Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

[NCR85]

http://www.zerohedge.com/contributed...e-users-not-si

I've been thinking for a while that Feces-book didn't have much going for it beyond the momentum generated by its randomly successful past. Is it's demise finally manifesting right now? Has its success-formula been copied and has its purpose been served on that note? What is left to set it apart from it's competitors by now?

[BadJuju]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

This is just the way of social media. It is an immensely competitive business and if you cannot keep up, you are left in the dust. I have not used Facebook or others like it, but I have seen the rise and fall of Shoutwire, then Digg. Now I use reddit. I am sure I'll see Reddit fall one day as well when the next big thing emerges. In my time with these sites, I noticed one common factor in their decline: a change in the interface. Every time these sites made a significant change in their interface, it marked their inevitable decline.

[GRG55]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

This is just the way of social media. It is an immensely competitive business and if you cannot keep up, you are left in the dust. I have not used Facebook or others like it, but I have seen the rise and fall of Shoutwire, then Digg. Now I use reddit. I am sure I'll see Reddit fall one day as well when the next big thing emerges. In my time with these sites, I noticed one common factor in their decline: a change in the interface. Every time these sites made a significant change in their interface, it marked their inevitable decline.

"Social media" seems the online equivalent of "bricks and mortar" social gathering places...the hot restaurant/bar, the hot night club, and so forth. Popular for awhile, and then the crowd moves on to somewhere else...

[aaron]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

So, does anybody have opinions on what the next hot hangout might look like? Something like Facebook could be developed and put into production for relatively little money. Why are people leaving? Is it a trust issue?

[reggie]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

The primary issue with mainstream social cybernetic systems, such as Myspace and Facebook, is that they are inherently founded on deceit, where the technocratic elite attempt to sell the public trivial value in exchange for hugely invasive practices that create Big Data with the central goal of establishing real time predictive feedback systems where peers possess extremely weak ties. I recall being on a panel with one of the more successful social media founders, long before anyone knew what social media was, and no one was talking about delivering real value for the end user. It's ashame, because online social systems can be hugely powerful if only the technocratic establishment would allow the ubiquty of such a system. Although, I've got to hand it to TaskRabbit for getting where they've gotten, it'll be interesting to see where they are allowed to go.

[cobben]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

The primary issue with mainstream social cybernetic systems, such as Myspace and Facebook, is that they are inherently founded on deceit, where the technocratic elite attempt to sell the public trivial value in exchange for hugely invasive practices that create Big Data with the central goal of establishing real time predictive feedback systems where peers possess extremely weak ties.

Things are neither so simple nor so obvious as this. Here is a more balanced nuanced discussion.


The $100bn Facebook question: Will capitalism survive 'value abundance'?
Michel Bauwens is a theorist, writer, and a founder of the P2P (Peer-to-Peer) Foundation.



Open-source software, shared innovation and crowd-sourced manufacturing threaten capitalism as we know it.


Does Facebook exploit its users? And where is the $100bn in the company's estimated value coming from?

This is not a new debate. It resurfaces regularly in the blogosphere and academic circles, ever since Tiziana Terranova coined the term "Free Labour" to indicate a new form of capitalist exploitation of unpaid labour - firstly referring to the viewers of classic broadcast media, and now to the new generation of social media participants on sites such as Facebook. The argument can be summarised very succinctly by the catch phrase: "If it's free, then you are the product being sold."

This term was recently relaunched in an article by University of Essex academics Christopher Land and Steffen Böhm, entitled "They are exploiting us! Why we all work for Facebook for free". In this mini-essay, they make a very strong claim that "we can certainly position the users of Facebook as labourers. If labour is understood as 'value producing activity', then updating your status, liking a website, or 'friending' someone, creates Facebook's basic commodity." This line of argument is misleading, however, because it conflates two types of value creation that were already recognised as distinct by 18th century political economists. The distinction is between use value and exchange value. For thousands of years, under conditions of non-capitalist production, the majority of the working population directly produced "use value" - either for themselves as subsistence farmers, or as tributes to the managerial class of the day. It is only under capitalism that a majority of the working population produces "exchange value" by selling their labour to firms. The difference between what we are paid and what the market pays for the products we are making is the "surplus value".

But Facebook users are not workers producing commodities for a wage, and Facebook is not selling these commodities on a market to create surplus value.
Indeed, Facebook users are not directly creating exchange value at all, but instead communicative use value. What Facebook does is to enable this pooling of sharing and collaboration around their platform - and by enabling, framing and "controlling" that activity, they create a pool of attention. It is this pool of attention which is sold to advertisers, for an estimated $3.2bn per year, which is barely $3.79 in ad revenue per user.

