Social media for the Paranoid

Facebook is marching across the world – displacing more local social networks, like Bebo, as it crosses the half a  billion members watershed. At first glance this seems like a huge success for social networks, but if users are so willing to swap social networks, into which they have ploughed so much time and personal data – why do we think that they will be loyal to their new network? If they are not then what do they switch to next? I am going to argue that many of the “sticky” characteristics of Social Networks in general, and Facebook in particular are actually caused by the incredibly fast adoption rate of the technology and not by the technology itself. I’m also going to argue that competition to Facebook will come from a very different direction than people expect.

First a little geeky diversion into the science of “adoption curves” – this is the science of determining the rate of adoption of a new idea or technology. Grossly simplified the rate of adoption of a new technology (social networks) depends on the availability of the underlying technology (Internet access), the cost (free),  how many people tell you about it, and the value it brings you (finding your High School sweetheart – priceless). So Facebook has spread quickly because it is free, Internet penetration is very high in the developed world (and growing in the developing world), and the media is all abuzz about it.

While early adopters had a choice of social networks,  the late majority (which is probably where we are with social networks) really only have heard of one – Facebook, and so that is the one they have adopted. So the more news about Facebook – good or bad, the higher the rate of adoption. Bad news really does not matter because at this stage of the adoption curve there is no obvious alternative for the type of people who are now joining.

If the adoption rate were slower then people would have more time to pick and choose between the different offerings before deciding – rather like the way they selected different TV delivery systems (cable versus satellite). But the fact that they have made a shotgun decision does not mean that this is the solution they will stick with.

The risk for FB is that it will end up like attending a college reunion – the pleasure is in the re-discovery of old friends, but once you have found your old High School Sweetheart what are you going to do – particularly if they live half a continent away?

Well that depends on what sort of person you are – for those that love to communicate social media becomes another tool alongside emails, phone calls, and even written letters. For those that  are stumped for something to say when they get the collective “good-bye” card to sign then it is unlikely that they are going to invest alot of time. Unless there is an immediate reward, which is the prize that drives so much online activity on dating websites, or even job hunting on LinkedIn.

So it seems to me that the social media world is going to divide into two – task and pleasure. Pleasure social media is essentially FB today – it is all about the pleasure of online discussion with your friends and family. It involves sharing alot about your personal life – if you don’t then there is not enough grist to drive the conversation. Perhaps you are comfortable sharing this sort of information with hundreds of people – perhaps not. My guess is that as people pass through life events (marriages, new children, deaths) people will consider what information about these banner events that they really want to share. So If you are getting married and only want to invite a select group of friends – do you really want to post every detail of the marriage? And more to the point do the uninvited guests want to be constantly reminded? Perhaps more importantly do you want to share that cute picture of your kids in the bath with people that are not in your core group of friends? So either you self-censor, in which case, what is  the point? Or you slim down your circle.

For task based socializing the focus is very different. You want to have the largest possible group of people because you are relying upon that circle to help you. So two obvious tasks based social media sites are dating and job finding. Are there others? Yes, group buying sites like Groupon are actually an example of an anonymous social media site, where everyone has the same aim (getting bargains).

Another interesting category is  social media based around physical social groups – such as schools, sailing clubs, and youth soccer. Facebook has clearly aimed at these groups – the question is whether organizations see Facebook as one more communications channel, or as the core of their communications?

So can a single social media site like Facebook do all of these things? I think the answer is no – which is why dating sites are still very successful and LinkedIn is growing fast. Can  Facebook persuade physical social groups to more exclusively to their platform? In most cases no – unless Facebook provides a “white-label” solution. Why? Because most clubs require rough agreement among their members in order to function, and social media is a hot button issue.

So Facebook is going to continue to be very successful, and is clearly going to wipe-out similar sites (like Bebo) simply because it is hard to differentiate the product offerings and Facebook is the obvious choice – I simply don’t believe that the investment people have made in inputing personal data is a barrier because as I said at the beginning of the article – it has not protected MySpace or Bebo.

