Facebook is Passé [Point.1] Friends ≠ Social Networks

Ok, so that was a cheap trick to make you read the article!

But it is tempting to get carried away with the brilliant success of Facebook and the equally brilliant movie by David Fincher. The F word in Facebook’s success as  “The Social Network” is after all, Friends.

But in the real as well as the virtual world, is our social ecosystem only comprised of friends?

Let’s just take two examples of social networks of a different kind.

LinkedIn

If you are a working professional, chances are very high you are part of LinkedIn. With around 90 million users it has nowhere near the mass of Facebook’s 675 million plus.

• But if you were Stephen Covey, which network would you be more interested in?
• Who’s  gotten people more jobs? LinkedIn or Facebook?
• Where are you more likely to meet a High Net Worth Individual? LinkedIn or Facebook?

Purely from a numbers perspective do you have more friends or more colleagues and ex-colleagues? I have more of the latter.

eBay

Are buyers and sellers not a social network? Especially when they generate billions of dollars in transactions from non-advertising sources. The fun thing is they consider themselves one of the pioneers of social networks as well!

eBay was and is the original C2C network, with a high degree of loyalty among  its member base – something yet to be truly tested at Facebook.

It also has PayPal, an established payments mechanism at a time when Facebook is just experimenting with Facebook Credits. And it has launched micro – communities like Neighbourhoods – a snapshot of which is below.

Hold on, what do you have to say to this, you say:

1. Facebook is all about the social graph

And the X- factor of interactions between friends.  It has user generated content. Comparing it to an eBay or Amazon is doing an apples vs. oranges. And LinkedIn may be useful but it is boring!

Counterpoint: X-factors are inherently short lived and consumers can be very fickle about the next cool social phenomenon. To rely primarily on eyeballs and look to monetize them through an ad-centric revenue model has high risk.

Also, eBay (which also has user generated content!) and Amazon’s revenue streams have been sustained over a long period of time. Let’s wait and watch on Facebook’s longevity on the social graph.

2. Facebook is an Ecosystem.

Developers like Zynga create engaging content for the platform so Facebook’s risk is spread among various developers.

Simultaneously Facebook benefits from any innovation that these folks bring out. LinkedIn is a closed system.

Counterpoint: Zynga, – its games feature consistently in the Top 5 of Facebook Apps – may decide that Facebook Credits and/or privacy controls are too restrictive to its growth as a social game publisher. Take away 200 odd million MAUs all of a sudden and Facebook will have a problem. The risk is not that well spread.

eBay and Amazon have very developed ecosystems as well and in some cases built larger barriers to entry for competition. LinkedIn is getting there with third party apps – it only takes one killer app to get the gold rush going.

Still not convinced? Still think it is apples vs. oranges? Facebook is by far the Big Boss of the friend-centric social network!

Fair enough, I’ll cover nest week in Part 2 why Facebook may soon be passé – one, the advent of the mobile network and two, the other F word of the Internet, which is actually a Gword = Google.