Of Facebook, Social Media, and The Cycle
Unless you have been hiding under a rock, you have pretty much heard that Facebook recently went public. That is to say they are now listed on the stock exchange as a publicly traded company. The immediate effects seem mostly to have confirmed Mark Zuckerberg as one of the richest men on the planet, at least on paper. It’s not been an easy start however, as there are more questions than answers about the true long term outlook for Facebook. The shares have dropped almost consistently since the IPO, and that has some people concerned. Mostly, people seem unwilling to accept the concept that the stock price was nearly 100 times earnings, which is an insane valuation for almost any company. Google, by comparison, trades at 17.5 times. Priced like that, Facebook is worth well under $10 a share, and not the $38 or so asking price to start.
The bottom line profitability of Facebook today however isn’t what I would consider the big issue. For me, the real concern is the cycle of the internet, and how things change over time. You only have to go back and look at companies like Yahoo, MySpace, and other similar internet only companies to realize that things come and go. MySpace was for many the original social media platform, and it was big for sure. Many companies based marketing on MySpace pages, and things were big. My Space has since pretty much collapsed, and was sold off for pennies on the dollar a little while back.
Facebook faces the same challenge. The online world is fickle, and people are often distracted by the next great shiny thing. Most online sites have only a couple of years near the top before they slowly fade away, becoming last year’s news. Facebook also faces the challenge of user fatigue, that is to say that for people over a certain age, there is only so many old class mates and old boyfriend to meet up with before you are done. Since middle age women were one of the big driving factors in making Facebook truly huge, their enjoyment of the site holds a key to the long term success. There is only so much farming and mafia games you can play before it’s all worn out, I guess.
Moreover, Facebook faces the challenge of Google+, which while not the most popular platform in the world, is slowly but surely gaining ground. Splitting up the social media market, just as the market itself is perhaps cooling down doesn’t bode well for those players in the field.
For those of us who have been online for a long time (my experiences date back long before the internet), you see that things come and go. Right now, Facebook is a big deal, but even today, I can say it isn’t as big a deal as it was 12 months ago. More media people are moving towards twitter, and the next great thing is “just around the bend”. Stay tuned.
PS: I should point out that I personally deleted my Facebook profile some time ago. I reached the point where it was less and less meaningful to me than ever, and the effort to update it became more of a burden than it was worth. I may one day soon have another Facebook profile, but I doubt that I will use it more than sparingly. The next big thing will be more interesting!