There is a specter haunting social media, and no, for those of you that recognize the paraphrase, it’s not communism. It’s kind of the opposite, actually: the looming insolvency wrought by insufficient or unsuccessful monetization.
Unlike the (first) dot-com bubble, where so many ideas existed only as vaporware, today many of our best media and technology ideas have been given virtual flesh; they exist, out there in the world, the offspring of programmers, visionaries, and venture capitalists. News aggregators, such as Pulse, that curate the events of the world and deliver them in the manner you prefer, software that converts the messiness of poorly thought-out web design into a beautiful “readable” package, the capacity to share information in the form of ideas, and images, and video, at the speed of 4G LTE, from anyone, anywhere. In popular parlance, status updates have been immortalized (though not necessarily in a good way), and even “tweeting,” a word that once elicited monuments of much-deserved derision, now enjoys a common, even banal standing in popular discourse.
And yet. Despite our current moment in digital media history, when so much seems possible that wasn’t only years before, the present moment lacks anything that we can properly call foundational. We are accustomed to thinking of Facebook and Twitter as the point-to platform giants of the social media revolution, and yet we have seen in recent months that the mighty are not nearly as mighty as we might have once believed. Facebook’s IPO, the center of so much speculation, praise, and blame, has resolved, some months later, into a fairly weighty disappointment. As of today, Facebook’s stock value has fallen to half of what it was when it went public. And why? Because it turns out that despite the unprecedented size of their user base, Facebook just isn’t making sufficient money to justify a higher assessment of value. Now they’re turning to gambling apps to try to fill the coffers. One has to wonder: if Facebook can’t make enough money off a billion users, what shot do the other social media contenders have?
There’s actually quite a bit of disappointment to go around. The former poster-child for web 2.0/social media, Digg, was sold (in pieces) for far less than it was once estimated to be worth. This devaluation happened in part because Digg’s user base fled to other sites (like Twitter and Reddit) that better performed some of the same functions as Digg. Friendster sold in 2008 for a little over $26 million, despite earlier estimates (from the same year) placing its value at $273 million. Rupert Murdoch bought MySpace for $580 million and then sold it six years later for $35 million, a rather substantial loss, even for him. In each case, the story is similar: before one technology or platform could figure out clear and stable monetization strategies that would solidify their market standing, another, newer platform came along and performed what we can call a function disruption, a type of technology disruption in which one technology slowly supplants a previous one by outperforming in a subset of that previous technology’s core functions.
In addition, all four examples – Facebook, Digg, MySpace, and Friendster– made decisions designed to enhance monetization that also served to alienate some of their users – the same users who are then more likely to jump ship and invest time and effort in a successor platform.
There are a few things to learn from this. First, when we’re thinking about disruption, we should understand that part of what makes social media such a disruptive environment is precisely that much of our current social media technology lacks market stability, and relies heavily on investment capital, which is to suggest that these technologies are already primed for and susceptible to function disruptions. As digital media enthusiasts, we tend to celebrate the extent to which digital and social media disrupt traditional media, and to some extent they do, but if we’re arguing from the empirical record, the reality is that both NBC and Random House seem to be adjusting and doing just fine, while many social media platforms rise and fall faster than a summer’s sunflowers.
Second, we really should dismiss any notion that there are no alternatives to the present platforms that dominate social media. While social media itself isn’t going anywhere, we have not yet arrived at the point where we can with confidence say that “X platform is social media, and social media would be unthinkable without X.” Not yet.
All of this brings us to Twitter, which recently made a number of choices that are not exactly user-friendly. They announced late last week that third-party apps would now have a maximum total user count and stricter limits on the types of API calls. These limits are part of an effort to divert more and more traffic back to official Twitter apps, which are generally inferior to many of the third party apps, but have the benefit, from Twitter’s perspective, of not filtering out advertising or other promotions. A while back, Twitter restricted API calls from certain apps – most notably Instagram – because they too closely mimicked the core Twitter experience. And of course there was the rather unceremonious separation of Twitter from LinkedIn in March of last year, a split that coincided with a Twitter developer blog post suggesting that, in the future, Twitter would be cracking down on how third parties used their API. Turns out they meant it.
In a different vein, Twitter also got into a bit of a public kerfuffle when they temporarily banned Guy Adams, a foreign correspondent for The Independent, from Twitter after Adams repeatedly insulted NBC over their coverage of London’s Olympic games and published the corporate email address of Gary Zenkel, the president of NBC Olympics so that people could email him their complaints. NBC, who had partnered with Twitter for advertising/promotion, complained to Twitter, Twitter then banned Adams, and a PR nightmare ensued – enough of a nightmare that NBC eventually withdrew their complaint and Twitter reinstated Adams’ user account. But while NBC received the brunt of the bad press, a few serious questions about Twitter’s behavior remain:
- How desperate must Twitter be for big time advertising partners if they’re willing to unilaterally suspend a user’s account based on a partner’s complaint?
- And if Twitter is willing to do that, and critical tweets can result in censure or banishment, how useful/viable is Twitter as a long-term micro-blogging platform?
