Stupid is as stupid does

“Stupid is as Stupid does”, or so Forrest Gump would have us believe. The single simple truth of this statement resonates with me when I see the absurd investment frenzy surrounding social networking. For some, we’ve seen all this before, we’ve seen start-ups with business plans etched out on the back of napkins achieve market capitalisation values that make the eyes water – in many cases before a line of code has been cut. For others, for whom this is a new phenomenon, a simple message, again from Forrest, “Life is like a box of chocolates, you never know what you are going to get”. And so it goes within the realm of social networks. My conjecture is simple, we’re still at the beginning of the innovation cycle in social networking, and ultimately, the same drivers that have always dictated the winners or losers will remain, contacts, communication, context and (as Bill Gates would have us believe) the king, content. To this end, I am not sure that anyone really knows who will win the social media war that is looming. With knives drawn on both sides of the Facebook:Google divide, are we not looking at two monoliths who are achieving little more that Netscape and Microsoft did in the late 1990s? Are we in danger of forgetting that users are the key to ‘winning’, not the digital enablers.

Some context. In the early days of the internet, nearly 20 years ago, value was perceived to be in the connection to the internet, not in the data that the network carried. As such, internet service providers, or ISPs (typically the larger telcos initially and latterly the more opportunistic independents) achieved utterly extraordinary market valuations as they boasted their millions of users and what seemed to be ever-increasing revenue streams. Notionally, ISPs has established a new digital domain, boundless in its opportunity and limitless in flexibility. A digital utopia. However,  overnight, with the advent of the commoditisation of bandwidth we saw these businesses stripped bare of value in terms of service provision and differentiation, and ultimately, in terms of market capitalisation. We also saw the scope of the internet reduce as user driven selection saw the emergence of a software driven internet.

The age of internet software leap-frogged the value of internet connection and associated value to the contacts and communications between users. Netscape, Microsoft, Yahoo and AltaVista ruled the bitescape, they were unassailable, monolithic, gargantuan and wholly in command of all they surveyed. Well actually, not. Like the ISPs before them, they were merely the enablers of content and communication. Inevitably, their value was inextricably linked to their fickle and transitory user base who, as they became increasingly internet savvy, were prone to migration from one product and service to the next on a whim.

Now fast forward to the early noughties. The age of the social network had begun, Friendster, Friends Reunited, Asmallworld, Linkedin, Bebo, Myspace and many others used viral battering and expensive colouring in departments (marketing teams) and peer pressure and insecurity to lure new users into their network ecosystems. In effect, the size of the internet domain reduced with each incarnation of technology evolution. Internet 1.0 reflected the total number of people connected to the web while the ‘browser wars’ saw the start of division of audience as they elected to adopt one technology over another. Portals further reduced scope as people became bound to Yahoo or the second incarnation of AOL and other notables. Walled garden mentality drove business models that were monetised based on simplistic advertising models, models that, while we may not want to admit it, have changed very little in the past 15 years. However, the evolution of advertising models is at the very core of what will drive the evolution of social media. Today, in order for the major search and social businesses to make money, user data is harvested, categorised and exploited. Users are told that this is the ‘cost of free’ and that this is what powers the internet eco-system. Utter tosh!

While the internet is the new mass medium, it would do well to learn from its predecessors, radio and television. Riddled by advertising, both have been forced to explore premium models that see users pay to have advertising excluded, this is secondary though, to the on-demand, interest driven features that these media have had to introduce to retain audience. So, inevitably, will the internet have to evolve. People are prepared to pay for their privacy, define their interests and what they want and when they want it. Audiences are no longer driven by a vanilla broadcast schedule punctuated by advertising, they want relevance, accuracy, privacy and interest driven experiences that save them time and in future, will save them money.

My conjecture is simple, social networks are no different from the early ISPs and the first internet software and search companies. They are digital enablers, albeit very good enablers, but in their absence, believe me, content would find a way to the masses. We are dealing with a different kind of internet user than we were 20 years ago. Increasingly knowledgable, increasingly connected the novelty factor of ‘connecting’ or ‘friending’ is long gone. The macro walled gardens of social networks are increasingly restrictive, they do not enable the free flow of interest drive content and relevant advertising, rather, they provide wholesale content deposits and measures of irrelevance in advertising that are increasingly leading to people leave the walled gardens of facebook and google in search of environments in which their needs are respected and catered for. Call them if you will, discerning internet users. Driven by the need to retain a deep degree of privacy, time constraints that demand accuracy and an interest for some in monetising their knowledge, their identities and their digital assets.

As such, I am convinced that technology has finally caught up with the market. Forget social networks, they will become irrelevant. Future focus will be (as it ever has been) on social data and digital platforms that enable user data on behalf of users and not the platforms that users associate with.

“And that”, as Forrest Gump might say, “is all I have to say about that”.

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