Facebook, The Mighty’s inevitable fall – Predictions on Internet

Last week, blogosphere was full of predictions and analysis on Facebook’s not so bright (distant) future. I happened to read some good ones:

In Facebook Fallacy post,  Michael Wolff In MIT’s technology review notes:

But so far, the sweeping, basic, transformative, and simple way to connect buyer to seller and then get out of the way eludes Facebook.

So the social network is left in the same position as all other media companies. Instead of being inevitable and unavoidable, it has to sell the one-off virtue of its audience like every other humper on Madison Avenue.

Oh, yes … In its Herculean efforts to maintain its overall growth, Facebook will continue to lower its per-user revenues, which, given its vast inventory, will force the rest of the ad-driven Web to lower its costs. The low-level panic the owners of every mass-traffic website feel about the ever-downward movement of the cost of a thousand ad impressions (or CPM) is turning to dread, as some big sites observed as much as a 25 percent decrease in the last quarter, following Facebook’s own attempt to book more revenue.

You see where this is going. As Facebook gluts an already glutted market, the fallacy of the Web as a profitable ad medium can no longer be overlooked. The crash will come. And Facebook—that putative transformer of worlds, which is, in reality, only an ad-driven site—will fall with everybody else.

In a more detailed analysis, Doc Searl, in his blog post  “after facebook falls“, agrees with the above post while questioning the effectiveness of personalized advertising in the industry. Many claim that Facebook, knowing everything about a person and with ever growing massive data & analytics under its belly, can provide lot better targeting than google or anyone else in the industry today (and hence the justification for crazy valuations etc). But Doc goes on demonstrating, as an example, with Facebook ads on his own facebook page, that how irrelevant the facebook ads are. – Neither they make use of his interests, nor the page’s content.

There is lot to learn from Doc Searl’s post for me:

But Facebook isn’t the real issue here. Working only the sell side of the marketplace is the issue. It’s now time to work the buy side.

The simple fact is that we need to start equipping buyers with their own tools for connecting with sellers, and for engaging in respectful and productive ways. That is, to improve the ability of demand to drive supply, and not to constantly goose up supply to drive demand, and failing 99.x% of the time.

….

Imagine being able to:

  • name your own terms of service
  • define for yourself what loyalty is, what stores you are loyal to, and how
  • be able to gather and examine your own data
  • advertise (or “intentcast”) your own needs in an anonymous and secure way
  • manage your own relationships with all the vendors and other organizations you deal with
  • … and to do all that either on your own or with the help of  that work for you rather than for sellers (as most third parties do)

From his post, I have two more items added to my Amazon’s wish list of books to read:

The Filter Bubble

Intention Economy: When Customers Take Charge

Another interesting view is from Phil Wendley’s post, titled “Facebook Dominiation Isn’t Inevitable – It’s Not Even Likely“.  Phil explores “centralized” vs “decentralized” systems approach and how eventually “decentralized” systems prevail when it comes to scale, with generous examples, including that of AOL. History has demonstrated several times that “decentralized” systems prevail in the end because “centralized” systems, as they scale, impose controls and limit choice & flexibility to end users/consumers. He notes, while technology is necessary to be able to scale to massive numbers but not a sufficient condition. The question that he asks is, what value (or the big idea) facebook offers to its users as it grows. And he argues that a growing centralized system cannot easily satisfy all its users the same way.

From timing point of view, the facebook’s recent debacle in public IPO may have triggered many of these posts, but clearly there is more to be analyzed and understood here. A related point to research more about is the true Ad potential in the mobile world, inability for platforms like Facebook to better target ads in this small form-factor devices and even if they do in their respective apps, finally the potential choice of other free/ad-free apps that users will have with APIs.

On a positive note for facebook, listen to this podcast titled “How Are Brands Using Facebook Right Now?“. The Facebook scaling related numbers that Michael Lazerow presents are mind boggling. No company ever has probably dealt with such a mind-numbing growth rate. No doubt, It would be every software engineer’s dream to be part of building such a system.

 

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