Category Archives: social networks

The inevitable disutility of networks (or why Facebook will fade)

It’s hard to believe, but the day will come when you stop using Facebook. Here’s why.

So imagine you’re on the phone with your boss and beeep a new call comes in from your spicy Argentinian lover who’s in town and then beeeeep yet another call arrives from your Aunt Mildred who used to nag you about flossing your teeth and you have to decide — quick! — whether to keep talking to your boss, or find an excuse to pick up your lover’s voice, or get reacquainted with Auntie.

And you get it. Like those calls, not all network connections are created equal. The inequality of network links is the basic flaw in Metcalfe’s law, a hypothesis by the founder of 3Com and inventor of the ethernet that as networks grow, they rise exponentially in value. Metcalfe’s math, you see, showed that the connections inside networks grow more rapidly than the number of users do — two phones make one connection, but five phones make 10 links, and 12 phones make 66. Because every additional node, or user, links to all the users before her, each addition creates waves of new linkages — and if value comes from links, then networks must scale in value. Metcalfe’s law was famously behind much of the hyperbole of Internet Bubble 1.0 in the 1990s, pushing sky-high valuations for any networked business regardless of whether it was profitable.

Humpty Dumpty sits on the wall
Of course, March 13, 2000 was not kind to pet food companies heavy in e-commerce. After the Nasdaq crash, economists pointed out that Metcalfe’s law has several gaping flaws; for instance, if larger networks are always exponentially more valuable, any firm in the world with a network of users should immediately merge with a similar business. Why would Facebook and Twitter compete, if by joining their numbers 2x they make 200x more value? In 2006 Bob Briscoe, Andrew Odlyzko and Benjamin Tilly pointed out the most famous flaw of all … if we follow Metcalfe’s law to its logical exponential-value conclusion, eventually the addition of one final user would equal all the wealth on the planet, an impossible outcome.

Briscoe and team, pondering why networks may have less value than supposed, pointed to linguist George Kingsley Zipf, who created, yes, Zipf’s law. Zipf noticed that words in the English language are used in descending order of magnitude, with “the,” the most popular expression, making up about 7% of all word uses, followed by “of” with 3.5%, “and” at 2.8%, with all other words trailing in a slow fall-off. Zipf’s law resembles the Pareto Principle that states in any collection a few resources hold the most value, and Chris Anderson spun off of Zipf’s concept with his “long tail” discussion of Internet commerce’s ability to meet diminishing niche consumer needs. Zipf’s finding means that not all network connections have the same value; your boss, lover, and aunt all are connected to you, but like the English words you use daily, you value each connection in different ways.

Humpty Dumpty took a great fall

So if networks have less value than supposed when they grow — when, conversely, does network value fade? Every network, as old as the roads of the Roman Empire, eventually falls into disrepair, replaced by something else. This disutility happens before users bail; at some point, there is a sense that the thing which made a network hot has faded, building an impetus to flee. See: AOL, Friendster, Myspace, Second Life.

Intuitively this makes sense: you can feel the itch today with your land-line telephone and the postal service, the desire to give up on these once-useful services. Other networks you still use are growing painful, too; email is cresting, a slow slog every morning over coffee, and one might suggest Twitter with its elegant 140-character tweets is a new email with less commitment. Facebook and Twitter are growing cumbersome too, one filled with silly games and the other adding complexity to its once elegant system; hipsters are moving past both to Instagram, an app that requires sharing only photographs. (Don’t think the brains behind Facebook and Twitter aren’t worried about such risks; this explains the near-constant innovation and entanglement strategies, such as Like buttons, being spread by both to stave off your boredom.)

Networks have more than a utility based on connections; they also have a shelf life. Our fundamental insight is all those connections can grow or diminish in value at once — based on the context of the network vs. its competitors. Yes, networks rise in value and build gravity to draw masses to their center. But like a planet teeming with life that begins to pollute its own atmosphere, eventually all users long for a fresh start.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Image: Neal Fowler

Giving ideas away for free

If a competitor asked you for advice, would you give it? Probably not. Yet take this Altimeter research report on how to get more from Facebook landing pages — sharp stuff. Posted for free. Where their consulting competitors can see it and repurpose it. What gives?

Sharing seems risky, especially among business warriors used to hiding secrets and skewering competitors. This morning, we had coffee with an executive from a competing ad agency to discuss forming a debate panel series, perhaps inviting other agencies from the region, and upon our return to the office met with some skepticism. What? Share ideas?

