The (Scheduled) Fall of the Facebook Empire


Social networks bring people together but like any gathering, the time comes to split. People move on, just like they did from Bulletin Boards, from Chat Rooms and from My Space. QED, historical analysis proves Facebook’s imminent and scheduled demise. The argument is put that users will always need Facebook to contact their friends but that’s what they said about the phonebook. The pendulum on Facebook’s fifteen fleeting minutes of fame has been winding down since it reached its zenith in May 2012 when its ownership went public.

Mark Zuckerberg is a talented man but he is not a businessman. His forte rises above mere commerce. Yet he presided over the halving of Facebook’s share price following the most overhyped IPO since Noah floated the Ark. I won’t delve into the apocryphal IPO debacle here but given the result that the original stakeholder(s) raked in bazillions of dollars in cash that day, I believe that the IPO marked the Facebook mission as ‘Accomplished’. The owners cashed out, regardless of what was to happen afterwards. Any shares they kept could be used as confetti because the overpriced issue on that May day got them twice what it should have.

No enterprise survives on a high profile alone. Only profitable companies survive. Enduring brands such as Mercedes-Benz measure growth based on how many people are driving their cars out of showrooms and their profit on each car.  Social networks measure growth by how many people are driving their profiles – period. There is no quoted profit per profile. Yet the figure of just under a billion user/customers was constantly pushed to promote the shares as if they had some inherent value. This perceived value is never fully quantified. There are constant references to ‘data mining’ but much of that data identifies patterns such as user preferences for strange cats, hagiographies relating to pseudo-celebrities and a behemothic amount of user messages of no apparent value. Facebook’s income from the sale of mined data is not its main source of income.

Principally Facebook makes its money from advertising and/or commission on sales. So if the users go elsewhere, the main income stream is gone too. Ads will never be popular with users and the more advertising space Facebook allots, the greater number of marginal users will reduce their activity or leave their profiles dormant to some degree. The hardcore user will endure, but they resent the ads. They’re also getting older and are looking for something different. And Facebook is not providing anything substantially different.

They tried. They added Messenger. I find that really useful. But you can only have it if you are willing to give them your phone number and from what you read in the news you may already have privacy concerns. Then they bought Instagram for a price that reminded financial observers of how the bubble burst for dot-com stock in Y2K. Instagram’s recent claim to ownership of user images led to a mass call by users to quit both networks unless the controversial claim was retracted. It worked, and I don’t doubt that advertisers took note of Facebook’s fair-weather friends.

Remember Facebook email? Splat! Facebook Gifts? I think eBay survived. The new Poke helps keep your identity hidden while you ‘sext’ images – circulating pictures of your private body-bits. Or somebody else’s. There’s a marketing truism for this tactic – sex sells. The latest straw to fall on the camel’s virtual back is Facebook Graph of which the CEO announced eloquently and analytically to the financial press – “Neat stuff, one of the coolest things we’ve done”. Apparently this new search engine will find other users to match your preselected requirements or common interests. Graph Search appears to launch an attack on two fronts – internet search and online dating, either of which is a daunting undertaking in its own right. Security experts immediately advised all Facebook users to raise their security settings when search returns were published using parametres like ‘married couples who like prostitutes’ and a host of other whimsical combinations. The spectre of listing gays in countries where homosexuality is deemed illegal was also raised. Wall St. reacted to this bromidic announcement by wiping 6.5% off the value of ticker symbol FB. The courtship is over with the investment bankers because they too won handsomely at the launch but that was a one-off and what’s left is chicken feed. There is a transparency about the emperor’s clothes. Whatever will they make of it when the rumoured Facebook Smartphone hits the shelves? One hopes they’ll get the maps right. There seems to be a vibe of desperation as Mr Zuckerberg scrambles to get the most out of his users – and quickly. Does he too have an eye on history?

To retain the hardcore users, Facebook are already following the former MySpace practice of adding feature after feature until the whole site behaves with the speed of a thousand snails. Take my own Facebook profile for instance. I was coerced into opening it by my offspring so it’s minimal, has 3 ‘friends’ (not a typo) and 75 ‘likes’. So I’m not exactly an advertiser’s dream.  Worse, in order to highlight the posts from my 3 ‘friends’ I had to render invisible the 75 ‘likes’ because they were dumping  diarrheal quantities of verbal, auditory and visual crap into my News Feed every day. Facebook’s solution to this? Pay $7 to nominate any post for ‘highlighting’! Unfortunately for them, that sounds more like a ransom demand than a service fee.

But don’t worry. Like a Melbourne tram, the next one will be along shortly and Facebook will, as MySpace successfully has, find a niche group to service and then operate a better, leaner model while the next iteration of Web 2.0 social swarming gives us a new buzz.  After all, MySpace was ranked #2 for web traffic when Facebook arrived and guess who has that rank today? Go on, guess.

5 thoughts on “The (Scheduled) Fall of the Facebook Empire

  1. Wow…my daughter was just saying this same thing to me yesterday and she is 14. “Mom facebook is on the way out”…according to her, MySpace is making a comeback because of some to the features it has that facebook doesn’t. So are definitely on the cutting edge with this post!

  2. ih24 says:

    This is a good article. It’s true most of Facebook is beginning to seem a little outdated, and sooner or later there will be another social network.

    • Thank you for the thumbs up as we both give fb the thumbs down. Somebody is already out there working on the next big thing and it will always be thus.

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