Creative Destruction: Why Facebook and Twitter May be Doomed

By: Guest | November 30, 2010 | 

Editor’s note: Today’s guest author, Jay Pinkert, a principal with Shatterbox, was a winner of our 9 Marketing Trends for 2011 contest, in which we asked readers to submit the ninth trend for our upcoming webinar of the same name, which will be held on December 15. (It’s not too late to sign up!) Following are further thoughts on his submitted trend, creative destruction. In the webinar, we will discuss how to adjust your business to leverage all nine trends.

Joseph Schumpeter popularized the theory of creative destruction, that in a healthy free market system, it is natural and necessary for companies and industries that rise to virtual monopoly status to be transformed or replaced through entrepreneurial innovation. Although Wall Street investment firms might be considered “too big to fail,” social media companies are not.

Now punchlines and cautionary tales, AOL, Friendster, and MySpace were once considered inexorable juggernauts. But it wasn’t a bonfire of superior technology that undermined them. Over time they all fell short of user expectations in various ways, allowing alternative value propositions, service models, and providers to gain a foothold and eventually surpass them.

Facebook and Twitter rose to their preeminent status by capitalizing on the shortcomings of their predecessors, then relying on the difficulty of moving/replicating personal networks to keep users in place (if not entirely happy or active). But even as these new hegemons enjoy seemingly limitless growth, they themselves are not immune to the creeping forces of creative destruction.

Recognizing the early signs and devising provisional strategies and tactics to address them could create new opportunities for social media marketers.

Seeds of Discontent

  • Privacy erosion – Recently described as “step on toes until people scream, then apologize,” Facebook’s policy has moved in the minds of many privacy advocates from a tolerated tradeoff to a genuine threat.
  • Lack of control over personal information and content – The more creepy “how do they know that about me” ads show up on our home pages, the less likely we are to trust our networking platforms.
  • Poor usability – Famously byzantine and inscrutable, Facebook’s user interface not only is a chronic problem in its own right, but also compounds its privacy issues by making users fearful that altering their account might undo other preferences and settings. And how well can it bode for Twitter when a symbol for its shortcomings, the Fail Whale, becomes a cultural meme and core users prefer clients like HootSuite and TweetDeck over the Twitter site itself?
  • Hubris – The classic. Ignoring how the open source movement begat Linux, which begat Android, today’s social media mega-networks appear to underestimate the power of a highly skilled, highly motivated community of true believers to effect transformational change over time.

New Approaches, New Opportunities

  • Diaspora – More of a guerilla movement than a frontal assault on Facebook, Diaspora, is setting out to become “the social network that puts you in control of your information. You decide what you’d like to share, and with whom. You retain full ownership of all your information, including friend lists, messages, photos, and profile details.”
  • Niche private networks – For the legal community, Legal OnRamp is collaboration system for in-house counsel and invited outside lawyers and third-party service providers, and Law Pivot matches general counsels at tech firms with outside subject matter experts for crowdsourced answers to legal questions.
  • Gist – The love child of database marketing and RSS readers, social CRM service Gist lets individuals manage and interact with their personal and professional networks by aggregating contacts from various sources in a single place and providing tools for content sharing and listening.

What Social Media Marketers Can Do to Leverage Creative Destruction

  • Develop a “niche” niche – The profession is full of Facebook and Twitter marketing gurus. How many “new and emerging social networking platform” experts can you name?
  • First mover advantage – Getting involved in early-stage networks to see what works, what doesn’t, and why can pay big dividends in influence if/when the community or service takes off. Look what it did for Twitter’s early adopters.

Jay Pinkert is a principal with Shatterbox, a marketing and communications consultancy that helps professional firms distinguish their brand and build referrals through content-driven programs and niche development.

  • HowieSPM

    A man after my own heart. Whenever people tell me something is a sure thing or never can fall the Company and Product Graveyards have more bodies than the live ones on the market. We have no loyalty. We go for what is best or best value for us personally.

