Facebook Is Going To Be The Next Big Thing. Again.

This is the first part of a three-part post series, trying to analyze the future of social media and the web. In part I, we examine what tools Facebook has to make it a dominant force on the internet and in our lives. In part II, we will explore the battlefield between Google and Facebook and see the different tactics they deploy in taking over the internet. In part III, we will try to see into the future and I’ll make some wild claims about Twitter – and try to prove them too. Stay tuned.

Facebook’s Old Business Model Failed

Google created a lucrative business of ad placement. They make a gazillion dollars in ad revenue. In Google’s wake, there were a slew of companies trying to do the same thing. For a while, ads were the business plan of the internet. Only, it didn’t work.

It takes huge amounts of clicks to make ads a lucrative business plan. In order to get these clicks, you need a huge customer base. And even then, it doesn’t work. Facebook has a huge customer base and it places ads on every page, however their ads are not as effective as Google’s. They’re just not bringing in the big bucks.

Why is that? For starters, people don’t use Facebook to buy things. It’s much easier to sell something when you are addressing a person with buying intent. When I want to buy something, I go to Google. When I want to hang out, I go to Facebook. What ad can be relevant to me when I’m chatting with a friend?

For a moment it seemed a rather bleak outcome. If Facebook won’t become a huge company, it will wade quietly at the sidelines of the Internet, until some new contender will wash them out. I, on the other hand, think Facebook hasn’t even started affecting our lives. I think Facebook is leading a revolution on the internet, and it will make huge piles of money doing so (I’ll have to discuss my business philosophy sometime, to explain why I believe consumers gain if there’s a company that’s making a lot of money).

My Internet Identity

The first thing Facebook has, is a good grip on my internet identity. Using Facebook Connect, I can easily log into websites, without having to remember multiple usernames and passwords. The more you use Facebook Connect, the more powerful Facebook becomes. The reasons are twofold:

  1. Switching Cost – Think of what will happen if Facebook disappears. How many sites will you lose access to? How much would it cost you to reconstruct your digital identity? On this front, Facebook has some competition from the OpenId Alliance, however, OpenId is just as broken. I use my Google account for many things, and if that somehow breaks, I’m done. There are some services that really hold us by the huevos. I’d pay to keep them up (Gmail literally contains my life!), and the more I use any one service the more power it has over my digital life.
  2. Data Integration – the reason Facebook Connect is better than other services is the integration with the Facebook Feed. The more I use Facebook, internally and externally, the easier it becomes for me to control my digital persona. It all streams into a single page, my Facebook Feed, where I can interact with everything. It’s easier for me, because I don’t have to go and check multiple sites. It’s powerful for Facebook, because they know so much more about me than anyone else.

So, Facebook will own my Internet Identity, and bring it all into my feed.

My Personal Life Line

To date, Facebook has the best social feed implemented. Here’s why:

  1. Inline Comments – the fact that each item has it’s own comment thread is much easier to follow than just having a bunch of status updates. Yes, Twitter, I’m talking about you. Google Buzz has this feature right. Allowing us to discuss items inline is what social conversation is all about. I find it much easier to follow and contribute to these conversations. On the business side, Facebook has a better chance of learning what is loved and important to each and every one of us.
  2. Separating Live From Interesting – The default feed on the Facebook homepage is a combination of new and interesting items. Interesting is determined simply by the number of ‘Like’s and comments. New items are randomly inserted as well, giving new items a chance to become interesting. Crowd sourcing interest is much easier than trying to build algorithms that automatically filters these streams (the way I imagine the Google Buzz engineers will try to solve the problem). The signal to noise ratio is very good, and most of us don’t need real time feeds (more on this point in part III).

One thing I am missing on Facebook is asymmetric following. Some people use social media to post interesting links and news. They are not my friends (yet), so I just want to follow them Twitter and Buzz style, and see what’s new and interesting. In the Facebook lingo, I want to become a fan of a user, not just a page. There are many privacy issues to be resolved, but this single change can render other social networks redundant.