We can, of course, argue that Facebook does a lot more than just selling the attention. For instance, their knowledge of our social behaviour, down to the individual level, has undoubted strategic value - for political power players and commercial firms alike. But is this surplus value really worth $100bn? That remains a speculative bet. For the moment, it's likely that the nearly one billion users of Facebook do not find the $3.79 in ad revenue per user very exploitative, especially since they do not pay to use Facebook, and are using the website voluntarily. That said, there is a price to pay for not using Facebook, in terms of relative social isolation from their peers who are users.

Engineering scarcity

What is important, however, is that Facebook is not an isolated phenomenon, but part of a much larger trend in our society: an exponential rise in the creation of use value by productive publics, or "produsers", as Axel Bruns calls them. It is important to understand that this creates a huge problem for a capitalist system, but also for workers as we have traditionally conceived them. Markets are defined as ways to allocate scarce resources, and capitalism is in fact not just a scarcity "allocation" system but also a scarcity engineering system, which can only accumulate capital by constantly reproducing and expanding conditions of scarcity.

Where there is no tension between supply and demand, there can be no market and no capital accumulation. What peer producers are doing, for now mostly producing intangible entities such as knowledge, software and design, is to create an abundance of easily reproduced information and actionable knowledge.
This cannot be directly translated into market value, because it is not at all scarce - it's over-abundant. And this activity, moreover, is done by knowledge workers, whose ranks are steadily expanding. This over-supply threatens to make knowledge workers' jobs precarious. Hence, an increased exodus of productive capacities, in the form of direct use value production, outside the existing system of monetisation, which only operates at its margins. In the past, whenever such an exodus occurred - of slaves in the decaying Roman Empire, or of serfs in the waning Middle Ages - that is precisely the time when conditions were set for major societal and economic changes.

Indeed, without a core reliance on capital, commodities and labour, it is hard to imagine a continuation of the capitalist system.
The problem is this: internet collaboration has enabled the creation of use value in a way that totally bypasses the normal functioning of our economic system. Normally, increases in productivity are somehow rewarded, and these rewards enable consumers to derive an income and buy products.
But this is no longer happening. Facebook and Google users create commercial value for their platforms, but only very indirectly. And they are not at all rewarded for their own value creation. Since what they are creating is not what is commodified on the market for scarce goods, these value creators do not receive income. Social media platforms are exposing an important fault line in our economic system.

We have to link this emerging social economy, based on sharing creative expression, with the more authentic field of commons-oriented peer production, as expressed in the open-source and "fair use" open-content economy, which one estimate said made up one-sixth of US GDP. There is also no doubt that one of the key ingredients of China's success so far has been the combination of the open-source - such as the country's domestic "Shanzai" economy - together with the patent-free policies that are imposed on foreign investors. This has guaranteed an open, innovative commons for much of Chinese industry.
Even as the open-source economy becomes the default way to create software, and even as it creates companies that reach a revenue of more than $1bn, such as Red Hat, the overall effect is still deflationary. It has been estimated that open-source annually destroys $60bn in revenues for the proprietary sector.
Thus, the open-source economy destroys more proprietary software value than it replaces. Even as it creates an explosion of use value, its monetary value decreases.

. . .

[seobook]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

"Social media" seems the online equivalent of "bricks and mortar" social gathering places...the hot restaurant/bar, the hot night club, and so forth. Popular for awhile, and then the crowd moves on to somewhere else...

absolutely. the problem with the broader social sites is their breadth...they are easy to begin using, but hard to maintain momentum over time due to
a.) the ponzi-like nature of demand for returns on investments (better expressed in Groupon than Facebook)
b.) the lack of depth required to have that breadth
c.) the lack of visitor targeting/value/intent tied to such breadth, which makes privacy violations & aggressive ad integration necessary to monetize the audience
d.) the competition cycle where there are always new competitors being funded to be the next Friendster / MySpace / Facebook

So, does anybody have opinions on what the next hot hangout might look like? Something like Facebook could be developed and put into production for relatively little money. Why are people leaving? Is it a trust issue?

I think a big reason people are using it less is that it is fadish. the above comment about user interface changes killing off some such sites is spot on...Digg v4 is a great example.

