There are big changes within the social media landscape. While the “general”, multi-purpose social media sites, such as Facebook, continue to attract more users (it now has over 300 million members) their rate of growth is slowing. Moreover there is also growth of “specialist” social media sites such as Linkedin (it now has over 50 million users). Then there are the growing “niche” social media sites such as Ning - which is actually a platform for creating your own social network.  

1. Different country preferences

While some social media sites are huge, they are not global propositions by any means, and the overall social media landscape is “tribal” or fragmented by country. For example, in Asia Pacific, the only place where Facebook leads the market is Australia, while the rest of the region does not tend to show as much interest in the mega-sites of the West:

• Australia - Facebook
• China – QQ
• India – Orkut
• Japan – Mixi
• Korea – Cyworld
• Malaysia, Indonesia, Philippines - Friendster
• New Zealand – Bebo
• Thailand, Cambodia, Vietnam – Hi5

While global sites may yet emerge, there are many regional and local players and cultural reasons for this to remain so.

2. Business models and “monetization”

When discussing the future of social media a key factor that must be considered is the development of a sustainable business model. This has been tried a number of ways including: 

• Advertising - ads are placed on these websites and revenue shared when these ads are clicked by visitors. Technorati and YouTube are examples of this model.
• Sales - the second model is through physical sales of products. A good example of this is Threadless where T-shirts are designed by users and the product is subsequently sold through the website.
• Subscriptions - this model is where the user pays a fee to secure specified access to content on a site.  As an example, Zune users pay a monthly fee for the rights to download some of the millions of songs, films and television content,  found on this site.
• “Freemium” (a combination of “Free and “Premium”) - this business model offers a basic service for free but charges a premium for advanced features. Linkedin uses this model.
• Charitable contributions – some sites such as Wikipedia are supported by volunteers, who provide content, and/or financial support.
• Partnerships with other enterprises – private enterprise and government has tried to utilize social networks. For example, Linkedin recently formed a partnership with Forrester Research to open up its data base to surveys.

That said, many social media sites are not profitable and do not have sustainable business models yet. To survive much longer they will need to find one.

3. Other drivers for change

While profit is a key reason for the change in the social media landscape, other factors that are also driving change include:

• Popularity – this can both drive and inhibit growth. While it is easy to see how a popular social media site can attract more uses, a site that becomes popular with the “wrong” kind of people can also inhibit growth. Yogi Bera was once quoted “Nobody goes there anymore, it’s too crowded.” I see this happening with social networks, especially now that parents, relatives, and even grandparents, have joined the Facebook “bandwagon”. For some, this site has become too crowded with the “wrong people” despite the filters that limit what material can be seen and what cannot.  
• Cultural preference - the leading social media sites tend to reflect the values and preferences of the markets where they are popular. That’s because social media sites compete with one another and the successful ones have been better marketers than the others. An example of this can be seen in Japan, where users tend to hide their identities, present themselves as avatars in cyberspace, and they tend not to post photos of themselves. This is likely one reason why Facebook has not succeeded with Japanese people while Mixi has. Facebook relies heavily on photos.  
• Technology – different markets have different levels of technology. In the more technologically-advanced markets such Japan, Korea, Hong Kong and Singapore,  people tend to use cell phones more to access the internet more than in other countries. Social media has therefore developed reliable mobile access in North Asia.  Conversely in markets where internet speeds are slow, the sites must be “light” so they do not take a lot of time to load up.  This is a key reason why Facebook Light was launched in August 2009.
• Fatigue and boredom A number of people are also getting bored with social media. The novelty has peaked and the user experience has become predictable and sometimes even banal. (Do real people poke each other?) Further, social media takes up a lot of time and this seems to increase with the number of friends who join your social network.
• Privacy – this can become a “negative driver” or barrier to growth.  As social networks experiment with different business models, they will have to find ways to protect the privacy of individuals.  Those not able to do this will lose trust, and the reason for people to use social media in the first place – to share.  

4. So where is social media headed?

There appear to be a number of directions that social media is going including increased competition, consolidation, restructuring and in some cases reinvention. Social media will also go more mobile and integrate with other media such as television:

• Increased competition – there will be more competitors enter the market to chase the customers that use the successful business models. It is still early days for social media and the numbers of visitors are quite compelling. An example of the increased competition can be seen in the Wall Street Journal’s recent attempt to target the users of Linked with WSJ Connect.
• Consolidation – social networks will start to combine as the successful ones find business models that work and start to incorporate features of other sites, buy out their competitors or push them out of the business. A good example of this can be seen when Facebook acquired FriendFeed in August 2009. This was done to acquire the company’s technology and its talented management team. Almost certainly the big sites will incorporate mobile and location based technology in their sites – some of it gained through M&A.
• Restructuring  - social networks will also need to restructure to become profitable over time. This trend will continue the poor economy puts pressure on shareholders and investors in these venture. MySpace is a good example of this. It is now concentrating more on entertainment e.g., music, as it has been out-marketed by Facebook as a multi-purpose site.
• Reinvention – some social networks will need to change to become profitable. For example in Japan, Twitter offers a new service to upload photos and video from either the PC or mobile phone.  This change may help make Twitter more profitable over time.
• Mobile – many want mobile access to the large social networks such as Facebook, Linkedin and MySpace etc. There will also be an increase in number of social networks that take advantage of mobile features, such as the location based technology used on such sites such as Brightkite and Loopt.
• Television – as digital television grows, there will the opportunity to link television with the internet. Technology will allow people to search for information based on what they see on television, blog and exchange views in real time, and in time, shop for goods they stars wearing on various programs. IBM recently filed a patent for new technology that allows Facebook and Twitter to be managed with a television remote control.

At the end of the day, the mega-sites such as Facebook and Twitter will almost certainly find business models, adopt new technology and features, and will survive. The mega-sites may also probably define segments to help retain different demographic and psychographics within the same site.   Niche sites of Ning will also survive and will appeal to a very select group of individuals, returning to the origins of social media – sharing with close friends. The middle companies will likely be squeezed the most.  

What are your thoughts? It’s a big subject and the many possible directions should be there bases of a good debate.  

This entry was posted on Wednesday, October 21st, 2009 at 3:33 pm and is filed under Uncategorized. You can leave a response, or trackback from your own site.