Creative Destruction: Why Facebook and Twitter May be Doomed

ginidietrich
Gini Dietrich Chief Executive Officer, Arment Dietrich, Inc.

Posted on November 30th 2010

 

Joseph Schumpeter popularized the theory of creative destruction, that in a healthy free market system, it is natural and necessary for companies and industries that rise to virtual monopoly status to be transformed or replaced through entrepreneurial innovation. Although Wall Street investment firms might be considered “too big to fail,” social media companies are not.

Now punchlines and cautionary tales, AOL, Friendster, and MySpace were once considered inexorable juggernauts. But it wasn’t a bonfire of superior technology that undermined them. Over time they all fell short of user expectations in various ways, allowing alternative value propositions, service models, and providers to gain a foothold and eventually surpass them.

Facebook and Twitter rose to their preeminent status by capitalizing on the shortcomings of their predecessors, then relying on the difficulty of moving/replicating personal networks to keep users in place (if not entirely happy or active). But even as these new hegemons enjoy seemingly limitless growth, they themselves are not immune to the creeping forces of creative destruction.

Recognizing the early signs and devising provisional strategies and tactics to address them could create new opportunities for social media marketers. 

Seeds of Discontent

  • Privacy erosion – Recently described as “step on toes until people scream, then apologize,” Facebook’s policy has moved in the minds of many privacy advocates from a tolerated tradeoff to a genuine threat.
  • Lack of control over personal information and content – The more creepy “how do they know that about me” ads show up on our home pages, the less likely we are to trust our networking platforms.
  • Poor usability – Famously byzantine and inscrutable, Facebook’s user interface not only is a chronic problem in its own right, but also compounds its privacy issues by making users fearful that altering their account might undo other preferences and settings. And how well can it bode for Twitter when a symbol for its shortcomings, the Fail Whale, becomes a cultural meme and core users prefer clients like HootSuite and TweetDeck over the Twitter site itself?
  • Hubris – The classic. Ignoring how the open source movement begat Linux, which begat Android, today’s social media mega-networks appear to underestimate the power of a highly skilled, highly motivated community of true believers to effect transformational change over time.

New Approaches, New Opportunities

  • Diaspora – More of a guerilla movement than a frontal assault on Facebook, Diaspora, is setting out to become “the social network that puts you in control of your information. You decide what you’d like to share, and with whom. You retain full ownership of all your information, including friend lists, messages, photos, and profile details.”
  • Niche private networks – For the legal community, Legal OnRamp is collaboration system for in-house counsel and invited outside lawyers and third-party service providers, and Law Pivot matches general counsels at tech firms with outside subject matter experts for crowdsourced answers to legal questions.
  • Gist – The love child of database marketing and RSS readers, social CRM service Gist lets individuals manage and interact with their personal and professional networks by aggregating contacts from various sources in a single place and providing tools for content sharing and listening.

What Social Media Marketers Can Do to Leverage Creative Destruction

  • Develop a “niche” niche – The profession is full of Facebook and Twitter marketing gurus. How many “new and emerging social networking platform” experts can you name?
  • First mover advantage – Getting involved in early-stage networks to see what works, what doesn’t, and why can pay big dividends in influence if/when the community or service takes off. Look what it did for Twitter’s early adopters.

Post by Jay Pinkert, a principal with Shatterbox, a marketing and communications consultancy that helps professional firms distinguish their brand and build referrals through content-driven programs and niche development.

ginidietrich

Gini Dietrich

Chief Executive Officer, Arment Dietrich, Inc.

Gini Dietrich is the founder and chief executive officer of Arment Dietrich, Inc., a firm that uses non-traditional marketing in a digital world. The author of Spin Sucks, the 2010 Readers Choice Blog of the Year, a Top 42 Content Marketing Blog from Junta42, a top 10 social media blog from Social Media Examiner, and an AdAge Power 150 blog, Gini has delivered numerous keynotes, panel discussions, coaching sessions, and workshops across North America on the subject of using online technology in communication, marketing, sales, and HR. One of the top rated communication professionals on the social networks, Gini was recently named the number one PR person, according to Klout and TechCrunch, on the channels, and number one on Twitter, according to TweetLevel. She also can be found writing at Crain's Chicago Business, AllBusiness, and Franchise Times.
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Comments

DouglasKarr
Posted on December 2nd 2010 at 4:03PM

Couldn't agree more.  There is another fundamental problem with some of these technologies... The goal of Twitter and Facebook are massive growth - which may conflict with the goals of each and every user, to provide a manageable network with which to communicate.  Great post.

