social media

  • October 20, 2017
  • Facebook is big, profitable, growing, and at a crossroads. The little social network that started in a Harvard dorm room is no longer the cute app that people can use to hook. It’s going through its terrible two’s as in its second decade and there’s plenty of evidence that the world wants it to use its indoor voice and to play nicer in the sand box.

    Several recent news items provide background.

    First, governments all over the world are trying to rein in its anything-goes approach to its presence on their turfs. In the West we might think a lot of the right to free speech but that’s far from a universal truth especially in the East. An article in the New York Times  highlights Facebook’s fungible approach to free speech in repressive societies like Vietnam where according to authorities, the social network

    “…had agreed to help create a new communications channel with the government to prioritize Hanoi’s requests and remove what the regime considered inaccurate posts about senior leaders.

    It’s hard to tell what’s worse the company’s stand on the first amendment in this country or its capacity to be easily rolled over on the subject by foreign dictators. It seems they’ll do anything to gain market share with which to sell ads. Facebook is happy to aid and abet repression while at the same time it stonewalls investigations into how its service was leveraged in the 2016 election.

    Perhaps most dangerous to life as we know it, Facebook is not in control of its sales process or its platform. In the mad rush to sell, sell, sell their algorithms inadvertently sold questionable ads to people fronting Russian institutions during the 2016 election. After denying it for months, the company finally came clean admitting as much last week. In the process they gave up a number of ads to the authorities and cancelled the accounts of fake individuals. So much for fake news, there are now fake people to worry about.

    Reporting in the New York Times as well as most major media outlets says that

    “Facebook has identified some 2,000 other ads that may have been of Russian provenance,” 

    and CNN chimed in that “…we may not be able to set the number at 2,000, it could be higher.” 

    Worse, it’s clear that law enforcement doesn’t know what it doesn’t know. Another Times story says that

    “The users who purchased the ads were fakes. Attached to assumed identities, their pages were allegedly created by digital guerrilla marketers from Russia hawking information meant to disrupt the American electorate and sway a presidential election.”

    The times also said that we still don’t know what the ads looked like, the content, who paid for them, and how many Americans interacted with them. There’s even more to the story and it’s easily pursued through the links provided in this story.

    This is important because it profiles a company and an industry that grew fast, reaps huge profits and is poised to influence how we live and it is being coy about its legal rights and responsibilities.

    This is a difficult road to tread. On one hand we have federal law, the Electronic Communications Privacy Act xxx 5, which prohibits government from unduly spying on electronic communications. While that might seem reasonable, should the protections of this law apply to foreign governments intent on disrupting a US election at the same time that the Federal Elections law prohibits any spending on American elections by foreign entities?

    In many cases, social networks like Facebook, Twitter, and the other social sites like What’sApp, WeChat, Snapchat, YY, VKontakte (Russia), QZone (China) are awakening to their responsibilities in free societies, or have reached critical mass to impose significant strictures on the free flow of information around the world. It’s a situation that cries out for the “R” word, regulation, before freedom of speech becomes a quaint memory.

    My take

    Some of my friends say this is no different from the US having tried to influence elections overseas for decades. They are right about US attempts but the US always did so in an above board way. We identified ourselves for instance as the Voice of America. We didn’t invent fake news we simply reported the truth, which was often bad enough. In the 1960’s former Illinois Governor and UN ambassador, Adalia Stevenson, told the Soviet Union, “I offer my opponents a bargain: if they will stop telling lies about us, I will stop telling the truth about them.” That’s the fundamental issue.

    In disguising their efforts to upset the 2016 US election, the Russians hid their efforts in social media, inventing fake identities and made effective use of psychological research to plant ideas that divided the American people. They didn’t need to hack into voting machines (though they did some of that too).

    In the aftermath a bigger set of questions arises for free societies and for heretofore unfettered social media companies like Twitter and Facebook. Is there a point beyond which appearing to protect cherished values like free speech does more harm than good? More specifically, is there missing nuance to such positions?

    Other societies such as the EU are chafing under the open rules of a Vox Americana and are they are organizing to circumscribe not only Facebook but the other big American companies that make up what they’re calling GAFA or Google, Apple, Facebook, and Amazon.

    Various governments have serious objections to how these companies operate and it would not be surprising in this era when they are, for the most part, maturing into their colossal world-girding selves, to see some initiatives to regulate or even break up these behemoths. It would be smart if the GAFA members plus Über and a few others, decided to short circuit the uproar and develop a set of rules to live by that go beyond not being evil, whatever that means. But that’s not how free markets typically work.


    Published: 5 months ago

    indexMicrosoft’s acquisition of LinkedIn for more than $26 billion raised a lot of eyebrows for good reason. True, the acquired company is valuable and generating revenue but like most of the social networking space, it is far from healthy and one wonders if Microsoft could have gotten a better deal.

