Disruptive innovations are only disruptive for as long as it takes competition to develop and thus create a market. Worse, for the disruptor, the niche it created can also spawn other niches. Social networking provides a vivid example.
First, there were networking sites that could help you find a job or a sales lead, then there were social sites whose purpose was simply, well, networking. Sites like Facebook and Twitter had no trouble achieving explosive growth, in large part because they were free. But lately the user/consumer has come to realize that free ain’t exactly free. The strings attached cause users to give up privacy and submit to psychological manipulation most often without their consent—a high price to pay for somewhat glorified email.
Social media’s problems have been well documented so there’s no reason to review them here. But hidden in the headlines are some nervous technology companies that jumped on the bandwagon early to make their wares all social, all the time. Exhibit A in all this is CRM. There’s no CRM company that doesn’t leverage social media to support customer centric business processes. From sales to service and marketing, CRM’s benefits include a lot of value from providing significantly lower cost business processes.
But now the vehicle for all that goodness is in trouble and while no vendors that I’ve spoken to think they’ll be abandoning their links to social media, some are getting nervous. A recent story in the New York Times documents how consumers in Illinois filed a suit against Facebook for violating a state privacy law. The suit alleges that Facebook used facial recognition software on users’ photographs without permission. In response, the social media giant is trying to invalidate the action saying that no harm was done and harm beyond simple law breaking is needed to enable a consumer to sue. Seriously.
Meanwhile, Facebook is in freefall. Grassroots movements encouraging people to quit Facebook, and other social networks, are gaining traction—enough that the company has doubled the waiting period for people to actually leave and have their accounts expunged from 2 to 4 weeks.
A new niche
Leaving the law suits aside, this ongoing drama is opening a new social media niche and there are vendors queuing up to enter. The new niche attempts to provide the goodness of social media including—the immediacy, bi-directional communication, low cost and broad distribution—without the vendor shenanigans. Actually, there may be two potential niches, call them Facebook lite or Facebook nice, and notifications.
The first option would strip away Facebook’s propensity to mine other people’s data but from a commercial standpoint omitting data gathering and analysis would leave Facebook looking bloated and silly. The second option might be a Goldilocks solution because it admits users fairly easily and offers a communications regimen that’s not too much, not too little, but just right. That’s notifications but they aren’t for everyone.
People using notifications dispense with the small talk—no baby pictures, cats or dogs or birthday reminders. With notifications people are always in the middle of a conversation not trying to hit the reset button because thousands of followers need reminding.
Social scientists tell us that typical people can maintain between 150 and 200 or so relationships; it’s called the Dunbar number and more than that leads to confusion. Common social networking makes it possible to go way beyond Dunbar though the relationships maintained often look not much different than what you get with broadcast advertising.
I think there’s a future for notifications and it’s possible that notification technologies will disrupt social networking. As with most disruptions the older technologies won’t necessarily go away but their market reach and importance would decline. Notifications in CRM would give you a just the facts ma’am vendor customer communications stream.
Testing the idea
Right now, I’m part of a beta test of a notification product in stealth mode. Compared to Facebook, you might say it’s bare-bones. There are no apps, no profile database for the unscrupulous to mine, just a list of my peeps, what I’ve called their attention to and what they’ve sent me (along with our comments). Sometimes I ignore the incoming flow for lack of time and it’s a good indication that I’ve reached my personal Dunbar number.
If there were ads and offers in the stream, I’d ignore them too because I’m good at understanding my needs. With so little data emanating from the user you might logically ask how a vendor is supposed to train an algorithm. The simple answer is that you hire people, perhaps subscribers for a time to share their data. That would be more than enough to ethically capture use data and train algorithms.
Not long ago, Esteban Kolsky and I ran a survey. As with most market research studies the hard part is getting people to take the survey. Ten years ago, it was relatively easy, you just bought a list and invited people and there were usually enough responses for statistical reliability. But lately no one wants to be bothered and market research has taken a hit.
The good news, though, is that the situation has opened a niche. Database vendors compile lists of people with specific attributes and pay them to take surveys. We researchers pay a fee to the consolidators and we get our answers. Most importantly, the responses come from people with the exact attributes we specify.
My two bits
There will be people who say that social media can’t or won’t be effective with a payment model to which I say that’s not my experience. Social media has tapped into a rich vein of information and access shouldn’t rely on subterfuge. It generates huge profits and there’s no longer a reason (if there ever was one) for sneaking around the user database for insights.
So those are some of the niches opening up in the shadow of social media. Notifications and a pay as you go model for research that’s above board and gives consumers what they need. I think CRM vendors are paying close attention and the current war room mentality companies like Facebook are exhibiting is not helpful and could lead to an unnecessary crisis in social and maybe CRM. We don’t need this.
The multiple issues/scandals/problems facing companies in Silicon Valley could drive you to ask if the wheels falling off the collective tech wagon. A recent article in the DealBook section of the New York Times asks the question,
Are we witnessing the end of a mania?
Investors, always willing to believe in technology companies, spent the last three years piling into the shares of companies like Facebook, Amazon and Netflix with special abandon. Now the intellectual underpinnings of the tech rally are being seriously tested.
But maybe this is just the way disruptive innovations evolve. To be sure, if it takes 50 to 60 years for a disruption to work its way through society and the economy, as I have documented in discussions of long economic waves called K-waves, then it’s quite likely that we’ve seen this kind of thing before, say in the 1960’s. You remember the 60’s, right? That’s the point.