Now reframe the thought from you vs. them to you in the center of a vast network. You want to reach other nodes of value, potentially future clients, but you can’t find them now. There are threads leading to them, connections through other people, and to reach them you need your message to flow along the paths inbetween. Sharing information means you’ll connect with new nodes (people, organizations) who discover you, and if your transmission has value, they will pass it along. You are increasing via randomness the odds that you will connect with value in the network. It’s akin to a single person, moving into a strange town, deciding to walk downtown to meet new people rather than sit home on the couch. The more random connections, the greater likelihood of a real relationship emerging.

Sharing information didn’t matter much in business when networks were locked away behind hard corporate walls, when sales meant cold calling and door knocking. But today, you can connect with almost anyone. Things can flow anywhere. Your current client base is likely people who almost randomly found you, because they had a need and were searching in their own networks. We suggest you increase such randomness; take your next big idea and give it away.

Gowalla: The bar tab for your social network

Those hipster kids in Austin recently launched Gowalla, a new social network that adds restaurants and bars to your friends or followers. The deal is you walk into a retail location, punch up your Gowalla iPhone app, and the GPS in your phone will recognize where you are — offering “reward” booty to thank you. You see threads from others who visited before you, and toss your own updates into Facebook and Twitter.

Why not add hard cash?

Gowalla for now is a simple geocaching game, basically a cleaner version of techies running around with GPS devices tagging certain spots on planet Earth. But conceivably it could add real coupons, with cash savings at bars, restaurants, and clothing outlets, giving retailers a reason to join in. The “passport stamp” could segue into a loyalty points program; and because Gowalla, unlike Foursquare, only works if you really are standing in a location, retailers will know whether you’re on site.

The question is whether a social tool that gives incentives at bars with gossip and photos will really take off … um, who are we kidding? We see Facebook buyout within 12 months. Dammit, Gowalla, why didn’t we think of this?

For a complete comparison of Gowalla (which is global) vs. Foursquare (which is not), The Next Web has a strong analysis. Via Jeremiah Owyang.

Now on Twitter, bet your followers

One of Twitter’s brilliant design moves was putting a psychological device on every page: a “following/followers” count that clicks upward like the high score on a game as you meet more people. It’s an addictive bit of feedback, creating the illusion of growing popularity no matter if 80% of the people who connect with you are selling get-rich-quick schemes or porn. More people love you today than yesterday. Your status is rising. You are loved.

Techies John Manoogian, Erick Michaels-Ober and Kevin Hunt have decided to toy with this psychology, launching Bet Your Followers in which you can gamble your online social connections like currency. They explain it best:

“We’ve been enthusiastic Twitter users since the early days and we genuinely value Twitter as a social service … our own followers are dearly important to us. But as Twitter grows, we’ve watched the race to accrue followers become a strange obsession. Whenever a sizeable group believes something to be sacred, it historically falls to artists, scientists, and hackers to question and play with that assumption.”

Human souls as poker chips. Winner rules the social media universe. All in.

The little threat behind Bogusky’s open conversation

Crispin Porter + Bogusky, the agency behind the creepy King and subservient chicken, has followed Skittles by relaunching its web site as a conversational hub — 80% feeds of what others are tweeting or blogging about it. Tim Leberecht at CNET explains that this is more than a trend; it also creates a potential threat for marketers everywhere.

After all, if a conversational hub is intriguing, what happens if someone else builds one for your brand? For example, Leberecht says, imagine “if McDonald’s suddenly saw itself confronted with a site aggregating blogs, videos, news, and tweets, all about but not by McDonald’s?” Leberecht goes on to suggest brands would have little legal ground for fighting this, since they can control their own intellectual property but not the conversations compiled elsewhere.

Aggregation, it seems, opens the doors for anyone to erect an exciting hub about a topic. Google has become the world’s largest case study of offering up content without ownership. If what people say about you has become more important than what you say, what happens if someone else gains control of your conversation first?

Twitter listens in on Congress. Are you to follow?

Digital guru Mat Morrison of Porter Novelli has mapped the Twitter connections between U.S. congressmen and women. He explains: “The direction of the arrows show who follows whom, and the size of the blobs indicates how ‘popular’ a given congressperson is among their twittering peers.” Red and blue dots denote Republicans vs. Democrats. (Click map to enlarge.)

This is intriguing on two levels. First, you see some users — primarily Republicans — rely on Twitter for heavy two-way communication, vs. others who connect infrequently and only one way. That’s the difference between pushing messages shallowly and really engaging.

