Just heard on Bloomberg TV channel, a comment by Hussein Kanji “Social networking companies lose users when they push for profits”. As per the interviewer Kanji has watched Facebook closely when he was at Accel, an investor firm.
The rise and decline of AOL and now the re-emergence of AOL could provide good insight into this statement. AOL was the ‘Social Media company’ even before the term social media was coined.
The products and services of the current social media companies are the new Avatars of some of the products/services in the late 90’s at the Internet giant then. Here is a very brief comparison:
|New Avatar||Previous Generation|
|Facepages, Google Sites, Weebly etc.||Hometown@AOL|
|Groups, Private Groups on LinkedIn, Google, Facebook, etc.||Groups@AOL.|
The new Avatars leverage the latest technology, attracting a larger audience from older products and services. Last couple of years saw an exponential growth in the adoption of these new Avatars. However, one needs to think what will happen to these current products and service, due to the following factors:
- Growth in funding of entrepreneurial activities in various parts of Asia and the adoption of local social media products in various area. For example, SMS GupShup is the leading social media platform in India.
- The growth in users of current social media will flatten out, after an exponential growth, as the number of users are fixed in the world.
- The discussion about privacy is getting hotter for these social media companies.
In summary, if current social media companies need to remain competitive and growing, they need to focus on innovation more than profits. The users will leave for the new technology platforms, as they did when the current Avatars were created.