    According to a colleague at the Enterprise Irregulars, Ross Mayfield, Ellen Levy reported that the deal can boast a number of superlatives if you look at it right, among them,

    • The largest sale of a consumer Internet company in history;
    • The largest sale of an enterprise software/cloud company in history;
    • The third largest sale of a technology company since 2001; and
    • The largest acquisition ever made by Microsoft.

    With those attributes you might expect that LinkedIn is in a really hot sector and everybody wants to get it at any price. It looks like a regular feeding frenzy. Well, hold on big guy, here are some other numbers to consider.

    Facebook announced revenue in Q1 2016 at $5.2 billion and profit of $1.51 billion tripling its year over year comparison according to a BBC News article that you can read here. Good for them.

    But now consider Twitter, which according to CNN Money has lost a cool $2 billion since 2011. I wonder if this can be construed as an illegal campaign contribution to The Donald. At any rate, Twitter has never turned a profit. Yikes!

    Then there’s LinkedIn. According to a Reuters article from February 4 of this year that you can find here, “LinkedIn Corp forecast first-quarter revenue and profit below Wall Street estimates as growth slows in its ads business and its hiring services face pressure outside North America, dragging its shares down 28 percent after the bell.”

    The article goes on to say that, “Online ad revenue growth slowed to 20 percent in the fourth quarter from 56 percent a year earlier as automated ads offered by Alphabet Inc’s Google make its traditional ad displays less attractive to advertisers.” Finally there was this, “Its revenue forecast of about $820 million also missed analysts’ expectations of $866.9 million by a wide margin.”

    Suddenly it looks like social media has become a winner take all market accentuated by Metcalf’s Law which states that the value of a network is directly proportional to the number of nodes i.e. users in this case. Why use anything but the biggest network unless it’s specialized as LinkedIn is because of its sales and HR focus.

    This is happening despite the high acceptance of social media in everyday life, just ask The Donald. Social has rapidly become the thing everybody loves to use and no one wants to pay for. The advertising business model that most companies rely on doesn’t help.

    Advertising has its limitations. There is a huge pool of money available for online ads but huge is not infinite. Just as there is lots of music available, people only want to pay for hits. If you combine Metcalf’s Law, which tends to limit the number of viable networks in this space and add in the reality of the fickle consumer you have an instant recipe for a declining market, which is what we see.

    Don’t worry, social media is too important to go away. It’s so important that it has commoditized its market into a virtual singularity. That’s the bad news too. The social market looks like it can support 2 styles; say Facebook’s and Twitter’s. There might be additional vendors in the space for a long time especially if larger companies buy them and they function as loss leaders. That’s ultimately the vision I see for any social company not named Twitter or Facebook.

    Published: 2 years ago

    thMicrosoft announced the intent to buy LinkedIn for $196 per share today or more than $26 billion. It’s a huge deal and a great payday for the social networking company specializing in making it easier for business people to connect. But why do this deal and why now? This calls for a lot of speculation but perhaps we can make some sense of it.

    Like other major software companies including Oracle and Salesforce, Microsoft sees itself as an essential platform for enterprises at all levels. The more functionality it can provide to its users, the easier it will be to keep them at home rather than roaming the Internet looking for something new. In addition, the availability of a familiar face such as LinkedIn has great appeal for many customers.

    But also, we may be witnessing the consolidation of the social networking space. Brands like LinkedIn, Twitter, and Facebook, and others such as Plaxo and MySpace, all got started around the same time—about ten years ago. Since then each has found a niche and many rely on an advertising model for revenue and growth.

    Those models are limited by network constraints, however. Each might be flexible and have great people working there but as Metcalf’s Law stipulates, the value of a network is directly proportional to the number of nodes on it. In our case nodes can be thought of as people and while we might all have Twitter and Facebook accounts, the number that also have a third network is smaller for the simple reason we can only track so much.

    So the advertising potential of networks is similarly limited. There is a large revenue pie for ads on social networks but it isn’t infinite and as is often the case, the early participants like Google continue to capture the lion’s share of revenues. In such a situation, if LinkedIn can be relieved from the need to generate so much ad revenue growth by simply becoming a valuable addition to the overall Microsoft value proposition, so much the better. The situation is similar with other vendors that offer social and collaboration functions as part of their value propositions, like Salesforce and Oracle.

    All this is to say that the age of social media is likely entering a mature phase. We can see which ones will be able to have a stand-alone future and which ones won’t. This doesn’t mean social networks and social media are becoming passé—just the opposite. They’ve become so valuable that they are becoming commodities and it’s hard for commodities to reap soaring profit growth (that’s why they’re commodities).

    So, good for Microsoft and LinkedIn, I think they are better together and their association seems to signal an inflection point in social networking. The strike price of $196 per share is significantly below last year’s peak of nearly $260 but also significantly above Friday’s close of $131.08, just about right in the middle. Is everybody happy?



    Published: 2 years ago

    Don’t look now but I think someone just invented the computerized watch.  I know there have been attempts, most recently by Samsung but the critics have been a bit harsh as in this review from the New York Times.  Also, Apple has been scooping up rights to iWatch but so far no product has emerged.