The next generation of social media sites are going to be around task based social activities.  After all – FourSquare is the ultimate task based site – it enables you to find your physical friends when you are out on the town. Do you want your boss to know where you are? Probably not.

So now you have three or four social networks to manage.  How are you going to do that? Probably via an application running on your cellphone or laptop. Firefox’s Identity Manager is a small step in that direction.

If I was a cellphone company – or a cellphone manufacturer – I would be running as hard as I could in this direction – after all the SIM in your cellphone is a pretty secure way of proving who you are.

Apple v  Facebook – the next great identity war.

So the Financial Times met Facebook this weekend with the headline;  ”Facebook becomes bigger hit than Google“.

One interesting point they made is that in September MySpace was bigger than Google, but that lead faded. Perhaps that should be the subject of this post, but the more interesting point (for now) was made by Lucy Kellaway – and she made it in the headline to her column; “Generation game plays out on Facebook”.

For those of you that were not watching British game shows in the late seventies “The Generation Game” on the venerable BBC involved two family members of different generations having to work together to compete against three other families to win a bunch of prizes that rolled off a conveyor belt, and as far as I can remember consisted mainly of cuddly toys and hair curlers. It also probably included flared jeans, Donny Osmond and “Saturday Night Fever” LPs – not to be confused with “Saturday Night Live”.

The seventies was the time of “Telephone Booth Stuffing” in case you wondered what else people did without social networks – basically an older version of adding people as (very) close friends.

Anyway I digress. What was funny (if anything besides the platform shoes) about the TV game show was the inability of people from the same family, but different generations, to understand each other sufficiently to even organize a phone call in a phone box.

This is the point Lucy makes in her normal, understated, style; “This isn’t a small thing: it’s a ginormous non-meeting of minds between two generations over what is not just a different way of communicating, but a different way of living”.

As she goes on to say that from her perspective (and from mine, if I am honest – after all we both drank far too much Pimms at the same University at roughly the same time, so it is not surprising we have similar social norms); “By contrast, the idea that communication becomes a random broadcast to 500 “friends” about what you were up to last night is perfectly incomprehensible.”

But seriously, in the same way that an older generation did not understand the impact of email (“what is wrong with writing a letter, or picking up the phone?” – the Lucy / David generation risks completely missing the impact that training an entire generation to share everything with their “friends” – at least when I shared a phone box with a friend or two I did not tell them with whom I spent the previous night. Each generation is having shorter conversations, more frequently, simultaneously with a wider and wider circle of “friends”.

If you are running a global software development project – perhaps this is the best news ever, as social media become the new collaborative platform?

Ever looked at the ads on Facebook?

Well sort of – after all they do occupy the right hand column on the webpage.

So why are the ads that I see so much worse than the ads on Google?

All I get are ads for herbal medicines that make my skin look younger  – don’t they know that I’m a Brit and so I drink gallons of black herbs with milk?

I think the key issue is that on Facebook advertisers only have indirect clues as to what you want to do. Given Facebook’s origin as a dating site a lot of these clues are about relationship status.

So ideally  when your relationship status changes from “married” to “single” they can show you a dating service – alas that is not an option with the current advertising selection method – so you just have to look for single people.

Puritanically, according to the Facebook advertising rules, they can not show you the same ad if your relationship changes the other way.

Then it turns out that according to the same rules you have to show your ad to either  men or women – not both – so you are out of luck if you swing both ways.

This all adds up to Facebook being a lot closer to a magazine ad than a Google advertisement. With a Google you know what the user is looking for, and you can respond at that moment. Very different form of advertising. I don’t belong to the demographic that reads Cosmo magazine – even though the articles look great, especially the “best swimwear”, so I don’t get to see those Ads.

So when I read that Facebook is overtaking Google search in terms of ‘face time” eg time reading the page, writing a message, or searching for friends, I really don’t care because what is relevant to advertisers is “engagement time” eg search time looking for something. Now if I could see that the user was searching for single friends then I might want to display an ad for a dating site.