My Wallet

Facebook is deploying an online payment system. This is extremely important. Since Facebook owns my Identity and know me so well, they can prevent fraud much better than any other service provider. It won’t be enough to open a Facebook user to use this system. You will also have to be an active user.

With this, Facebook can protect users and businesses better than the competition, while maintaining lower commissions. They also have a larger user base than PayPal, the strongest competitor in this area. Facebook can turn into the number one payment system over night. This is a very big deal.

Coming Full Circle

It all ends back in the Facebook homepage. You’ve rated a product on a shopping site, while using Facebook Connect? It’s in the feed. You’ve bought something using Facebook Credit? It’s in the feed. Organic ads in the feed are what no-one was able to offer before without sounding sleazy and spammy. Marketers are going to love this. Sellers will jump head over heels to get a piece of this action. This will drive Facebook Connect and Facebook Credit to new heights.

With these changes, buying intent is coming to Facebook. Looking for a new dish washer? Why not search Facebook for reviews by your friends? Oh, wait. There’s also a relevant ad for that. Of course, Facebook has to upgrade its search capabilities to get this working properly, but it only has to work on the Facebook Feed, so it’s easier than trying to control the internet like Google does.

So, Identity, Feed, Wallet, Ads and Search (with buying intent). It’s not so obvious that Google will be able to dominate the internet for much longer. It’s going to be an interesting battle, and this is exactly what we’ll discuss in Part II: The topology of the New Internet.

Talking To The Machine

With the explosion of Social Media in the last couple of years, lead by Facebook‘s and Twitter‘s success, I’ve been hearing a lot of commotion from two opposing camps. On the one hand are people who don’t use social media. They are, by far, the majority (as Facebook has “only” 350 million users, and Twitter is still much-much smaller than that), but they are a quiet majority. The other, louder camp relies heavily on social media to pump a message of self importance. Most people writing in the blogosphere are early adopters, and as such tend to be ahead of the curve in adopting social media as well. There is no surprise, then, that the Internet is full of people calling anyone shunning from Facebook a Luddite.

“How can you say that social media is bad?” they ask the taxi driver who complains, that his son spends too much time in front of the computer and not enough time playing soccer with his friends. “He is playing with his friends. Honest. In fact,” they go on, “he has more friends now than ever.”

This is a big fat lie.

Talking To The Machine

I’ve been spending more time in Social Media lately. There’s a lot going on in there. Many funny YouTube videos. Links to new and exciting gadgets. Reviews of various books. Pictures of kittens.

What I found out is that when there is so much information, I have no time to engage in real conversation with real people. I comment on status messages, interacting with bits of information, not with people. It’s like a Turing test gone wrong, where I’m trying to separate human statuses from machine generated statuses.

One thing I can do is ask for help. A few weeks ago I needed an old computer, so I asked if anyone I’m connected to is going to throw away his or hers. Within a couple of weeks I’ve got me a brand-new old-but-respectable working computer. People ask for opinions about products. They ask for help finding a specific song. Social media is a great tool to dip into the knowledge of the many and find stuff where Google is completely broken.

This is useful, but it is not a replacement for the intimate connection you can only have with your best friends. This is you, using a service, to find information, interacting with information, and talking to the machine. If the Matrix ever existed, it would not have used people as a power source. It would have been an aggregate of human knowledge and computation. An intelligent being so complex, we couldn’t even comprehend its existence – the same way neurons in our brain don’t contemplate about our feeling of self.

Remember, there is no spoon.

Communication Is The Key

Communication is easier today, more than ever. This means couples keep in touch during the day. Children and parents know better what the other is doing. Close friends can stay closer. With the mobile phone, instant messaging, emails, Facebook and Twitter, I find it much easier to keep in touch with a select few. The advance of technology allows these few to be as far away from me physically as possible, it makes no differences.

But they are select, and they are few. At the end of the day, social media has not changed much in how we chose our friends. It only changed how we spend our time with them.

One Last Word Of Warning

A recent study discovered that watching television increases risks of heart attacks. This is no joke. The research discovered that:

Compared with those watching less than two hours of TV, people who sat in front of the box for more than four hours a day were 80% more likely to die for reasons linked to heart and artery disease.