The problem Twitter has – and at this point it’s a famous problem, and one that is in no way unique to Twitter – is that at some point Twitter had to make a choice about who it is and what it wants to be. It had to choose between a platform that primarily served a function for its users or a platform that primarily served its users to advertisers. One can’t fault them for choosing the side of advertisers and promotional partners; after all, Twitter has investors who expect something for their investment. But there’s the rub: for Twitter to become profitable (which it isn’t yet, not by a long shot), it has to monetize its user base within the constraints of its platform and serve those users to advertisers far more effectively and pervasively than it does now. And that means, like Facebook, that Twitter must increasingly make decisions that prioritize the needs of advertisers over the needs or desires of the users.
The good news is that at present, these decisions impact relatively few users. But the historical record thus far is not encouraging, and I find it difficult to imagine a scenario in which, if push comes to shove, Twitter draws a line in the sand that nicely maintains the balance between user interests and monetization. It seems far more likely that the relationship will become more and more unbalanced, and that Twitter will engage in behaviors that alienate additional users, and that sacrifice functionality (like inhibiting third party apps) in order to maximize ad revenue.
The reason why this problem isn’t unique is simple: nothing is free. Whatever the hype and euphoria over the limitless, low-to-no-cost potential of the social Internet, the simple truth is that services are free only if the cost of their use is paid by some other mechanism, and in the vast majority of instances, just breaking even on cost isn’t enough. The relationship between user and service is thus perverted from the outset, in that the service is a service in name only; its function is to build a user base and to then “serve” (i.e. sell) that user base to parties interested in accessing it. Maybe this involves advertising, maybe it involves selling user information to data miners, whatever. But the money has to be made somewhere, and if users aren’t paying for it, they will invariably run into the limits of their free use and the concomitant realization of the non-financial costs of “free.”
This is why I think that those capable of doing so – and this includes the people of the MCDM to be sure – should throw their personal and institutional ethos behind app.net. App.net is an attempt to create a for-pay micro-blogging service with many of the core features of Twitter, but with the core assumption that – because users are paying for the service – the users are the clients, not the product. And that means that the app.net team makes decisions that they believe are in the best interests of their users, not their investors, and not their advertisers.
It doesn’t mean that advertising is excluded – NBC can still have an app.net account and advertise all they want, and people who wish to subscribe to the NBC feed can. But if we don’t want to see those ads, we don’t have to, pure and simple. It also means that app.net has no incentive to limit third party app innovations that use the app.net service. Indeed, the development team has already committed to a series of standards that will ensure that third party developers can use the app.net core in ways that are both open to innovation and stable, including support for:
- Activitystrea.ms Atom & JSON feeds, as well as RSS feeds, of public posts for individual users, hashtags, etc. (Note that this is different from making them the foundation of our read/write API, which we have decided not to do)
- Pubsubhubbub (PuSH) support (as a publisher, initially)
- Exposing user identities with Webfinger
- Commitment to coordinate between internal and external parties to create and support open-source “lightweight” clients in as many flavors as we can, ala Stripe
- Commit to enabling and supporting users in building inbound and outbound syndication to and from App.net
In other words, what we have is a system that could provide a hook for a number of federated standards and clients – something Facebook and Twitter already do – but this time around the system would be funded by users, which solves the future insolvency problem before it even arises. Indeed, the team behind app.net pursued the initial development using a Kickstarter-like pledge system: pledge fifty dollars for the first year of service (that’s the estimated yearly fee), which works out to about $4.17 per month, or a $100 for the year if you want developer access (the pledge has already been mocked, in a parody that is both funny and misguided). Their goal was $500,000 in initial pledge funds. They received just shy of $800,000 by the time the pledge-by date arrived, and are still accepting sign-ups.
By the way, did I mention you get 256 characters instead of a mere 140? You’ll be amazed at how much more coherent you sound when you have an extra 100+ characters to use.
Now there are all sorts of reasons to suspect app.net might fail. The whole effort seems quixotic in many ways, especially when most Twitter users haven’t yet felt much pain from less-than-ideal Twitter business decisions. Still, what are the alternatives? You could stick with the big guns right now, assume everything’s going to be fine, and that they won’t exploit you too savagely. But if you’re worried about that exploitation, or even anxious about the lack of transparency with which that exploitation takes place, or if you’re worried about the future problems of insufficient monetization adversely affecting the stability of those services, then you have to think about your options.
At the same time, it’s clear that “simple and open” has not won in the social media space, so the dream of a set of federated Diaspora servers seems unlikely to become reality. At present there is no credible alternative to Twitter, and no realistic alternative to Facebook (assuming, like me, you don’t think Google+ was ever meant to be a Facebook alternative). App.net has a chance to be there if and when the floor falls out from under our current dominant micro-blogging platform, and that’s a chance worth supporting. In addition, if app.net does provide a stable hook for OAuth and other cross-platform credentials, it also has the potential to disrupt Facebook in two ways: first, by providing a more stable Identity 2.0 solution than does Facebook Social, and second, by allowing an established user base to use things like a federated Diaspora, which gives that sort of open protocol social network structure a fighting chance. I don’t personally think that last is going to happen (I’m not too confident in the Diaspora Project), but it’s worth mentioning the possibility.
Supporting app.net also has the benefit of implicitly lauding the philosophical underpinnings of the project: that users are customers, not commodities. That’s worth supporting, even if app.net fails, because it encourages the next platform-as-service developer to begin developing.
App.net is, in summary, a potentially Big Deal, because it signifies a potential shift toward realizing social networking as a utility (a la phone or electricity) rather than a data aggregation business. How it performs will tells us a lot about the potential futures of social media in particular and the internet in general.