name Web sites went under, but was it the end of the Internet? I would argue social media is in the same position today. To say it is sinking is indeed exaggerating.

Indeed, the second page of the article cites an industry observer who believes that “the current shakeout” will “burst with a pop,” rather than the “thunderclap” of the dotcom bust.

Yes, there is much that needs to be fixed, clarified, and worked out. Valuations may be way off, but that does not negate the potential of social media as a marketing tool.

Yes, there will be consolidation. I have argued this is not only likely but necessary in my blog almost a year ago (April 21, 2008: The future of social networking: Consolidation or fragmentation?). It is a needed and inevitable part of an industry’s growth process, not its death knell. Look at any mature industry today, and you will see that they all go through a period of explosive growth, experimentation and consolidation.

This fits with a model articulated by Jeanne Powell and Francisco Moris at the Economic Assessment Office, Advanced Technology Program (NISTIR 6917 Different Timelines for Different Technologies, 2003). My take is that social media is moving from the “Fluid, Emerging Phase” to the “Transitional, Growth Phase”

What is key to success in this evolving environment is to stay flexible, up-to-date with technologies and not to put all our eggs in one basket.

Social media strategists will be wise to incorporate this philosophy into their social media planning.

3 Comments Leave a comment

  1. I think you hit the nail on the head by focusing on consolidation. By it’s very nature, "social networking" looks very much like a "winner takes all" marketplace, particularly due to the social network effects. While some point towards their not being enough capital in the investment markets to sustain "so many social networking companies", I think there’s simply not enough attention or interest from users to sustain so many… and thus why capital is appropriately shifting away.

    I’d also probably argue that while we tend to associate the need for capital with successful growth industries, one of the most promising parts of the long-term potential of the top networks is it that relatively little capital should be required…

    Comment by Denis Hancock — January 19, 2009 @ 4:15 pm

  2. Good points Denis. What we are seeing is exactly about the distribution of capital. Evidently, the Internet user base can spread itself only so far. Imagine if every one set up their own social network on Ning. None of them would provide any value. I know of at least two similar photography social networks on Ning with about the same number of users. How will those consolidate? My guess is that tools that allow people to manage multiple online accounts and personas will be emerging and the consolidation phase will decline once one or two of these mature and become widely adopted.

    Comment by Roger — January 20, 2009 @ 2:49 pm

  3. awesome post! all this web 2.0, social networking and social media for business talk has enabled me to form a new division of my company! Thanks and look forward to more insight from you.

    Comment by dilan — May 6, 2009 @ 11:33 am

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