Posted on December 2nd 2010 at 4:24PM

I'm afraid if we were to break this news to our readers, many would throw their hands up in disgust or disdain and loudly proclaim, "What's the use?!" Most of them are just now getting into Facebook and the mere thought of it becoming an also ran is completely outside the pale. And I'll throw Twitter in the mix just for good measure, though I could see it being more susceptible to your theory than FB. 

While it's useful to keep one eye on emerging technologies, I think, for the time being, it's better to help small businesses (that's our market) understand the nuances of the current social network power brokers, Facebook, Twitter and LinkedIn, and learn how to leverage the respective benefits of each for marketing and sales. 

Posted on December 2nd 2010 at 4:35PM

That was quite possibly the most articulate and well thought out article on social media I have read in quite some time.

Consumer behavior cannot be ignored and as you said, " devising provisional strategies and tactics to address them could create new opportunities for social media marketers." It will be interesting to see the changing trends and if users flock to new and growing platforms in the way users flocked to Facebook and Twitter.

One stop shopping for users, content creators and business would be highly beneficial. I think it's a challenge for the everday person, much less the marketer to keep up on all the new and innovative tools that are coming out in social media.

Great insight on the potential evolution of social media.

Thanks for the good content.

Frankie

 

Posted on December 2nd 2010 at 5:06PM

I think predictions of Facebook's and Twitter's demise may be premature. While no one can accurately predict the future I think it is important to note that some of your suppositions do not necessarily apply to the vast majority of users.

First, I think the privacy concerns of Facebook are a greater media concern than that of individual users. I am not minimizing the point - merely trying to put it into some sort of context.

Second, the number one reason people use Facebook is fun. As long as it continues to satisfy that need people will continue to use it.

Third, the longer Facebook exists without a viable competitor the harder it will be for the next social network to usurp Facebook's authority.

Fourth, Twitter has its uses - fail whale aside. All systems fail at one time or another. The rise of mobile will keep people tweeting until there is an easier alternative.

If both services become more intrusive in their ad insertion - problems will arise. If both services begin to sell out to corporate sponsorships and compromise the basic benefits of what they do - people will start to look elswhere.

However, as people continue to build the breadth and depth of their networks on these services it becomes more difficult for them to move to a new platform. And, they will only do that if a significant portion of their newtork migrates with them.

Social media will continue to evolve. New player will appear and old ones will fail. But to think that 'The end is near' is an extrapolation I am not ready to accept.

Posted on December 2nd 2010 at 5:11PM

Gini Dietrich:

While every enterprise faces the same potential for creating its own demise, I disagree that Facebook or Twitter may be 'doomed'.  I agree that users are a fickle group, but Friendster and MySpace were first-efforts in creating a comprehensive, open-networking Social Media tool and they had shortcomings that made them annoying (MySpace still does). In the case of MySpace, it attracted and became dominated by a segment of the population that is driven more by hormones than anything else.  Facebook and Twitter growth have been driven partly by capitalizing on the weaknesses of their predecessors; however, the major success of both was by bringing new people into the Social Media world. 

Facebook attracted a larger segment of the population, including older users that suddenly became addicted to the connections that it provided.  Today, even those who dislike FB have had a hard time detaching themselves from it because 540 million SM users cannot be ignored without sacrificing something significant. The problem is that another networking service may solve certain dissatisfiers of FB, but until everyone you know, or want to know moves to that service, you have to try and live in two or more networking worlds, and that is a pain.  So a person has to weigh whether they are frustrated enough to add one more networking group to their attention span or live with FB.

You ignored the other possibility.  That instead of leaving, people may realize and accept that privacy is a myth online.  I am constantly amazed by people who believe that they can be anonymous on the Internet.  They think that a nondescript user name means that their identity is protected or that a comment they make will disappear the next day.  I don't disagree that there are some legitimate privacy issues and the FCC is proposing new regulations to address many of these issues, but a significant part of the problem is not FB but the gullibility of the user who thinks that they are 'in disguise' when they are on the web.

