Will the Facebook Bubble Burst In 2014?

Thursday Dec 26th 2013 by Mike Elgan
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Everybody uses Facebook because everybody uses Facebook. But what happens when they don’t?

 Facebook is the most “valuable” social network on the planet, at least on the basis of a phenomenon called “network effect.”

“Network effect” products are those that derive their value from the number of people using them.

The classic example is the telephone. If you were the only person with a phone, its value would be zero. If 99% of the population is connected to the telephone system, its value is so high that owning one is a requirement in order to participate in society and in the economy.

Facebook’s position as the leading social network is based on “network effect.” As with the telephone, everybody uses Facebook because everybody uses Facebook.

Other social networks and social sites have some element of network effect, but also have other qualities. For example, if everybody suddenly stopped using YouTube tomorrow, the site would still be valuable because of the content already present. If everybody except the top one million users stopped posting to Twitter, it would still be worth using to get the tweets of those million users. If everybody quit Google+, it would still have the Internet’s best photo tools, video chat feature and lifelogging system.

Facebook: not so much.

People don’t like Facebook. The total effect of Facebook’s features, functions and design is strongly negative.

People love using Facebook because they love the other people who use Facebook. And that’s why Facebook feels like a “bubble” that’s overdue for a collapse.

Once everybody is no longer on Facebook, the “network effect” is weakened and its value decreases for everyone.

Facebook is suffering from a quiet abandonment, especially among teens and people in their 20s -- Facebook’s original demographic.

It’s quiet because most people who leave maintain their accounts and pretend to use the site for the benefit of those left behind -- parents, grandparents, co-workers and so on.

Here are what I believe are the top ten reasons people leave Facebook:

1. Social groups collide. Teens and twenty-somethings post messages with their friends in mind, then grandpa chimes in and wrecks the conversation by saying: “What the heck does “wtf” mean?” You post pictures of your drunken New Year's Eve antics, then later wonder how those pictures are affecting your promotion prospects at work. Social groups collide on Facebook, and younger people hate that.

2. Users are overwhelmed. In an era of hyper-simplicity and minimalism, Facebook is a visual riot. On a single page, you can see the News Feed, the Ticker, a left-navigation bar packed with "Favorites," "Pages," "Groups," "Friends," "Apps," "Interests," the status update bar, birthdays and advertising all over the place, including in the News Feed.

3. Facebook annoys. Facebook is riddled with not only ads, but badly targeted ads. Sometimes, it shows ads that you have endorsed or "Liked," when in fact you never did. It shows ads and lies about the fact that they're ads, calling them "Suggested Posts." Facebook ruins photos with heavy compression. The user interface is confusing, and it's often difficult for users to figure out what's going on or get it under control. Facebook drops sometimes important messages into a folder called "Other" that hardly anyone remembers to check. These and other flaws constantly annoy users.

4. Facebook creates social stress. There are many situations where Facebook puts you into a pickle. For example, you hate your boss. Do you "Friend" him? Do you not "Friend" him? Do you have to change your relationship status for an on-again, off-again relationship? The significant other wants you to, but do you want co-workers involved? Having a single social network where everybody is expected to participate creates social anxiety.

5. Political rants are like death and taxes. Facebook's status as the social network for parents, grand-parents, cousins, uncles, co-workers, former co-workers, former classmates and so on means you have to endure political rants, often strident and frequent.

6. Relationships end, but Facebook is forever. Sometimes a breakup isn't complete until you leave Facebook.

7. Privacy invasion is constant. Facebook is harvesting all kinds of information and doing who-knows-what with it, yet the advertising displayed doesn't reflect actual interests and, in any event, Facebook has not earned our trust.

8. Conversations are annoying. Facebook streams are packed with "success theater" posts of people bragging about their wonderful life, political rants, ancient Internet memes, first-world problems, duck-face selfies and endless gossip and chatter.

9. Bullying, shaming and trolling. There's a lot of abuse on Facebook, especially among high school kids. The abuse is especially effective because a user's whole social and family group might see it.

10. Fear of an unknown future. At some point, some users realize that all that Facebook sharing really amounts to them violating their own privacy. Will posts today harm relationships, job prospects or other opportunities tomorrow?

Where Are People Going And Why?

A million dollars isn't cool. You know what's cool? Snapchat is cool.

Snapchat may fade in popularity next year, be “snapped” up by some Internet giant like Google or Apple or simply disappear like a Snapchat message. But today, Snapchat is the anti-Facebook. If you look at the 10 reasons why some people leave Facebook, you'll notice that none of these problems exist on Snapchat.

Ultimately, Facebook is full of other people's agendas, and it feels out of your control. Some people just want to have conversations. They want to say something to another person, or a group of people, and not worry about the drama and uncertainty of feeding into the Facebook machine.

Snapchat is just one of the many places where Facebook refugees are going. Other destinations include WhatsApp, Instagram, LINE, WeChat, Kik, Twitter and Google+. Many are dividing up their social networks by service, having their smart conversations with strangers on Google+, their celebrity fan interactions on Twitter, sharing their pictures on Instagram and keeping touch with their best friends on WhatsApp.

It's a diaspora, and people are heading to different places, and the social and communication app worlds are very much in flux.

How Facebook Tries to Stop the Bleeding

Facebook is bleeding users, especially the youngest ones. One study found that 16-18 year olds in the UK were "embarrassed even to be associated with it."

The situation is so dire for Facebook that the company is now paying people to use it. For example, Facebook recently partnered with T-Mobile US to offer GoSmart Mobile prepaid service free, as long as the users are on Facebook.

The concept is similar to one Facebook uses in 45 countries where people typically pay for data by the minute. Facebook Zero is the name of the program in which Facebook pays for data connectivity as long as people are using Facebook.

And Facebook is also enabling fliers on seven of the largest North American airlines -- AirTran, American, Alaska Air, Delta, Frontier, United and US Airways -- to use Facebook free in-flight. Facebook is paying for passengers' GoGo access, as long as they're using Facebook.

Facebook is trying to stop bleeding users through acquisitions. When people started abandoning Facebook for Instagram, Facebook bought Instagram.

Another stratagem is to copy. For example, in the 2.5 years that Google+ has been in existence, Facebook has copied nearly every differentiating feature about that service (except for its simplicity, Hangouts, photo editing tools and lack of advertising). Facebook tried to copy the Twitter stream concept in several ways by adding asynchronous following and the Ticker. When people started using Vine, Facebook's Instagram copied its approach to capturing and sharing videos. They even tried to copy Snapchat by creating Poke.

It’s likely that Facebook will continue to do everything it can to not only stop losing users, but also try to hide the fact that its core audience is slipping away.

Don’t get me wrong. Facebook will be a large and financially successful social network for years to come.

I just think it’s likely that Facebook is a “network effects” bubble that will pop, possibly this year. When it does, the service will be relegated to an also-ran status that’s just another choice, rather than the necessary social network where everybody is and must be.

And that’s probably a good thing.

Photo courtesy of Shutterstock.

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