Because there’s little living memory of the last time, today’s happenings look unfamiliar. A disruption grows and grows consuming everything in its path until there’s nothing left to consume and at its peak the disruptors become the disrupted and accommodations must be made. Often the they are initiated by standards and even regulation—admittedly a dirty word in Silicon Valley and environs but one that must be said.
In the more genteel days of the 19th century the disruption of the day, electricity, had its own peaking moment pitting uber genius Thomas Edison, a proponent of direct current (DC) standards against the lesser known geniuses Nicolai Tesla and George Westinghouse, who favored alternating current (AC).
Edison was not above making a slur to defend his viewpoint. When a condemned man was electrocuted using alternating current, Edison got his publicists to influence a headline saying the man had been “Westinghoused.” Those were the days. Nonetheless, facts are stubborn things and AC won the day because it was just a plain better standard for long distance transmission, something the emerging electricity industry simply had to have.
Through standards setting and regulation, the electric industry became a ubiquitous and standardized service that is accessible to all and this set the stage for further growth of the industry and the economy. Ironically, the standards and regulations were nothing that individual business people would have readily agreed to.
The Times article asks in a roundabout way if the tech sector is in a similar moment. While the sector comprises businesses as different as Facebook, Apple, and Google, to name a few, Facebook and social networks are reaping a healthy share of skepticism, and for good reason, so let’s concentrate there. Another Times article may have pinpointed the peak moment when social media went from the disruptor to the disrupted,
Shortly before the election, a senior official with the Trump campaign bragged to the Bloomberg reporters Joshua Green and Sasha Issenberg, “We have three major voter suppression operations underway,” which the article described as targeting “idealistic white liberals, young women, and African-Americans.” Brad Parscale, who ran the Trump campaign’s digital advertising, is quoted in the same piece discussing his plan to use dark ad posts of an animation of Hillary Clinton referring in 1996 to some African-Americans as “super predators.” Parscale suggested that the campaign would use this image to discourage a demographic category described by the reporters as infrequent black voters in Florida. “Only the people we want to see it, see it,” he explained. “It will dramatically affect her ability to turn these people out.”
Dark ads display once to a specific audience and then disappear though they’re still in the vault. But guess what, the article goes on to say that,
the dark ads have disappeared and Facebook won’t release them, citing the privacy of its advertisers.
Zuckerberg might say that trust is important and he might spend a few bucks on grandiose full-page newspaper mea culpas but he and his company are still remarkably tone deaf. Did the suppression effort work? You be the judge,
The election of 2016, the first after Barack Obama’s presidency, was notable for a seven-percentage-point decrease in African-American turnout, from 66.6 percent in 2012 to 59.6 percent, according to the Pew Research Center.
The first decline in 20 years and the largest decline on record.
This isn’t an American phenomenon. The news shows that the effort in 2016 was international with companies like Cambridge Analytica employing many non-Americans to sort data, create psychographic profiles, and generally influence the US election and possibly other efforts like the Brexit vote.
We’re at the moment when attention turns to regulation in social networking and elsewhere. Facebook’s focus on the individual’s rights (privacy of its advertisers!) rather than the potential harm it can cause to a whole society represents a blind spot that will interfere with any solo attempt to rectify the situation. That’s why self-regulation rarely works without a mandate from government.
It’s possible to regulate social networks through a system of encryption, certification, and a modicum of tracking. Doctors, lawyers, plumbers, beauticians and many other professionals all submit to systems of practitioner licensing and professional standards and utilities are regulated. That’s a workable model for social networks.
It’s currently easier to attempt to influence millions of people about consequential issues than it is to pull the permits to make an addition to one’s home. It shouldn’t be that way.
The momentum in the halls of legislatures around the world right now is toward regulation. The social networks should welcome it and work with governments to reach a workable compromise which includes a standard set of regulations that apply over broad swaths of the planet. Regulation will do for the industry what it can’t do for itself and that’s exactly what the society needs.
I was a guest on the Gillmor Gang last Friday hosted by Steve Gillmor and available for streaming on Tech Crunch here. If you’ve never had the pleasure, it’s an hour of discussion at the nexus of technology, business, and current events and well worth seeing.
For the last few weeks we’ve devoted time to how we all should react to the revelations about Russian intelligence services attacking Facebook during the presidential election. The conversation has evolved over that time, in part because there are new revelations every week and as the plot thickens our response has become more nuanced.
For instance, when we started the discussion we knew that Facebook had been the advertising medium of choice for the Russians but that turned out to be only part of the story. In the intervening weeks we learned about the role of Cambridge Analytica in stealing user profiles. Technically we’d have to say there was no theft and that at the time Facebook was running exactly as it intended. I don’t know anyone who sleeps well knowing this. But it adds layers to our discussion and recommendations.
Last week I advocated, as I had in some blogs on BeagleResearch.com that we’ve entered a time when we must seriously consider regulating Facebook and all social media and treat it all like a utility. You can read more here.
But back to the Gillmor Gang. There was a variety of opinion about what to do and to my surprise, regulating was not top of mind for anyone other than me. That’s okay though. The discussion was lively and exercised points that I had not considered. What do you think? Take a look.
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
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.
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.