But second, this points out that one value of social media lies behind the scenes, as outside agencies and companies learn to track the connections between individuals and use them for business intelligence purposes. If nothing else, this could help sales in other marketing channels. A classic approach in direct marketing is to target consumers who are “lookalikes” to other consumers. A recent study by AT&T found that social acquaintances within phone networks are 5 times more likely to respond to direct marketing offers, the logic being birds of a feather shop together, or buy the same stuff. Add it up, and social network maps create a new form of customer valuation model in which you can place values on entire networks of target consumers — based on their interpersonal relationships.

Thus the real value of Facebook and Twitter may not be in their use as outbound marketing devices or even inbound listening for customer service, but in the intelligent mapping of communications between people … for a God-like view of how humans interact, and how, perhaps unfortunately, those connections might be manipulated.

Evan Williams slices up the Twitter network

Twitter CEO Evan Williams hints at coming changes in the microblogging service. Foremost is helping users segment the hundreds (or thousands) of people they follow. It’s difficult, Williams notes, to share thoughts with the world when your spouse and family and workmates and drinking pals all read the same thing.

So Twitter plans to help you slice up your online social network into bits.

Williams calls this the “collapsing domain” problem affecting many social networks, meaning that on face value the link structure may appear huge — but in reality it consists of little microbubbles of communications. We wrote in BusinessWeek this year that Twitter is not a vast communications network of 2.3 million users squared. Rather, it consists of small pools of people with gaps and limits on how they interact. This is important to marketers and investors, because it puts big brakes on how internal communications could propagate inside any social media network.

Metcalfe’s Law might work for telephones and fax machines, but in human networks, the value of links is not exponential. Or as marketers often complain in ad planning meetings, if making a message go viral were easy, everyone would be doing it.

The warmth of ‘Social Objects,’ or why you care about Twitter

If social media will soon be like air, why are we still huddled around brands? Think of the irony. While everyone is hyperconnecting via wireless internet, we still use 1950ish big brands to deploy ourselves. MySpace. Facebook. YouTube. Flickr. If something new comes along with slightly better features, we’re not sure we want in, cause man, we love the Twitter brand.

Hugh MacLeod suggests that humans may need brand focal points to begin social conversations. MacLeod calls these points “Social Objects,” or devices similar to a bottle of wine or campfire that people tend to gravitate around … objects that somehow begin the social process.

MacLeod writes, “Social Networks are built around Social Objects, not vice versa. The latter act as ‘nodes’. The nodes appear before the network does … granted, the network is more powerful than the node. But the network needs the node, like flowers need sunlight.”

Maybe there’s hope for Facebook monetization yet.

(Photo: Jeff Casillas)

Twitter: How deep is your love?

How many people do you need to touch?

This is the key question about Twitter. The little texting engine gives you the simplest possible on-ramp into social media, reaching as many or few people as you like, and that means you really need to decide — what do you want out of a human network, anyway? The most brilliant minds we know can’t figure out how to use it. Seth Godin avoids it entirely. Darryl Ohrt promotes tracking hundreds. Robert Scoble follows the entire planet.

None are right or wrong, but we see five simple approaches for using Twitter:

1. Personal — some use Twitter to follow, and share news, with just 10 or 20 people. As in, “Team, I’m running late for the game.”

2. Promotional — Ryan Kuder of Yahoo fame laments that some simply game the Twitter system to spray the masses with links, hoping to attract a few “nibbles” to their sites or press releases. We’ve been guilty of this. “Hey, check out my great post!”

3. Celebrity hunting — you can “follow” William Shatner and Robert Scoble and others, for a brush with bigger brains or whiter teeth. Occasionally Captain Kirk will write you back.

4. Cool-hunting — many bloggers are using Twitter to toss the latest trends and finds from the web back and forth like footballs, with compressed TinyURL links saying, “Hey, check this out!” Closely related to No. 2 above.

5. Mass friggin’ madness — the only term we can think of to describe the people who follow 20,000 others … which turns your cell phone into a ticker tape of human attention deficit hyperactivity disorder.

So which do we choose? We want to be personal, we want to expand our networks, we want to learn from others, and we all want a bit of self-promotion. And at different times, we want different things.

Hey Twitter: how about including a volume dial?

Hey! Nielsen … we like you

OK, we were skeptical about Nielsen’s new social network. But it’s mesmerizing. Visitors to Hey! Nielsen give Digg-like rankings to actors, television shows, movies, internet sites and video games, and can soon access a TV Guide-ish calendar of entertainment options across channels.

Nielsen, in turn, is gathering real-time qualitative research about consumers’ preferences that it may resell to advertisers. Plus, Nielsen may have the will and skill to build an actual media portal — this has been tried before, but Hey! Nielsen offers an intriguing compilation of entertainment options across almost all media formats.

Nielsen gets bonus points for the widget application, which allows Nielsen’s new site to go viral among thousands of users.