In his excellent piece “What has happened to all the new social networks?” Arthur Monday writes that the rate of rapid social start-ups is probably on the wane:
Despite the insistence of web executives everywhere that rivals online are “only a click away”, you actually have to screw up royally to turn a successful service into one that people leave in droves (So congratulations to the former managers at MySpace and Bebo: you deserve your place in those MBA case studies of the future.)
Look around, though, and sites such as blip.fm haven’t taken off. True, services such as FourSquare and Gowalla seem to be on the rise – although, as Leo Hickman pointed out last week, people haven’t quite grasped the threat that they can pose to users. So we’re back at the original questions: where are all the new social networks? I think they’re gone. Done, dusted, over. I don’t think anyone is going to build a social network from scratch whose only purpose is to connect people. We’ve got Facebook (personal), LinkedIn (business) and Twitter (SMS-length for mobile).
And throw in YouTube for good measure!
Are all the social media bases really covered? I tend to agree and here’s why. If you look at classic market dynamics, there are usually three large companies who dominate a market and then a few niche players. Think about almost any traditional industry and consolidation occurs over time to leave a market leader, a close second and an innovating third player. Soft drinks — Coke, Pepsi, Dr Pepper and the niche players. U.S. beer market – A-B, Miller, Coors and niche players. Rental cars — Hertz, Avis, Budget and niche. The examples can go on and on.
But consumers seem to be able to attach their emotional loyalty to ONE player per social market. That’s why the business strategy has been so different for the social business start-ups. It’s not differentiate or die, it’s scale or die.
Once the checkered flag waves for the location-based apps race, radical innovation and new players on the social scene may be over.
To a great degree the new functionality of smart phones drove the adoption of social networks, especially the location apps like Foursquare. Hardware (3D capability) is also driving the latest innovations in entertainment and gaming. It may take another breakthrough on the mobile hardware side before we see the scope of software innovations like we’ve seen on social networks over the past five years.
Agree?
2 Comments
There are so many issues I have with this post I hardly know where to begin:
First off, substitute AOL, CompuServe, Prodigy for Facebook, LinkedIn, YouTube, Twitter. Would Netscape be a good comparison to Foursquare?
I’ve seen this same argument back in the early 90s with different players. Some people, without using hindsight, love to tell the world that we’ve hit a wall as far as innovation, saturation, etc. It’s obviously just not true. Are we in a lull? Yes, absolutely, and we will be until the economy recovers. Take it from an entrepreneur looking to launch the next big social site that is not only highly scalable, innovative but also profitable: no one is building anything great right now that is getting the kind of funding required to make a splash.
The next issue I have is that this post considers location-based apps to be the end of innovation. How about what’s going on with Augmented Reality and QR Codes? We haven’t even hit a wall with video yet.
Another bit I take issue with is the grouping of services into market leaders and niche players, especially around the assumption that niche players can’t scale and are doomed to die. Tell that to the folks at Sam Adams. Just because they haven’t scaled doesn’t mean they can’t or won’t. Look at Netscape, talk about niche! But that fiesty startup yanked us out of the silos of AOL, et al into a browser-based Internet experience. Even when they were crushed by Internet Explorer, that didn’t mean that players like Mozilla and Apple weren’t relevant.
The next thing I’d like to consider is the assumption that Social Networks are covered with LinkedIn, Facebook, Twitter, YouTube and that sites like MySpace, Bebo, Foursquare, etc. are not part of the equation.
LinkedIn (13 million UV/mo) and Twitter (28 million UV/mo) combined don’t have the numbers of MySpace (65 million UV/mo). As far as Twitter goes, no one is really sure how much of the mobile market the represent since their engagement happens across SMS, browser, desktop, and mobile apps. But, I wouldn’t count out sites like Mocospace and Myxer which represent 30% of the traffic of mobile sites. Foursquare (1.5 million UV/mo) has only 75% of the traffic of Bebo (2 million UV/mo).
Are Personal, Bursiness, and Mobile the only channels to be looking at? Have you forgotten Media Consumption? Gaming? Ecommerce?
New technology AND new user trends will determine the next social growth. Or the folks at Google will (http://www.thehindu.com/sci-tech/internet/article538385.ece).
Great comment Michael. I agree with you 100%. I was recently at a trade show and someone said “take a look at all of these companies, in just a few years only a few will be left standing with a handful of giants ruling the space”. I replied with “Not if they stay small and agile enough to evolve and respond to the market”. Sometimes too big is a bigger problem, at least it can be in the end.
And I think we can certainly say that, the game is always changing – and has significantly changed over the last decade. Now we have more “able” start-ups, small businesses, and individuals that ever before. You can hire cheap all over the globe, more companies (typically smaller) are embracing the idea of a remote workforce, and I think* we’re becoming more cost conscious as entrepreneurs. We’re at least able to be more aware of what others are doing “out there”, how they do it, and why they succeed or fail.
Sorry this post is so one-sided, but I’m glad it sparked your participation.
- Patrick