With Twitter, I think most people have undervalued Twitter.  It is perceived by many as a network of celebrities and pointless dribble of 'what-I-just-did'.  However, the core of Twitter consists of people discussing cutting edge issues and it is the only service that brings together people around the world who are focused on one topic.  If it can overcome its poor public image and be recognized for what it can do, it could jump from 100 million users to 500 million users in 6 months.  It is more likely to be the center of business discussion than any other service out there.  LinkedIn (May 2003) is older than MySpace (Aug. 2003) and it is has been leapfrogged by Twitter (July 2006) with over twice as many users (41 million vs 98 million.)

The wanna-be replacements for FB and Twitter have one big problem.  Some of the very things that users say they want to protect them also restrict the connections that give FB and Twitter advantages in adding new users and making new connections.  If any networking service is doomed it is LinkedIn because it has such a complicated system to add new connections (How do you know this person?) that it renders itself irrelevant.

Yes, FB has made some stupid mistakes, but if everyone organization that made stupid mistakes was 'doomed' then Wal-Mart, Target, HP, Microsoft, Apple, Exxon, and thousands of others mega organizations are all 'doomed'.

Will FB and Twitter be the giants in 2015?  I doubt it, but I don't see any other SM tool that will challenge them in the next two years.

Paul Kiser

Posted on December 3rd 2010 at 5:06AM

This is an eloquent overview of the situation. Megaliths like Facebook always have a shelf-life in spite of the hype. Facebook has been an interesting case because it has made some big mistakes but it's also made some major shifts and kept itself at the top for a while. I don't know how long this will continue but it could be several years.

I wrote some thoughts on the death of Facebook at the time that Diaspora was looking for funding earlier this year. To be honest, I'd been wanting to write about Facebook's demise for years but they just keep springing back.

Posted on December 3rd 2010 at 12:07PM

Ben,

Thanks for your kind words and insights.

You are abosolutely right, Facebook et al might prosper and endure indefinitely.

Bottom line for me is not that Facebook and Twitter are somehow predestined to decline and/or fall, but rather that we miss opportunites as marketers if we believe that they are uniquely immune.

Other variables that bear on the durability of Facebook and Twitter include corporate management/ownership changes, legal challenges (U.S., EU, China) and equally successful international competitors (Baidu). So even if they make good product/service decisions, other unforeseen exogenous factors might also trip them up.

 

Posted on December 3rd 2010 at 1:05PM
All: Thanks for the great discussion! My bottom line in writing the post was not that Facebook and Twitter are somehow predestined to decline and/or fall, but rather that we miss opportunites as marketers if we believe that they are uniquely immune. I'm not positing that there will be 1:1 replacements/competitors, but rather that the biggest threats to their long-term fortunes come from multiple smaller players that could siphon off key users groups and force the larger established players into defensive postures. Other disrupters that could bear on the durability of Facebook, Twitter, et al, include corporate mnagement/ownership changes, government intervention (U.S., EU, China) and equally successful international competitors (Baidu). Microsoft's history with government bodies is a case in point, and the EU recently started a fishing expedition with Google. As Robert Frost succintly observed in "Fire and Ice": Some say the world will end in fire, Some say in ice. From what I've tasted of desire I hold with those who favor fire. But if it had to perish twice, I think I know enough of hate To say that for destruction ice Is also great And would suffice.
Posted on January 12th 2011 at 9:02PM

An insightful overview of social media trends. It appears the real genius is in what users do to adapt the usability of these sites, rather than any technical brilliance. The whole social media market appears to revolve around sporadic bursts of mini friending frenzies centered around egotistic supremacy - with pockets of organized crowdsourcing for more productive pursuits. I noticed on SocialMediaToday that the statistics around the use of Twitter for entertainment and personal tracking died rather a quick death, with the rapid rise in HashTags indicating that outside of event-related Tweets, Twitters main use today is more of a search engine than a rapid communication tool. It is all moving so fast that it is difficult to pin down exactly where the next big innovation will come from.