    One of the tough parts of inventing a category like this — even for the inventor — is trying to figure out what goes into the product.  If it’s a slavish imitation of what’s already in market as an analog product, why would you buy it?  If you envision something more functional, then what are the functions?  What makes it unique and not simply a miniaturized version of, say, a smartphone?

    The first computer watches all seem to suffer from smartphone-itis, the need to reproduce every function of the small screen on the teeny-tiny screen.  Seriously?  Yup, you know they’re out there.  But the path to the new, new thing is through a small identity crisis that asks what’s unique about me?

    Well, as it turns out in pure Cartesian logic, I am what’s unique about me.  I think, therefore I am has morphed into I respire therefore I am.  That sort of reduces humanity to the simple ability to fog a mirror but there’s more to it than that.

    Fitbit, if you don’t know, is a little device that straps onto your wrist and records the activities that are unique to your day.  Based on a few parameters you input at, the system tracks the steps you take (and other activities) and figures out how many calories you’ve burned and how many you are (gasp!) entitled to if you expect to fit into that holiday outfit.  Even your blood pressure and glucose reading can be entered so that you have an up to the moment digest of the many important health parameters that are unique to you.

    So it had to happen at some point.  The sleek wristband that formerly simply lit up to tell you about some goal reached has morphed into a watch with a digital readout where the blinking lights used to be.  Now Fitbit is a data collector and a watch that synchs with your iOS and Android devices and can feed any apps in those ecosystems with your unique data for further processing.  Think about that.

    Watches that enable two way communication or social media hookups or listening to songs or that let you watch the World Series on your wrist have missed the point.  A compass?  Spare me.  All those functions have homes on the device and they are not needed on the wrist. They might run on the wrist the same way that spreadsheets also ran on the laptop but it took the graphics packages and slide show software to make the laptop an indispensible part of business life.

    And so it is with the computing watch.  Sure it tells time and so does your handheld or a Timex but just as the handheld became the social location (close to us but still somewhat apart) the wrist has now been claimed as true personal computing space.  The watch sleeps with us, showers with us; it is designed to not come off except for charging about once a week.  The Watch is part of us yet at the same time it incorporates our other devices and computers through ecosystem apps — a good balance that’s low on redundancy and high on added utility.  Most importantly, it captures some of our most intimate data helping us manage our bodies.

    That’s it.  Future generations of watches might incorporate more personal functionality (blood chemistry through sweat analysis, perhaps?) but they won’t bother with email or they’ll end up looking like over engineered Swiss army knives.  That knife has a lot of useful stuff, many even have a knife and fork but did you ever try to cut a steak with one?

    Published: 4 years ago

    It’s (mostly) Rock ‘n’ Roll

    Then there is this from Weekly Standard writer Matt Labash who writes a long rant on Twitter and why it is eating our brains.  Didn’t they say things like that about Rock ‘n’ Roll?  Obviously, they were right.  Matt seems like a man off his meds but like many such savants he can make some interesting points sometimes.

    Labash’s target is Twitter, and he points out, “Even after seven years of nonstop media hype, only 16 percent of Internet users tweet, the same as the percentage of 14-49-year-olds who have genital herpes. The difference being that the latter are not proud of their affliction, while the former never shut up about theirs.”

    I suspect the herpes numbers are kept down by increased condom use, but what about Twitter?

    Ok, seriously, I get it.  Twitter. One hundred forty chars. Bad.

    Maybe I don’t though.

    You may have noticed that about the only things I Tweet are blogs like this or pieces from the New York Times.  I don’t read my tweets unless they are delivered by email and I hardly follow anyone.  When I go to shows they supply me and my buds with tables, WiFi and power in the hopes that we’ll live tweet the event.  I write articles and check email.  Ever read the tweet stream from a show when the twits reach critical mass?

    “Look at Marc’s sox!”

    “Stripes gonna be big!”

    “Talkin’ ‘bout Marketing Cloud”

    “Marketing next big idea”

    “You going to the dinner?”


    It’s not for any political reasons that I am Twitter agnostic, I am just an introvert.  I can go for days hardly interacting with humanity, truth be told.  My wife hates it but I think it’s normal and no, I am not shy.  When I have something to say, I… you know…say it.  There’s a lot happening in my head and I don’t usually have time to check out just to check in.  It’s more interesting in there.  I suspect most writers are like that, which might explain Labash’s incredulity about Twitter.

    But introverts make up only about 25 percent of the population according to Susan Cain, author of “Quiet, The Power of Introverts in a World That Can’t Stop Talking”.  Perhaps the paperback might modify the title to include those who can’t stop Tweeting.

    Regardless of my habits, I think I get Twitter.  It’s a communication mode that unfortunately enables people with a need to know, to inquire as often as they like from the whole world about their status in it.  Twitter and some other social media have vast power to amplify our thoughts as well as our insecurities.  But look, only 16 percent, according to Labash, are that insecure.  And if insecurity is a form of neurosis then we haven’t made much progress since Freud and Jung but neither have we backtracked a lot.

    Published: 5 years ago