Facebook's Fabulous Future
Bashing Zuck and Co. has become fashionable among tech's know-nothings. I guess a company that remains both profitable and popular must be a bad thing.
CEO, 1871@tullman
OMMENT
For the last year or two, it's been fairly easy for the naysayers to continually predict the imminent demise of Facebook. The latest rants focus on the alleged slippage in the sharing by FB users of their "personal" news and details. For me, even if true, this falls somewhere between "who really cares anyway?" and "TMI" to begin with. There's plenty of this kind of crap to go around and we should all actually be grateful to hear that the over-sharing is abating even if Kayne and the Kardashians are still killing us with just their shameless alliteration alone.
As far as I can see in terms of actual metrics, the FB juggernaut continues forward, notwithstanding some bumps and a few false starts (to wit: even with 1.5 billion requests a day, search on Facebook continues to be, at best, a work in progress). Given the aggressive, but forgiving, culture that Zuck and Sheryl have built, the setbacks are treated not as catastrophes or career-enders as they might be at Amazon, but simply as the likely results and costs of the typical trials and tribulations of building any new business.
After a dozen years, Facebook isn't exactly new, but it has managed, to an amazing extent given its rapid growth, to preserve an everyday culture of constant innovation and experimentation that's virtually non-existent in companies its size. If we all knew in advance how these kinds of constant tests and experiments were going to turn out, we wouldn't need to try them in the first place. But at FB, the code is never set in concrete and it's ever-changing. There's no such thing as business as usual. And while it clearly helps to be brilliant; it's far more important to be fearless.
And, in terms of the stock market, the bears and the shorts haven't really been any more successful in laying a glove on the continued, consistent rise in the company's stock price. Downticks in FB's stock for Q1 were almost non-existent. All this talk about Facebook being a voracious vampire that needs a stake through its heart before it ruins all of our lives and poisons the minds of our children is just junk. The professional pundits are finding that attacking Facebook is just about as hard and as sloppy as trying to nail JELL-O to a tree.
The reasons that we're regularly offered for the impending FB disaster come in three flavors:
(1) The kids no longer think FB is cool and are rapidly moving in large numbers to the hottest new app or service-;whatever that might be. Well, that simply isn't happening because, apart from Snapchat (to a degree) there's really not a lot of other places to go for all the functionality of Facebook. And God forbid, your friends might not even follow you there. New sharing services continue to come and go and their numbers never remotely resemble the reality of Facebook's size and scale. As an example, and to almost no one's surprise (except maybe Marissa Mayer's), Tumblr isn't that destination although not too very long ago it was being touted as the next big thing, so the morons at Yahoo quickly paid a bundle for a bunch of ad-free nothing.
(2) Facebook is fast becoming a "business" (Surprise!) and that can't be good for its model because it's not hip to be perceived as trying to make money as opposed to being mainly mission-driven. This is just another version of the "kids will be kids" BS. The people who matter have always known that, social aside, Facebook has been in the performance marketing business since the start and is now demonstrably the absolute best in that business-- bar none. Google's grasp, on the other hand, continues to slip as more and more of the action on the web has less and less to do with websites and everything to do with apps. If you can't see into the silos, you can't show me where to sell my stuff. And don't even get me started on the growing threat of ad-blocking apps that are impressively effective against browser-based ad targeting and virtually useless to date against ads served within apps.
(3) Facebook played a nasty trick on us--we all helped to build its massive social sandbox-- and now Zuck and Co. closed the gates and want to charge us for playing (read: marketing and advertising) there. Grow up, people, this shouldn't be news to anyone who's been watching this movie for a while. It's never been a question of "if", but a matter of "when" Facebook would start charging for effective access. While Twitter continues to wander in the wilderness looking for a monetization model, FB has been focused on the bottom line for years. I'm not exactly sure when the idea of "paying to play" fell out of favor, especially for emerging media companies like FB. And it's clearly becoming the base case just about everywhere you look as publishers try to hurriedly re-erect pay walls and resuscitate their subscriptions systems without completely strangling the golden goose. One important difference is that the publishers know that, in reducing free and easy access to their content, they are acting at their own peril whereas this is simply a logical extension of Facebook's plan from the get-go. Honestly, a lot of this particular flavor of whining just seems like sour grapes from folks who didn't get there first.
Overall, many of these conversations feel like wishful thinking mixed with a little dose of schadenfreude being foisted on anyone willing to listen by tech talkers and media mavens who missed the boat and who are now sitting on the sidelines watching their futures sail away. Others are spurious spews by negative know-nothings, failed competitors, or also-rans whose own launches went nowhere or whose paper sailboats are getting steadily soggier and slowly sinking as the sun sets on the old ways that the MSM used to do business.
