When you plug your new iPad 2 into the wall you don’t worry the electrical system may use the wrong voltage, frying the gadget. When you fly on an airplane you don’t fret the pilot won’t be able to communicate with air-traffic control due to different radio systems, sending you into a mountain. Why? Because both use common standards.
Standards win in networked systems because they make sense. Like gravity pulling pre-planetary material into orbit around birthing stars, network consolidation is an unstoppable force … and one that will soon shrink social media to a series of winning platforms. The law of network effects decrees that large, interconnected systems consolidate power, pushing others aside. For marketers, this means the recent period of hyper-innovation in social media will soon subside into a few commodity platforms … good news for those who must listen and push memes through the emerged media channels, but bad news for the social upstarts (Foursquare, we’re looking at you) who may have difficulty breaking through.
How wide is your chariot?
To understand network consolidation, consider the railroad gauge — that is, how far to place wheel tracks from each other, a puzzle dating prior to the Roman Empire. If you make the distance between wheels too narrow, a chariot, car or train will tip over; too wide, and you incur higher costs for building roads or rail systems. Today about 60 percent of the world’s railroads have a standard gauge (distance between tracks) of 4 feet 8 1/2 inches, but this wasn’t always so. That distance was invented by British engineer George Stephenson, who wanted a “just about right” approach neither too wide nor narrow, but George had numerous competitors, including the Great Western Railway which went as far as 7 feet 1/4 inches between tracks to support heavier loads and faster speeds. Eventually, one standard won out in most countries, because it makes economic sense to allow train systems to be able to link to each other.
Any interlinked system eventually pulls users into common behavior to amplify its power. Consider these examples:
1. Entertainment and news communications are vastly centralized in our world. Geoffrey Miller noted in his 2009 book “Spent” that six global conglomerates dominate most of what consumers see in the media. TimeWarner owns HBO and CNN; Disney owns ABC and ESPN; Vivendi Universal, Bertelsmann and Viacom consolidate most other media; and NewsCorp, of course, gives us Fox News and more than 170 newspapers. If you see Time magazine promoting a new Warner Bros. movie, the fact both are owned by TimeWarner may have something to do with it.
2. The advertising world also has been consolidated into four massive power brokers controlling about $38 billion in communications influence — Omnicon, WPP, Interpublic and Publicis. See this handy chart for a history of the takeovers.
So let’s turn to the newest network tools, social media. Xanga, Jaiku, Vox, Gowalla, Open Diary, Diaspora, Ning, Plaxo, Yammer, Twine, Kickstarter, Wetpaint, Trapster, Plone … what’s that? You don’t use those systems?
Like electricity or railroads or planetary systems, eventually users learn to plug in, ride along and rotate around only one or two major winners. Every new network invention begins with a period of rapid innovation, followed by consolidation, commercialization, and standardization. The upshot for marketers is yes, social media is an important channel … and one that will soon turn into a line item like TV, radio, and print, with simple standards for execution that don’t require reinventing the wheel with each campaign.