Digg was popular in part because
a.) it was largely a niche tech news site
b.) internet marketers had an incentive to market it

When they marked most independently published stories as spam the marketers had no value in promoting it (particularly as the people that were ahead of the curve on social stuff back then were more frequently working for independent publishers and affiliates rather than bigger brands back then). And when they drastically changed the interface, made it harder to vote on friend's stories & increased ads ... they made it much easier for members to break their usage habit & taste test other sites like Reddit or Twitter.

Over time I expect more niche vertical sites to take the place of the broader ones.

The primary issue with mainstream social cybernetic systems, such as Myspace and Facebook, is that they are inherently founded on deceit, where the technocratic elite attempt to sell the public trivial value in exchange for hugely invasive practices that create Big Data with the central goal of establishing real time predictive feedback systems where peers possess extremely weak ties. I recall being on a panel with one of the more successful social media founders, long before anyone knew what social media was, and no one was talking about delivering real value for the end user. It's ashame, because online social systems can be hugely powerful if only the technocratic establishment would allow the ubiquty of such a system.

Almost all these companies start off with claims about "open ecosystem" and "changing the world" ... but those are just to fuel growth, getting independent developers and users to market the platform (by making the perceived cost of building on it essentially nothing). Then after sufficient momentum is gained, they start closing things off, cloning the most popular 3rd party apps, mentioning "sorry guys...we should have been clearer in our communications" as though the screw job was an accident & the double speak was anything but deceitful.

[aaron]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

seobook, I was hoping you would jump into this conversation. Thanks

That has been my impression, as well. Deceit, lies, and screw jobs...

I keep thinking about "Angie's List" in this context. They were not around a few years ago. They took the business model of some long term players, and applied marketing and advertising, and then went public. I bet the ROI on the whole deal was 1000% or more. It was well executed, but I doubt they will last a long time. It was not meant to be a long term site/business. it was designed to fleece the public, in my opinion. They used to advertise on NPR every single day. The ROI must be pretty good for "sponsors" on NPR *. They also bought huge amounts of Google ads (I ran many, small local sites and saw their advertising everywhere) and probably others. It seems to me, if your goal is to bring a "company" public, you can spend a few tens of millions and leave with 100's of millions. They were definitely paying top-dollar for their google clicks... They could not have been profitable with the amount they were spending. I do notice how they stopped their NPR campaign after they sold out and no longer see their ads on my sites.

From "insider" knowledge of the technology the use, I can tell you that Facebook wastes a shit ton of money. They certainly have enough money right now to waste, but it is almost like they do not care. Obviously, their real value is the information they can sell to the governments around the world and advertisers. It reminds me of "minority report" for some reason. If you are walking through the mall and your retina is scanned, how do they know what to put on the advertising billboard for you? That is a key piece of data that Facebook is uniquely positioned to provide. Is it possible that they have already gathered "enough"? Everything else, including the advertising revenue, is just icing on the cake?

* If you have a advertising budget and want to get your name recognized, I think a year long daily campaign on NPR will get you a lot more visibility for the buck than is probably known.

[dcarrigg]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

"Social media" seems the online equivalent of "bricks and mortar" social gathering places...the hot restaurant/bar, the hot night club, and so forth. Popular for awhile, and then the crowd moves on to somewhere else...

I think you can take that analogy one step further. It's hubris. The bar owner sees the establishment become popular, so all of the sudden, after a couple of years the pints have risen to $6. And they take away the good music the bartender played and put in an online jukebox. Now we have to hear glam pop followed by rap followed by metal or some other schizophrenic combination of music. Then maybe they take out the dart boards and put in a spot for karaoke or trivia. Other businesses start advertising all over the place. And they advertise these "upgrades." And then people find another spot.

That's what I think is really going on with Facebook. Sure the UI changes can screw with people. But endless notifications to make things work - singing in and sharing god knows what data with third party apps - local businesses begging you to like them - constant missteps with privacy and facebook and instagram - these things add up.

When it was a cheap (in internet terms, cheap can mean clutter free use instead of money exchange) way to communicate cleanly with friends it was popular. Now it's 100 Zynga requests interspersed with new app centers, calendars and event listings nobody cares about, groups, and page feeds.

That's what gets people jaded. The constant drive to add more and clutter the place up.

It's certainly what killed MySpace.

Just look at MySpace. It's functionally illegible.

Sometimes people just want to move through content quickly and occasionally talk.

When it becomes more advertisement than content, people move on.

[aaron]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

It seems VC plays a roll in this crappy state of affairs, no?
.

