Posts about facebook

The new British class sytem: Facebook

In today’s Telegraph (and this month’s Vogue), Conde Nast UK head Nicholas Coleridge admits that he’s trapped in the new British class system: Facebook.

I know people – adults, that is, busy people with jobs – who spend two or three hours every single day tending their virtual roster of acquaintances, “poking” people, adding applications, trawling friends’ lists of friends to find new ones to poach, or approaching complete strangers to boost their score.

The second half of 2007 has seen the renaissance in England of social competitiveness. Who has more friends on Facebook, me or you? Or, more pressing, who has the most glamorous friends on Facebook? We have turned into a nation of social-stamp collectors.

As I posted on his page on Facebook, I am relieved to both be his friend and have more than he does.

How would Google compete with Google?

So when someone came along who actually managed to compete with and even frighten Google — namely, Facebook — how is Google competing? By going open. There’s a lesson in that for the rest of us.

I keep saying that media companies should ask WWGD — what would Google do — in formulating their digital strategies. Well, in Google’s Open Social, we see that the best competition against a growing monopoly is openness.

So how should we compete with Google or at least challenge its monopoly? Openness. I’ve argued for sometime that we need an open-source ad infrastructure. If the rest of the world other than Google — that is, those who have the other half of advertising Google doesn’t yet have — can gather together and create standards, then Google would be faced with the same decision Facebook is now faced with: whether to use those standards. What organized Facebook’s foes? Ironically, it was Google. Who could organize the nonGoogle ad universe? I see no one on the horizon. That’s why Google keeps growing. We’re letting them.

Social value

$15 billion for Facebook doesn’t sound so crazy when you consider this: A Deutsche Bank analyst says that a newspaper reader in 2004 was worth $964 a year. Today, that’s $500. Facebook’s 50 million active users translates to $300 per at that valuation. And newspapers are shrinking while Facebook is growing by 200,000 new users a day. A day. And those users spend an average of 20 minutes each day inside the site vs. 41 minutes a month on newspaper sites, says DB.

By the way, the analyst says newspapers will come back into the black in 2012 but I see no rationale in theh E&P story for that prediction.

(Link corrected. Thanks, friends.)

The Facebook economy

You know a platform is gaining traction when it spawns an ancillary economy. The Facebook platform has not only supported apps companies that are, in turn, supported by venture capital, but now it yields conferences that can charge $400 at the door. I don’t see why such a conference is needed when Facebook developers have been gathering in hackathons thanks to Meetup, which is a helluva lot cheaper, or thanks to organizing on Facebook itself, which is free. But this is capitalism at work. Next we’ll be seeing the equivalent of SEO: app optimization consultants and conferences and books and new job descriptions and ads for them.

Recommending the tail

Wharton and O’Reilly just released two provocative reports on whether social distribution and recommendation really get into the long tail.

First, O’Reilly’s on the distribution of Facebook apps:

The good news has already been widely disseminated: there are nearly 5000 Facebook applications, and the top applications have tens of millions of installs and millions of active users. The bad news, alas, is in our report: 87% of the usage goes to only 84 applications! Only 45 applications have more than 100,000 active users. This is a long tail marketplace with a vengeance — but unfortunately, the economic models (for developers at least, though not for Facebook itself) all rely on getting into the very short head.

I think there are a few reasons for that. First, the Facebook platform is so damned new. If the same analysis of the entire web had been made in December, 1994, two months after Netscape’s release, it would have shown that Netscape got most of the attention along with a camera on a coffee pot. It took a long time for the Web to develop its incredible depth: its tail. The Facebook platform is very much in its infancy. It’s far too soon to draw any grand conclusions.

More substantively, I think one reason for this undistributed distribution is the nature of social apps: They gain in value the more that people — especially you know — use them, and so the community is uniquely motivated to create blockbusters. It’s one matter to simply recommend things to people (more on that from Wharton in a minute); it doesn’t really affect you if more people watch the movie you recommend, except that you feel as if you’re part of a trend and maybe you can discuss it with them. Those are light motives. By contrast, many Facebook apps are all but useless if your friends don’t use them; that’s the social in it. This creates more of a gathering point than mere recommendation.

I think there’s a lesson in this for old, blockbuster-oriented economies — entertainment and media, mainly: How do you improve your product for all by having more people involved in it? And how does that motivate people to spread it for you? We have seen this happening in online forums: the more people who are involved, the more people get involved (though there is a tipping point; you can have too many people). I wonder whether collaborative media could take on this effect. Lonely Girl 15 may be an example: people made media around the media and spread the original along with their creations. How can newspapers and TV shows do likewise? How does the collaboration and the involvement of your friends improve the product and how then do you get your friends involved? If I were trying to produce a social news or entertainment product, I’d investigate that formula.

Now shift to mere recommendation. The Wharton report (via PaidContent) says that as presently implemented, automated recommendation systems tend to cluster people around products and create blockbusters.

Online retailers may be shooting themselves in the tail — the long tail, that is, according to Kartik Hosanagar, Wharton professor of operations and information management, and Dan Fleder, a Wharton doctoral candidate, in new research on the “recommenders” that many of these retailers use on their websites. Recommenders — perhaps the best known is Amazon’s — tend to drive consumers to concentrate their purchases among popular items rather than allow them to explore and buy whatever piques their curiosity, the two scholars suggest in a working paper titled, “Blockbuster Culture’s Next Rise or Fall: The Impact of Recommender Systems on Sales Diversity.”

Hosanagar and Fleder argue that online recommenders “reinforce the blockbuster nature of media.” And they warn that, by deploying standard designs, online retailers may be recreating the very phenomenon — circumscribed media purchasing choices — that some of them have bragged about helping consumers escape.

The problem is with automated recommendations and that a critical point:

“Because common recommenders recommend products based on sales and [consumer] ratings, they cannot recommend products with limited historical data, even if they would be rated favorably,” they write. “This can create rich-get-richer effects for popular products and vice-versa for unpopular ones, which results in less diversity.”

That could be solved or balanced, I think, if you shift to reliance on human recommendations: ‘My friend Fred finds good stuff for me…. My friend Sally finds better stuff than Fred…. My friend Jeff has no taste.’ Then a critical mass of historical data doesn’t really matter; relationships and taste and shared knowledge do. And we find the friends who like the stuff we like. We live in the tail. We can also live in the head of the curve: We all watch American Idol, too. More on this later…