Having mastered the people part of the platform business, we're seeing Facebook turn its attention increasingly to the publishing part of the process and the fact is that today all the major platforms (Apple, Google, Amazon and maybe Microsoft) are also trying to successfully manage the same migration. As platforms continue to grow into publishers, the main difference is that Facebook alone among them doesn't seem the slightest bit interested in creating its own content. Maybe that decision was informed by watching some of the others stumble along the way (See "3 Lessons From YouTube's Programming Disaster.") or maybe FB just prefers managing and distributing the milk to owning the cow.
For decades, traditional media was either owned (newspapers and radio and TV); paid (marketers and advertisers); or earned (news, celebrity and notoriety -- good or bad). All of these channels had a single end in mind (apart from selling us something) and that was to help generate word of mouth (WOM) which, in the best of cases, was what I used to call "Triple A": active, affirmative and authentic. WOM is basically what we hear directly and honestly from friends, family and co-workers. It has always been the prime driver and the most effective and consistent influencer of consumer behavior. We knew that strong, positive WOM was critical to the ultimate success of any product or service, but managing and growing it was always much more of an art than a science. You paid your money and you kept your fingers crossed and hoped for the best. A lot of what was paid (and it's still the case today) was wasted (like vitamins), but we never really knew or could accurately determine what worked.
Facebook came along in 2004, completely changed the game by making the web personal so we actually knew who we were talking to, and made the WOM process scientific because word of mouth became social sharing and sharing in Facebook's world is a science. Make me care and make me share became the mantra and social sharing became the fourth leg of the media biz. (See "Make Me Care and Then I'll Share.") Social sharing was simpler than owning and operating the presses; cheaper than paying for the privilege of getting your story out there; and much easier than having to earn the world's attention by doing something special, important or otherwise noteworthy. Social sharing quickly became WOM on steroids.
And the real "secret sauce" for Facebook was that virtually all of the content creation and all the heavy lifting was being done by the users. This continues to be the basic FB economic model today and also the central reason for the impressive margins that FB manages to maintain. It's also the reason that Facebook poses such an existential threat to traditional publishers and media makers.
Owning four of the fingers in the fist out of five ain't bad and that's always been Facebook's plan. The initial two digits in the platform strategy were (i) curation and (ii) distribution and these have essentially been in place since the beginning. Facebook and the other platform players simply seized control of the distribution of the publishers' products and never looked back. Today, massive distribution platforms like Facebook are the primary ways in which the world gets its news and information. We're fundamentally lazy people and creatures of habit. We spend 50% of our mobile time using a single social app and we're basically gonna keep going where we've been going-- only more so--as the noise, clutter and confusion continues to mount. Decision fatigue is a drag for all of us. We're more coasters today than explorers.
Publishers may still be feeders (if they make their news "fit" the new formats), but Facebook is the force and the power in the new equation, and frankly, the publishers don't really even know where their stuff is being sent or seen these days. They basically have to take Facebook's word for it. And yet, publishers today can no longer afford to try to go it alone-- it's all about aggregation. And if your content isn't front and center somewhere, your business will be nowhere soon enough - you'll be breathing in the other guys' exhaust.
Most of the math that I've seen suggests very clearly that the publishers who are riding on FB's coattails are doing much better than the guys still trying to do anything themselves. The audience is huge and the traffic they're seeing is a multiple of what they were pulling previously to their own destinations. We can expect more and more of the remaining outliers to throw in the towel and join the crowd pretty soon. If you don't make dust, you eat dust. And the dust never really settles because Facebook never stops building.
- A Lesso
The next two steps in the roadmap to global domination are about (iii) hosting and (iv) monetization; and this, of course, is precisely what Instant Articles is all about. Instant Articles delivers control to Facebook of every part of the media publication process except the costliest and most challenging component-- the actual creation of the content. This is also why Instant Articles is both a tremendous attraction and an enormous threat to the very publishers and media companies who are already racing to be a part of the new program. The old-line players are simply turning over the keys to the kingdom to Facebook and hoping for the best. And you can expect precisely the same kind of frenzy around the relatively new Facebook Live feature-- live streaming video generated directly and instantly by the users. Massive amounts of new content at little or no incremental cost to Facebook and complete control of curation, distribution, hosting and monetization.
We're seeing the fingers of Facebook closing around the necks of the last standing, old-line publishers and media companies and telling them basically to stand aside while Facebook robs the train and then everyone can talk politely about splitting up the loot. "Trust me," Facebook is saying, we'll talk soon. Here's how that talk will go: what's mine is mine and what used to be yours, we can talk about.