    I truly beliee in 10 years Social is like SMS. It is embedded in every device with simple tools to pick who to connect with, in what ways, what level of privacy yet still allow discovery. I mean Google is discovery right?

    I had a brief email exchange with one of the VC’s who backs many of the social businesses including Twitter.. I like Twitter. I don’t see evil or deviousness in Twitter. So I want them to survive. I keep challenging the Ad supported model vs the Apple/Microsoft Model of selling/licensing technology. He said Ad Support is only way. He is a smart man for investing. But not smart with business models. We will pay for something great. if it is not great you are doomed anyway right? Because great will come along!

  • FollowtheLawyer

    Howie: Livefyre won’t let me respond on your comment thread, so I’ll see if it lets me do a new comment.

    I like the way you think, too 🙂

    Now that ad-supported models have demonstrated the non-monetary but still very real costs to users, more of us will be willing to pay for control.

    Thanks for adding your insights!

  • HowieSPM

    @FollowtheLawyer something is up with the LiveFyre thing because it has happened a few times with the comments section. I just see Social Media Technology as Technology vs Content. We make the content. So they are putting it in the wrong basket!

  • jasonmmurphy

    Interesting and well written post Jay. For me the differentiator being that mobile usage has grown and although it is possible for Twitter and Facebook to melt and go away like AOL and Friendster have it will be more difficult because of the accesibility that people have today to these SM platforms.

    The previous companies were all launched in an era of dial-up connections and motorola razor phones.

  • FollowtheLawyer
  • FollowtheLawyer
  • FollowtheLawyer

    Jason: For some unknown reason Livefyre still doesn’t let me reply to comments, so I hope you see this.

    Thanks for your kind words.

    Indeed, today’s titans might not suffer the same fates, but if past is prelude — and it usually is — even if they do not fade into irrelevancy, Facebook and Twitter will be fundamentally transformed by changes in mobile technology and end user requirements — as well as other unforeseen factors (as Howie noted yesterday).

    I wish I could say that my post inspired them, but NPR this morning ran a similar story during “Morning Edition” in which Finn Brunton, a postdoctoral researcher at New York University specializing in digital technology, noted:

    “Because Facebook is not smarter than all the rest of the programmers in the entire world. Somebody is going to come up with a workaround, or some kind of social structure is going to emerge that is going to need a new kind of system. But it’s just a question of when and what form it’s going to take.

    “I suspect that Facebook is definitely not the last form of social network that we see. And in many ways we’re going to look back at it as being the most primitive.

    “And the things that are going to come next, the things that are going to evolve out of this are not just going to be much better at privacy and much better at data management. They’re also going to be much better at allowing people to accurately represent the complexity of their lives and of their relationships.”

  • jasonmmurphy

    @FollowtheLawyer Thanks for the link, I’ll be sure to read this. I just think of Facebook as more of a Google type of platform than a social media platform.

    Sure, it’s social media but with the way it is evolving towards GEO and commerce I think it will last.

    I’m still skeptical about Twitter and think this thought process applies to “one-dimensional” platforms like Twitter.

    At the end of the day Facebook serves almost 25% of the worlds advertising, that’s tough for any ankle biter, genius or not to catch up too. 😀

  • followthelawyer This line gave me the chills:

    “in many ways we’re going to look back at it as being the most primitive.”

    How exciting it is to be a part of all of what is and what will be in the social tech space. I cannot imagine what the future will hold, but I am certainly anxious for the changes to come.

    Thanks for a great response to a thought-provoking post.

  • FollowtheLawyer

    That line sticks with me as well. Thanks for adding your kind response

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    Jason: Other variables that bear on the durability of Facebook and Twitter include corporate management/ownership changes, legal challenges (U.S., EU, China) and equally successful international competitors (Baidu).

    And how much ad market share did Yahoo! have in its heyday? 🙂

    Bottom line for me is not that Facebook and Twitter are somehow predestined to decline and/or fall, but rather that we miss opportunites as marketers if we believe that they are uniquely immune.

    Thanks for the great conversation!

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