Why the Facebook model is not sustainable in the long run

This post was written in 2012–2013 and reflects thinking at the time. For current views and topical discussions, please see recent articles.

"Why Twitter will live and Facebook will die" (and there is also a niche for Friends Reunited!)

Reports of the growing "Facebook fatigue" have been circulating for a couple of years now. This perception has been borne out by the PR disaster that was the IPO. But in my view the causes of that are often misunderstood. It is easy to say that FB has "stopped innovating", or is "resting on its laurels", or "has been too focused on advertising and not enough on user experience". All those things may be true, but they are merely symptomatic of a bigger structural problem.

I think this article ("Why Twitter will live and Facebook will die") on Forbes.com has it about right. In a nutshell, FB has a predominantly internal focus - people (and now also companies) trying to make themselves look cool in the eyes of other "cool kids", therefore it has too many useless and time-wasting features. Eventually, disenchantment is inevitable. Twitter, by contrast, is all about providing fresh information in real time, hence, the reasoning goes, you never tire of it.

You don't have to agree with everything that the author Rocco Pendola says ("You can do everything on Twitter that you do on Facebook, plus stuff that’s actually useful" - well, you can't upload video clips and play games, for instance), nor do you have to be a Twitter obsessive ("I keep my smartphone next to my bed. When I wake up in the middle of the night and, most definitely, when I wake up in the morning, I spend a minimum of five to 10 minutes at a time on Twitter. Then, I am on it all day") to agree with his main contention.

FB is just too much like damn hard work - all the self-embellishment, "friend" management etc - that's the main reason why I never signed up (even before the well-publicised concerns about privacy and information security). This by the way applies to all similar services, from Bebo and LinkedIn (which however has the saving grace of being highly utilitarian) to various country-specific spin-offs (e.g. vkontakte.ru - literally, "in touch"), which is even stylistically similar to FB). There will be always a place for this kind of sites - teenagers and students / young professionals with too much time on their hands and no understanding of how to prioritise their time. But this natural demographic also determines the limits of growth. Besides, young people will always be tempted by anewer, "cooler" places to hang out, hence no single platform is safe in the long term (hello, MySpace!).

What of a third category of social media services: personal discovery / reconnection sites? Friends Reunited (now under new management) was the first and remains the best known of those. Again, there are several country-specific clones (e.g. odnoklassniki.ru, meaning "classmates"). In all cases, while there is a wide range of functionalities for instant messaging, picture sharing etc, the main point is about re-establishing social links with people from one's personal past (classmates, university friends, etc). Once those links have been restored, user activity tends to dip significantly, as people then switch to off-site methods of staying in touch (or simply realise that there were good reasons for not staying in touch in the first place). LinkedIn, while similar in some respects, is quite different in that it seeks to establish new communities rather than re-establish old ones.

The "personal discovery" sites face another constraint which will always limit their growth potential - we have already seen the passing (in the social networking sense of the word, anyway) of the last pre-email, pre-mobile phone generation. From now on, the new cohorts of users quite simply will never face the situation of having lost touch with someone against their own will. They grow up permanently online and on-call. In a sense, this is quite sad - if you've never lost, you've also never found. But that's just lyrics, I guess.

BitTorrent and the music business: an uneasy truce emerging?

This post was written in 2012–2013 and reflects thinking at the time. For current views and topical discussions, please see recent articles.

File sharing is here to stay - music companies need to learn to live with it

I've come across this interview with one of senior BitTorrent employees, Matt Mason, who has written extensively on the issues around music piracy. BitTorrent, in case one doesn't know, is an incredibly powerful tool for P2P sharing of high volumes of data. As such, it has succeeded where Napster failed before: it has made music (and video) piracy more than technically possible - it has made it virtually irresistible. Does this mean that the music recording industry is finally doomed?

In my view, what is doomed is the music divisions of the huge US studios, which may well follow  EMI into the sunset, unless they radically change their game. For we are now seeing a likely end of paid content. This is a much bigger challenge than that posed by "first generation" P2P file-sharing around ten years ago. Back then, the CD was king, and the king was way over-priced! As a reaction to that, young people started ripping their CDs into mp3 files and swapping them over the likes of Napster. The trade-off was poorer sound quality and a lack of a  physical medium (although of course you could then burn your pirated mp3 tracks onto a CD...). What that meant was that, having found the music that they liked via free file-sharing, people were then willing to go and buy it in physical form, through an "official" retailer (and it helped that, faced with the threat of piracy, CD prices declined to more reasonable levels). The music studios' revenue model therefore had to adjust, rather than crumbled completely.

What happened then, though, was that the studios, and of course Apple, saw this as a opportunity to get rid of the physical medium altogether. Of course this reduced the distribution costs and sped up the buying process. And of course Apple made a lot of money. But once a professionally-produced and professional-looking physical medium is no longer the default, there is no longer any difference in the user experience whether you go through the "official" or "pirate" channel to get your music tracks (or the latest episode of Hardcore Pawn). In fact, ownership is no longer viewed as very important, since with high-speed broadband, 3G (and soon 4G), wi-max and other "always on" technologies, consumers can simply stream whatever piece of content they fancy this very second. In this sense, perhaps the bigger challenge to the studios is not BitTorrent but services such as LastFM and YouTube (although they do pay royalties to the rights owners).

But back to BitTorrent. What Matt Mason is saying is that the studios can monetise their content rights by using P2P portals as audience aggregators for the purposes of advertising selling, product placement etc. Facebook has shown how this should be done. Of course, Facebook's challenge now is that it is no longer seen as "cool enough" by a lot of people. BitTorrent and similar services should be immune to such a "falling out of fashion", as their focus is external (music content) rather than internal (interaction with other "cool people"). Don't treat the file-sharers as pirates, treat them as consumers (and milk them accordingly!). If that's how it pans out, the recorded music business model will come to resemble that of FTA television, in being predominantly advertising-funded. Isn't it curious how the future of one medium may well lie in the past of another. But before that happens, a lot of companies that once seemed "too big to fail", will have failed. And hopefully their place will be taken by a large number of independent labels, or even artists marketing their music direct. But that's the topic for a separate article.