How web platforms collapse: The Facebook case study

https://tedgioia.substack.com/p/how-web-platforms-collapse-the-facebook

by keithly • 4 years ago

57 37 4 years ago

tedgioia.substack.com

gardenfelder• 4 years ago

Instead of serving users, the dominant company decides it’s better to control them.

RcouF1uZ4gsC• 4 years ago

I believe the analysis and the lesson learned are completely wrong.

The real reason for Facebook's decline is that Apple knee-capped their advertising.

The lesson in this is: don't let another company be able to get between you and your customers.

Google took this lesson to heart some years back, hence the massive investment in Chrome browser and Android so that no company could come between Google and its users.

htp• 4 years ago

Facebook's and Google's customers are advertisers, not end-users, no?

marticode• 4 years ago

Apple's demonetization was painful financially but the platform losing steam is a deeper and different problem that started before that event.

enos_feedler• 4 years ago

The critical investments Google made was paying Apple for search traffic and building their own smartphone-centric hardware ecosystem (pixel, home, tv etc). Android is too indirect. Regulation and OEMs like Samsung can prevent Google from getting the capture over users at the prices they want. Chrome is meaningless outside of ChromeOS / Chromebook.

bentt• 4 years ago

You're not wrong that Apple knee-capped them. The thing that made their stock price dive was all of the applause.

hedgehog• 4 years ago

Apple may have been a factor but I think the bigger issue is FB's growth narrative got weak and their valuation was based on expectations of growth. The new story is that they are no longer attracting young, affluent users that as a cohort represent the future ideal advertising target and cash cow for the company. Repeatedly other platforms (Instagram, WhatsApp, TikTok) have shown they can grow rapidly while FB's in-house copies keep failing. More recently antitrust concerns have clipped the wings on FB's primary defense against external competition (early acquisition). Their big bet on the metaverse seems like a big boondoggle that doesn't have legs. Losing cross-app spyware may hurt FB but I don't think it's the biggest reason why the public market have lost faith in FB's growth prospects. They still trade at a PE of around 11 so it's not all doom and gloom.

saurik2• 4 years ago

I can’t imagine a single Spotify user ever saying: “Please make sure you never tell me the members of the band.”

Does Spotify even know who was in the band? Is that metadata anyone attached to the tracks? Sure: if it wasn't they could have asked for it, but if they already have a ton of music without that metadata is the feature ever going to be useful as an afterthought? Does any other music platform have this feature? This example is so weird it is making it really difficult for me to concentrate on whatever point they are trying to make.

syrrim• 4 years ago

They could pull it from wikidata pretty easily. This would cover all major bands and many more minor ones.

saurik2• 4 years ago

Oh, maybe for like, really organized groups. But even those change over time. Most of the musicians I know just work with random one-off hires when they get around to recording a track.

pschuegr• 4 years ago

Every song on Spotify has a credits list which you can get to in a couple of clicks. Some of them have band members.

adamauckland• 4 years ago

Spotify only knows what you tell it.

Currently, you can add a Bio, links to social media sites and create an image gallery, but the admin section isn't particularly smart, I can't see anywhere to set specific data like band members or timelines.

Not sure who's expected to admin all of this though, I'm published on 30+ streaming music platforms including Spotify and iTunes and I don't have time to go round adding data to all of them.

duud• 4 years ago

Yet another article conflating the decline of Meta's stock price with actual collapse. Three of Meta's products have more users than TikTok:

https://www.statista.com/statistics/272014/global-social-net...

There are legimate concerns but saying that a company on track to do $120 billion in revenue for the year is collapsing is disingenuous.

notpachet• 4 years ago

This article operates on the premise that companies can keep their users around indefinitely, if only they treat them with respect. I am not sure that's true in the case of social media companies (and probably other types of companies, too). I think there's an element of fashion to it. Companies go out of fashion. If you're in Gen Z, it's more fashionable right now to use Tiktok than it is to use Instagram. It's still more fashionable to use Instagram than it is to use Facebook.

How fashionable these platforms are seem to be inversely correlated with how deeply they've penetrated society. Once a teenager sees that her grandma is using Facebook, it starts losing its special luster.

That's not to say that shitty product choices don't also play a factor, but I have a feeling that it's a smaller factor than fashion at the end of the day.

prawn• 4 years ago

I'd say that's certainly part of it. Even just escaping the hordes to stand out in a new place/way would be important to people. Think about how strongly teenagers define themselves with clothing and music to carve out a niche.

Beyond that, I think social networks are heavily reliant on active creators. If those people feel like minnows amongst the masses and grandmas, they're more likely to strike out in new territory whether it's a fresh network or mode of creating. Become a bigger fish in a smaller pond. Which leaves behind less-active users or people who've found reward/profit on the previous platform, making that platform start to feel more like TV than a mingling, social space.

foobarbecue• 4 years ago

Yep, this is it. When I ask my younger friends why they prefer IG over FB the reaction is "ew, Facebook? That's so over." The cycle is repeating now with IG becoming uncool in favor of TikTok.