[BadJuju]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

When it becomes more advertisement than content, people move on.

Very true, sir! I wish I could recall more of my experiences with Shoutwire and Digg, but the gist of what you are saying confirms the same feelings I had back when I decided to stop using those services.

You also make a very good point about social media sites focusing more and more on advertising than on content. It is a problem endemic to social media because you are not making a product or shifting goods around. These sites drive a tremendous amount of traffic, but monetizing it is problematic because it often comes at the cost of content. And so you end up with a vicious cycle of trying to keep revenue up with two competing dynamics.

[shiny!]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

seobook, I was hoping you would jump into this conversation. Thanks

That has been my impression, as well. Deceit, lies, and screw jobs...

I keep thinking about "Angie's List" in this context. They were not around a few years ago. They took the business model of some long term players, and applied marketing and advertising, and then went public. I bet the ROI on the whole deal was 1000% or more. It was well executed, but I doubt they will last a long time. It was not meant to be a long term site/business. it was designed to fleece the public, in my opinion. They used to advertise on NPR every single day. The ROI must be pretty good for "sponsors" on NPR *. They also bought huge amounts of Google ads (I ran many, small local sites and saw their advertising everywhere) and probably others. It seems to me, if your goal is to bring a "company" public, you can spend a few tens of millions and leave with 100's of millions. They were definitely paying top-dollar for their google clicks... They could not have been profitable with the amount they were spending. I do notice how they stopped their NPR campaign after they sold out and no longer see their ads on my sites.

As a cautionary aside for my friends here, the vendors in Angie's List are no better than what you'd find in the phone book or on Craig's List. Of the five plumbers, three insulation installers, three bathroom remodeling contractors and two general handymen that I interviewed from Angie's List, all but one plumber were overcharging rip-offs, incompetent, or both. It's not worth the cost of a subscription.

[dcarrigg]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

Very true, sir! I wish I could recall more of my experiences with Shoutwire and Digg, but the gist of what you are saying confirms the same feelings I had back when I decided to stop using those services.

You also make a very good point about social media sites focusing more and more on advertising than on content. It is a problem endemic to social media because you are not making a product or shifting goods around. These sites drive a tremendous amount of traffic, but monetizing it is problematic because it often comes at the cost of content. And so you end up with a vicious cycle of trying to keep revenue up with two competing dynamics.

That's exactly why churches and town halls were not for profit. The concept of monetizing the old Roman Forum is foolhardy. There are thousands of years of examples of it existing. But it never existed for profit. And yet, the town square was always there. So shall it be in the digital age. But I don't think we'll find a decades-long stable iteration of it until we get over the impulse to privatize public discourse.

It's a fool's errand.

[aaron]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

You have to pay to use Angie's list as well? Jeeze... (I have never visited the site).

It just shows that it was a scam from the start. theoretically, the other companies screen their contractors.

[shiny!]

Re: Reggie Middleton Empirically Shows Facebook Getting "My Space[d]" As They Actually Lose Users

Angie's List supposedly screens their contractors, but the ones I talked to from there were mostly awful. For example, three contactors bid from $900 to $1800 to seal a leaking air duct under my floor. The maintenance man in my mobile home park sealed it like iron top and bottom for $35. It took him 90 minutes and that included ripping out a section of tile floor, replacing the subfloor and tile, and $12 worth of materials.

Four plumbers bid from $2500 to $5000 to replumb my house, until I found an honest one who did it for $850. One of the plumbers wanted $250 to reset the toilet!

The insulation company I hired to replace the old insulation under my house only did half the job, leaving sections uncovered and falling down. I had to threaten them with the Registrar of Contractors to make them come back and finish.

The bathroom remodelers made such a hash of my bathroom that I had to fire them. My plumber- the one good contractor I found on Angie's List- said he'd never seen a job bungled so badly. Other contractors I interviewed to finish the job wanted to do things that were against code. They obviously didn't know best practices with materials and methods.

I eventually hired the park's maintenance man to do the bathroom on weekends. The whole room had to be stripped out to the studs and rebuilt. It took month but he did a good job. (it was a real pain, too, being my only bathroom)

Maybe shoddy, overpriced workmanship's the norm with contractors today, I don't know. My husband did all our repairs- plumbing, carpentry, roofing, everything. For 19 years we didn't hire one outside person to fix anything. In the 2 years since he died, the house decided it was time to fall apart and I got thrown to the contractor wolves... What a learning experience!