All signs point to a fairly predictable year for social networks.
Bigger social networks will balance monetization with risk aversion. Upstart social networks will try to grow into bigger social networks (so that they can become money hungry and risk averse). Sounds a lot like 2012.
Facebook is the ultimate case study for social networks. Despite having unprecedented social audience and time on site, they have struggled to adequately monetize since going public. Their stock price is up recently, but not in response to any revenue. Their stock has the potential to be quite volatile (Stock lockup expire, revenues may be less than expected, Sandberg may be leaving the company and Zuckerberg may sell shares, and the recent
fiasco monetization effort for Instagram). If the company with the best resources is struggling, it is illustrative for others.
When you look at a platform like Foursquare, they have a pool of much fewer users spending much less time on site (or in app). Their struggles to generate revenue may be even more difficult, causing them to look at additional opportunities to make money. Selling more personal information is one tactic that they can use (and in Foursquare’s case they are).
Twitter is in a similar situation to Foursquare. In its quest to go public this year (a quest they continuously deny), they will probably continue to integrate more advertising into the platform and continue to pare down third-party access.
This isn’t to say that there won’t be changes but they won’t be anything mind-blowing. There will be ancillary services introduced like Facebook’s Snapchat knock-off Poke and Twitter’s Instagram-ish photo filters, but the risk is probably too great for these big social networks to change too much. If you don’t believe me, marvel in the fact that Facebook may change the columns on Timeline from two to one. Boom!
The really exciting stuff in social will probably be happening on the periphery. Considering that Facebook, Twitter and the like aren’t the preferred social networks of Gen Z, the jockeying will probably occur in upstart social network to be the preferred network for younger folks. Myspace is an example of a network with a slick design around a clear niche (score an assist to Spotify for doing a poor job of creating a social space around music).
There are thousands of other upstart social networks as well, led by Instagram and Tumblr who face monetization challenges this year. Because they are so entrenched in a younger population it will be interesting to see if they can accomplish higher revenues without alienating the “multitasking” generation. Google Plus is going to introduce ads this year as well, albeit with an older population of users. It will interesting to see if this stunts its recent growth somewhat.
I’ve read a lot of bold predictions for 2013 (like Facebook going the way of app.net and having users pay to play), but I think the end of 2013 will find us in about the same place as 2012, except both Facebook and Twitter stocks will both be underperforming (instead of just Facebook).
What do you think? What does the next year hold in store for the big social networks and the upstarts? Anything unexpected on the horizon?
A recent post by Lindsay Bell on Spin Sucks, “Why I left Twitter for Facebook” reinforced to me the staying power of Facebook (and inadvertently Twitter and Google Plus). Lindsay’s comments (and the reaction to her site) reveal that the audience and user experience of these social networks (though diminished) still hold a lot of appeal, which is why I think most social networks are after the younger population of users.