Evan Spiegel, the sassy CEO of Snapchat, isn’t mincing words when it comes to Facebook. He’s even predicting its (if not imminent, then inevitable) death.
Let’s face it. Are there many of us who haven’t — in a frustrated flurry of posting “Happy Birthday” greetings and watching the algorithms (recycling the same posts) and advertising (accosting us at every twist and turn) — thought the very same thing?
“(The) Facebook, Google, even Angie’s List revenue plans are based on an ever increasing number of users and advertising sales,” says Spiegel. “Unfortunately there are a finite number of online users.”
In a story originally posted at LinkedIn and now up at Communities Digital News (CDN), Spiegel lays out his case.
“Facebook has made itself nearly irrelevant to small business users,” Spiegel argues. “These users were initially convinced to create Facebook pages and investing resources in developing a presence there. But they were blindsided mid-year, when Facebook tightened its control over the flow of information to business and personal users, deciding what users would and would not see in their feeds.”
Spiegel, who wrote a book about Yahoo and has been a critical observer of the social media world, posits that “Facebook has made the same wrong decision as Yahoo, which reached a $128 billion market cap based on advertising revenues. Yahoo’s growth was the result of the dot.com bubble that eventually burst, shrinking their market cap to less than $10 billion.”
It’s not just Facebook that Spiegel pillories. Angie’s List, he says, has never really turned a profit.
“The most recent Angie’s List report states that from 2010 onward, the average annual membership fee was just over $12, down from more than $36 a decade earlier,” he notes.
“Angie’s List suffers from the same problem that social media sites like Facebook are suffering from: a limited, finite user group.”
The truth is, according to Spiegel, that “The brick wall of what they previously thought was an infinite user group is infact a very finite online marketplace that will not allow advertising businesses — such as Facebook, Google and Angie’s List — to enjoy unlimited growth with unlimited competition.”
Spiegel runs through the numbers: the initial jump online, the incredible growth stats for many media sites, the steady and seemingly inexorable ascendance of Google as master of web pages. But then comes the deluge.
“The takeaway for online platforms is that we are reaching user saturation,” Spiegel explains. “There are no longer large blocks of untapped internet users that will allow sites to double or triple their user numbers. So social media sites like Facebook, search engine/advertiser platforms like Google, and crowd-source groups like Angies List are seeing business models based on a never ending, replicable user base hitting the wall.”
It’s a fascinating commentary — and well worth reading in entirety.
Truth be told, it’s not just the numbers that tell the tale. It’s the cultural shift. On the internet, it seems, the future always belongs to the new and upcoming. The shape-shifters, the barrier-breakers, the novel, and the unique. It took legacy newspapers a century to gain a firm foothold — today, internet startups think they’ll grab market share in a month, and hold onto it forever.
But back to Facebook.
“Facebook has continued to perform in the market despite declining user engagement and pullback of brand advertising dollars — largely due to mobile advertising performance, especially app install advertisements,” Speigel writes. “This is a huge red flag because it indicates that sustainable brand dollars have not yet moved to Facebook mobile platform and mobile revenue growth has been driven by technology companies (many of which are VC funded).”
For ordinary users, Facebook’s drive to monetize and to bring everyone under its ubiquitous umbrella is more irritating than inspiring. Millennials are saying “no” in droves, according to recent research, and the college students who once formed the foundation of Facebook are tired of having their Moms comment on their posts.
Things are shifting, yet again. Speigel’s eulogy could be a little early, or it could be pretty much on target. One thing is for sure: today, nothing lasts forever. Maybe not even a decade.