If I were a social media mogul, my strategy would be to relaunch the same platform under a different name every 5 to 10 years. Put some new css in there, release some flashy ads, and users will think it's a different thing. Most IG and Whatsapp users are shocked when you tell them those apps are owned by the same company as FB.

On the other hand, there are some platforms so solid that they seem to transcend fashion. I'm thinking YouTube.

headsoup• 4 years ago

I think youtube just has so much content that is nowhere else that it can't go 'out of fashion.' It's a massive public archive of creative and educational content which you can't just discover on another platform.

It'd take a very long time for something (like rumble/vimeo) to catch up or an amazingly large stuff-up at Youtube to drive people away.

dchuk• 4 years ago

YouTube lacks a personality like Facebook/Instagram have. It just “is”.

It’s closer to infrastructure than any other social platform out there. Kind of blends into the background as you browse it.

Also, there’s a better separation of the content from the vitriolic comments than other platforms. I use YouTube all the time, and literally never read comments. Instagram/Facebook, the comments are integral to the consumption pattern, showcasing just how very fuckin awful almost everyone is when they can be internet tough guys vs basically decent human beings in real life.

joshe• 4 years ago

Pretty funny that a substack called "Honest broker" has this paragraph:

"Do you think I’m exaggerating? Trust me, the people who run the company believe in 24/7 surveillance as the single most important feature on the platform. They absolutely must monetize your participation, and can’t do that without putting you under observation (as law enforcement officials call it.)"

There is also a graph lie. Even though the article was printed today, it shows that stock price from about Nov. 3 the price nadir at $90. It's been above $110 for 3 weeks.

I don't suggest that Facebook is a good way to spend time (it's boring). But the idea that it's even in the top 100 worst things in the world is crazy.

Anyway Ted was a decent music journalist who has been driven mad by tech hurting journalism. Tech derangement syndrome.

mulligan2• 4 years ago

this guy might want to include data about facebook user number, dau / mau, instead of stock numbers. facebook itself, not even counting insta or whatsapp, continues to grow. it is hard to claim a "collapse" if the user base is growing

datalopers• 4 years ago

Meta’s userbase is growing in regions which do not currently monetize well. Notably Asia-Pacific and “Rest of World” which monetize at 1/12th to 1/16th of a US/CA user.

The growth rate in US/CA is basically flat while those regions are 3-5% YoY.

mulligan2• 4 years ago

FB MAUs in US/CA are most of the population: https://www.statista.com/statistics/247614/number-of-monthly...

and still growing. it is isn't unreasonable for that growth to be slower than less penetrated regions.

but that still doesn't produce a conclusion of collapse

that facebook has such a high percentage of users in the most profitable parts of the world, doesn't connect with the posts claim that users are leaving

fleddr• 4 years ago

Getting pretty tired of all these poorly written "death" and "collapse" stories that are little more than random guesses. In this case in particular because the author lacks the insight most of us had a decade ago already:

"How can they possibly make so many decisions that run counter to customer preferences? There’s only one reason why they do this. They do it because they’re so dominant."

You're NOT the customer. Advertisers are. They do not make user-hostile decision out of arrogance, indifference or incompetence, they do it to make money. Preferable every quarter more.

Other than this, the lengthy article doesn't contain a single tangible point as to why Facebook would collapse.

lerela• 4 years ago

From the article:

The main reason why they don’t care about serving users is because the user is not the customer at Facebook. The users (you and me) are the product sold to the actual customers.

pessimizer• 4 years ago

You're NOT the customer. Advertisers are. They do not make user-hostile decision out of arrogance, indifference or incompetence, they do it to make money.

This is obviously inadequate. Users are the product that are being sold to advertisers, therefore decisions that shed users affect the bottom line. Why would an outlet not fear shedding users even while taking user-hostile decisions?

I'm not offering an answer. But because they’re so dominant is a better answer than ¯\_(ツ)_/¯ for me.

vs2• 4 years ago

I hate substack!

johnwheeler• 4 years ago

A company’s stock price is often disconnected with its economic output relative to other opportunities in the market. This happens more often than a major web platform failing, so I conclude the possibility is greater it’s the former.

oblib3• 4 years ago

My wife's grandfather, Theodore Houser, was the CEO of Sears in the `50s. He wrote a book called "Big Business and Human Values". The last CEO had nothing close to "Human Values", and Sears didn't last long after they started ignoring his advice.

Elon Musk would do well to read that book.

listenallyall2• 4 years ago

Apples to apples? Mr. Houser didn't have to compete against Amazon, Target, Wal-Mart, specialty retailers (Home Depot, Best Buy), clothing discounters (TJ Maxx, Kohl's), any internet stores, or any suppliers selling Chinese-made goods.

oblib3• 4 years ago

Sears had pretty much the 1st crack at creating an "Amazon" and blew it. I mean, it's fair to say the "Sears Catalog" was the blueprint for that.

amadeuspagel• 4 years ago

Facebook's DAU continues to grow. It's not collapsing. It's absurd to speak of a collapse because the share price is falling. There are many possible reasons, maybe it was overvalued before, maybe investors don't believe in the metaverse ...

How web platforms collapse: The Facebook case study

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