Books I have co-authored

Facebook: the black hole that will engulf the Internet?

It is hard to overestimate the effect of Facebook, the social media giant that has been jokingly called the Death Star. Every player in the Internet sector – from mobile operators to Amazon, Google and eBay – needs a strategy for how to relate to and handle the competition from Facebook.

With 300 million unique visitors per month and counting, Facebook is now the fourth largest website in the world. The growth of the user base has been spectacular. In the six months since November 2008 the user base has grown by 100 million unique users and the annual growth from April last year is 160% (source: Comscore).

On any given day, 50 percent of the users log in. On average users have 130 friends, each month more than 2 billion photos are uploaded, and more than 2 billion pieces of content (links, status updates, notes, wall posts, etc.) are shared. The addictive user stickiness seems to be very high. The developer community exceeds one million and there are more than 250 third party applications with over a million monthly users. The Facebook API will be the next win32 interface.

Nokia, “3”, and most of the other phone makers are busy integrating Facebook on their handsets. Access to Facebook on the mobile phone has been one of the few really compelling applications that has induced the mass market to start using the mobile internet.

Other social communities are losing this race big time. In Sweden the youth community Lunarstorm is losing members in absolute numbers. MySpace and Second Life have lost their momentum and might be marginalized within a few years. LinkedIn may go the same way. Even MSN/ should feel threatened.

Compared to MySpace (or starting your own blog) the settings and customizations on Facebook are more limited. This makes it much easier to set up a Facebook account. The risk that inexperienced users will get confused or create impossible and unreadable layouts is eliminated. This has been an important factor for the adoption of Facebook by the less experienced mass market.

What we are witnessing are network effects on an unprecedented scale. Once everyone you know is on Facebook it is hard to resist joining and if you are on another social community site it will feel emptier and emptier over there.

That Facebook will beat its direct competitors in the social media market space is a given. But the most far-reaching effect is that there are signs that Facebook has the potential to become the universal user interface.

Social media and “web 2.0” have changed the communication patterns among the generation that grew up with the Internet. In a country with a high internet maturity such as Sweden there seems to be a generational divide around 35. The older generation (“the email generation”) uses the internet for one-way communication such as writing email, ebanking, reading newspapers and buying air tickets. The younger generation (“the messaging generation”) lives in a world of collaboration and two-way communication where they are both users and producers of information. The Internet is a large part of their social life and they use social media for conversations, IRC, IM, texting, blogs, forums and communities.

Email has already lost its role as the primary interface for communication in generation Y and is losing importance in the messaging generation as a whole. Communication with your friends is done on IM, texting and Facebook. While your email inbox is full of unwanted interruptions, anonymous solicitations and some spam your Facebook messages are spam free and almost only from your friends. Email is considered an outdated legacy system and is mostly used for newsletters, promotion coupons, and contacting companies.

If you belong to the older generation and need a reliable plumber you look in your address book, think about who might know a reliable plumber and call or email that one person to ask. If you belong to the messaging generation you take a picture of the problem pipes and broadcast a question to all your friends. When the right person reads it he will spend 15 seconds responding and solve your problem. If you are late for a lunch meeting in 2009 you write it on your lunch date’s Facebook wall.

There are more signs that social media is about to disrupt other industries. The total voice traffic (fixed + mobile) seems to have peaked in a country with a high IT maturity such as Denmark.

Facebook has the potential to marginalize email centric players (portals) such a Google Gmail, Yahoo, AOL, and Hotmail. There is also a risk that the mobile operators will fail with their ambitious projects to create mobile portals that utilize the handset and the phone address book as a way of owning the customer and offering a universal communication service. If the mobile operators fail to create lock-in with strong portals due to competition from Facebook, Nokia will fail with its portal plans as well. Even blog platforms such as Blogger and WordPress have noticed a decrease in the growth of new users.

If Facebook becomes the preferred user interface and continues to add functionality and third party applications that will increase stickiness we could see a resurrection of the “portal” from the 1990s in a new form. It will be your default start page, it will integrate all your other mailboxes, calendar and messaging, and the rich experience will probably make you stay there most of the time. Other web properties such as Google, Amazon, eBay, YouTube, Wikipedia, Microsoft and BBC will be relegated to a role as dependent suppliers.

I am aware that this post has only focused on the arguments supporting the Facebook hype. I will address the drawbacks and weaknesses of Facebook in a later blog post.

Comments are closed.