Facebook’s Myspace Moment – Know Here About Social Networking Sites

Fri, Jul 27, 2012

Is Myspace Moment Of Silence

facebook's myspace moment Three months ago, Mark Zuckerberg became a bazillionaire when his social media company, Facebook, had its IPO last May.

The numbers were stunning.  Over 900 million users worldwide and growing.  900m million!  The IPO numbers were stunning, too.  Priced at $38 a share, Mr. Zuckerberg, who retained 56% of the voting stock—itself an unprecedented feat—was suddenly worth $100 billion.

Not bad for a business started in his dorm room just a few years earlier.  Now all Zuckerberg had to do was figure out a way to monetize his 900 million customers.  As it turns out, that’s easier said than done.

In its first quarterly report, Facebook’s revenues were up 32% year-over-year, which sounds fantastic…

Unfortunately, revenues are down from 45% growth in the prior quarter.  In fact, this is the fifth consecutive quarter of declining revenue for the social media giant.

What’s happening to Facebook?

Overhyped and underperforming

Nothing that hasn’t happened before with over-hyped companies in the internet space that have become overnight successes on the promise of future revenues from sources that do not exist in the present.

I’m not saying that Facebook isn’t making money, because it is.  It had $1.18 billion of revenue in the 2nd quarter with a profit of $157 million, or 8 cents a share.

The problem is that Facebook is losing customers and user time spent on the site is declining.  The growth in the number of users, time spent, and most of all, revenues from same, are all on a downward trend.

Not coincidentally, so is the price of the stock, which is trading around $23 a share.

myspace moment of silence

Why would Facebook be losing customers?  The company reports some interesting phenomena going on…

They say that when Facebook reaches 50% penetration in a given country, that user base flattens out.  Apparently, Facebook is at that point in many countries.

But there are other reasons as well.  Remember, Facebook use is free.  That attracts some users with the public park mentality.  What’s that?  Public parks are free as well, and when something is free, it attracts a certain proportion of people who go there because it costs nothing, which is exactly what they have in their pockets to spend.

Thus, when Facebook offers premium services and features to its 900 million plus users, a great percentage of those users will have no use for them or little or no resources to spend on them.

Another cause of Facebook’s difficulties is that they now have competition.  Smaller services are popping up that offer the same and/or different options, or better services in some cases, with less privacy worries and more cache.

That gets at two different issues.  One is the aspect of exclusivity. Way back when, Facebook was it. There was no other choice—except MySpace, which somehow failed to capitalize on their pre-emptive position.

In a matter of months of Facebook’s arrival, MySpace fell out of fashion, underserving its users and becoming pigeonholed as a preteen hangout, not nearly hip enough for whom else?  Twenty-something hipsters and businesses.

Facebook was new, then, and cool, developed and run by another twenty-something hipster/braniac with a great following and great PR from the young Hollywood set and big business. Facebook was…the bomb.  And it grew like it, too.  After a while, say, three months ago, it became that which it started out resisting:  anonymously big business-like.  And people started to get turned off.

Users started asking themselves, “Who wants to be just one more users among a billion others?”  And who wants their privacy violated?  Their information owned by a less-than-friendly Facebook mega-corporation?  Smaller, more intimate services offered privacy, more targeted services, and one other elusive factor: coolness.

Losing its ‘cool’

This, of course, leads to that other factor—the style or cool factor.  Facebook is no longer the cutting edge, hip place to do your social media biz…

Facebook is, to hipsters and others of the younger generation, becoming passé.  Who wants to hang their personal stuff, their friends’ stuff and all the rest of it, where their parents do?  That’s like twenty-somethings going out on a Saturday night and meeting their collective parents at the same nightclub.  Ewww!

Like it or not, Facebook has joined the establishment, and the establishment is rarely cool for very long.  Not only that, but like today’s banking establishment, and like our very own federal government, Facebook’s credibility has suffered since it has not lived up to its own hype. And its financial status is starting to look like the US dollar…

It is everywhere, widely known, and losing value by its own over exposure.  Furthermore, the recent disclosure that Facebook data is shared with the US government has made its brand on par with a vile domestic spying agency and made Mark Zuckerberg look like an arrogant, out of touch and overpaid government snitch.

As Facebook struggles to regain its footing going forward, I predict that it will not find the going easy.  In fact, it will be all down hill from here.

But don’t worry, Mark; you’ll still be a hit with the Hollywood crowd.  I hear Justin Timberlake is looking for a social media bookend to go with his on-the-cheap purchase of MySpace.

And those are…The Gorrie Details.

Source: http://www.absolutewealth.com

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