Wednesday, October 22, 2008

The Future of Social Networking; What Future...?

I'll make my position clear; I am and always have been sceptical about the position of the Social Networks. Sure, contemporary society is embracing social networks such as Facebook on an unprecedented scale, but is Facebook as a business truly sustainable? As we are already seeing, the social networks are already stuggling to prevent outward migration of users; as soon as a site slips up, it seems that ten new ones appear to address the deficiencies highlighted. I posted recently about comments made by Facebook CEO Mark Zuckerberg which defined the organisation's business model as growth orientated, yet there was little mention of revenue generation. It seems that more and more social media platforms are creating a business first and worrying about revenue later. Although this has worked well in some cases (consider the case of Google), whether or not this strategy will be sustainable in a time of economic crisis is yet to be seen.

Don't get me wrong, I would suggest that social networks will continue to remain an important element of the social media; let's face it, the social desire to connect is unlikely to dissipate any time soon. I do believe however that the dominant network will be cyclically replaced over the coming years. As we have seen with the case of Facebook, users generally do not like change, yet they constantly demand up to date applications and tools. These two demands seem to contradict each other somewhat. It is my guess that both imposing change upon the end user and failing to provide adequate facilities will drive the customer away. This cycle is likely to continue for several years to come, perhaps until some new social platform replaces the social network in its entirety.

The Social Network's current inability to generate revenue is likely to be its eventual undoing. Growth must be funded. I imagine that as investors become disillusioned with the perceived benefits of the platform, investments will become increasingly scarce. Remember, there are other, more sustainable social media platforms that represent a far more viable option for business success. Without funding, expanding the business becomes increasingly difficult. Failure to innovate will cause the product to become stale, and will invariably result in the outward migration of users similar to that described above.

Is there a future for the Social Networks of today? Who knows. One thing is for certain though; unless social networks identify a viable revenue model, selling the benefits of the platform is going to become increasingly difficult.

Show the Rogue some Stumble love


  1. I think the problem with the social networking arena is that people have seen how successful MySpace and Facebook have been in gaining corporate buyers, and are of the mindset "I want a piece of that".

    Unfortunately, what they don't take into account is how hard it is to build the initial followers, as well as maintain their happiness when there. It's not just a matter of "set up a new social network and the suits will fly to buy me".

    As you rightly mention, even the "big boys" are realizing the problems - MySpace, for example, doesn't really have a large audience outside of the US, and Facebook doesn't seem to know what to do with itself.

    Perhaps we need a Google to step in and show how it's really done, if we want social networking to outlast the initial buzz.

  2. One of the things I remember reading about extensively through my post grad studies was critical mass. This theory simply states that when a network reaches a certain point, the adoption of an alternative would provide substantially less value to the user. In the case of social networks, the largest organisations (namely Myspace and Facebook) should have reached critical mass. Unusually, this doesn't seem to have happened. Even consumer lock-in does not seem to be preventing outward migration.

    I truly believe that over the coming years we will see new, ever more innovative platforms rise, shine, and then fade. Until a viable revenue generation model for social networks is established, social network survival seems to rely upon the organisation's ability to acquire capital. This will become increasingly difficult, particularly in the current economic climate.