Equally if I could monitor the IM messages to and from that user and look for keywords I would also be better able to judge what that user wanted at that time. That, of course, is what Google does on gmail.

Alas, most of the advertisements I have seen on gmail have been for sump pumps – and indeed I bought two only this morning. Of course I could have run a sump pump campaign on Facebook aimed at guys in New England – but alas few of us have joined the “flooded basement appreciation society”, so we are hard to identify.

Now what Facebook seems to be doing is driving up the amount of information that users share publicly to drive up the number of page views and time on the site. I would suggest that they improve their advertisement filters. A simple filter that says “advertise if the status of this user characteristic has changed in the last 24 hours” would be great. Least for targeting people changing sex.

Fortunately I am really only interested in changing my age – downwards, so I’ll keep drinking the Facebook Koolaid – least the herbal variety that they advertise so often.

Social Media and Electronic trading platforms are both Cloud Services - superficially they seem to share nothing in common, but on closer inspection there is alot that they could learn from each other. This article takes a first pass at looking at the implications of this comparison.

Cloud Services are all the rage – everything is apparently moving into the Cloud – or more precisely into a datacenter not owned by you. The term “managed service” seems so old fashioned and quaint today.

It seems to me that Cloud Services really divide into two; commodity and monopoly.

Commodity Cloud Services are all about the basics of storage and processing – online backup, email, web hosting, user authentication, and conferencing. Essentially all the valuable data belongs to the customer, and the vendor relies upon price and reliability to sell. The competition is essentially in-house - but once a company wants to outsource there are alot of options from some really big players (Microsoft, Google, IBM, Amazon).

Monopoly Cloud Services have something that the user can’t get elsewhere. That used to be specially collected data (Lexis -Nexus) but more and more it is moving towards user generated data. So when you enter your data into a Social Network Site it ceases to be your data and instead belongs to the Social Network. This is why Union Square Ventures (early stage Twitter investors) invested in Twitter – it is pretty hard to argue with their logic or their foresight. It is also not surprising that they don’t believe in software patents, which were the traditional way a software company enforced a monopoly (well until the time it took to get a patent became three years plus, and hence only useful to the people who focused on patents and not building a business, but I digress).

So once you conclude that the user data is exceedingly valuable you need to make more of it. You really only have two levers – more users and more open user data. Hence the push by Google and Facebook to relax privacy settings.

Electronic trading platforms face the same issues – their value depends on the liquidity of the market (how many players and how much trading volume), cost of a transaction, lower spreads (the delta between buying and selling an asset), and greater transparency. So they focused on getting lots of real users on their network Then they discovered High Frequency Traders and their world changed – now these firms are responsible for about two-thirds of all US equities volume, and life without them is pretty much impossible for any exchange.

So why do Social Networks care? Well they are about to go down the same path.

The first big step was taken by MySpace with its joint venture with three (Warner, Sony BMG, and Universal) of the biggest record companies. OK – they did not want to do this deal, but they did not have alot of choice given that they were being sued by Universal over copyright infringement.

So today the front page of MySpace has Britney Spears – while the frontpage of Facebook is pitching running the Facebook application on your mobile phone. In other words Facebook is focused on driving up user generated content, while MySpace has switched to professionally generated content. Brittney Spears is the High Frequency Trader of the Social Networks space.

Now the Financial Times has an article on a Japanese competitor called Ameba Now, who has reached 1 million visitors after three months of growth. They allow usernames in Japanese characters – but the more probable reason for their growth (according to the FT) is that they have persuaded celebrities to use their service.

Does Facebook need Lady Gaga? Yes – long term they will have no choice because while the user’s own data is valuable it is also replicable.

On the plus side, according to Nielson, in January the time visitors spend on the Ameba site is seven minutes as opposed to twenty-five on Twitter – but the addiction to High Frequency Celebraties seems to be unavoidable.