Dunstan had this message for members of the public: “In addition to doing regular exercise, avoid sitting for prolonged periods and keep in mind to ‘move more, more often’. Too much sitting is bad for health.”

So, if you are a heavy user of social media, please, use it on the go from a mobile device. Don’t sit in front of the computer for the entire day.

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How Google Wave can save Twitter from itself

A few months ago, Rob Diana posted on RegularGeek about the hazards of having only one Twitter or one Facebook. Whenever there’s a service that is important to us, and is without competition, consumers are in a disadvantage:

Unless you live under a rock, you have heard that there were massive DDOS attacks that affected Twitter, Facebook and a few other sites. The sites affected had varying degrees of success in staying functional, but Twitter seemed to be the hardest hit. Given that Twitter was having issues for most of the day, many people migrated to other services like FriendFeed. However, FriendFeed is not an alternative microblogging platform, it is a completely different type of site. So, what can we do if Twitter goes down?

If Twitter goes down, the blogosphere reacts as if the world is ending. It may be a bit much, but Twitter has become a mainstream application. When it goes down, a lot of people know about it. Can we avoid downtime? Probably not, but there are ways to work around this problem. First, Twitter could itself become distributed. Similar to software like email, why not have several Twitter installs around the world that all talk to each other?

Here’s the thing: Once you have a winner in social-networks such as Facebook, or in real-time web such as Twitter, it changes the economy in those markets. The network effects of these products makes them extremely hard to defeat. Today, instead of fighting with Facebook and creating a competing social-network, it makes much more sense to compete within the Facebook economy (this is the angle that Zynga and iLike are playing).

Facebook and Twitter, mainly because of their APIs, are becoming economies, and there’s no backup system in place. If Twitter decides to shut down third party clients, so only official Twitter client with official Twitter ads are used, they’ll can do it. Users have no-where to go.

Fail Whale

Fail Whale

Proprietary is Evil

The internet technology stack is built on openness and sharing. Packet routing is a basic pay-it-forward mechanism where each server does its best effort. Firefox and other open-source projects got a huge boost through the shared efforts of many, and they are creating much needed competition to some evil monopolies. Currently, the leading social companies are (quickly!) becoming monopolies.

And the web prefers good over evil:

Wave can fight Evil

Wave is coming with its own set of open protocols. If you want to create a Wave provider that competes with Google, you can. That’s good because (repeat with me): Where there’s competition, the consumers win.

Here’s a short difference by example between the Wave protocols and the old social media services:

  • Email is a protocol. If I don’t like my email service provider, I can switch. It’s a hassle, but not impossible. Technology allows for competition. Competition drives the market. We win. When Gmail announced they are giving 1GB of storage and a new interface, suddenly everybody was innovating their email clients.
  • Instant messaging is a service. When instant messaging just started, I was using ICQ. I hated ICQ, but I couldn’t move until my friends moved. I liked Messenger, but had to move when my friends started using Gtalk. I can’t chose.

We need to build many Wave servers. We need competing Wave providers. We need to hook Wave into the existing APIs of the social-media services. We need to allow consumers to move from the monolithic services to the distributed technologies, without losing their connections. Once we are on the Wave, no one will be able to keep us away from our real-time web and from our friends. You can’t Fail Whale email, you can only Fail an email provider.

By moving from services to protocols, we can turn the Fail Whale into a Prevail Whale.

Prevail Whale

Prevail Whale

Open-sourcing Stuff 2.0

Open-source is much vaster than software only. Concluding the argument I’ve started last week, I want to explore the final frontier of open-source: the physical world.

Making stuff used to be hard and expensive. In order to be efficient & competitive in the market, you needed big and expensive machines and you needed to mass produce. The barriers of entry were very high. The cost of building a factory was amortized over the vast amount of items produced. These assumptions are no longer true.

Jay Leno has a 3D scanner and 3D printer combination that can print parts for his car collection, parts that are impossible to find. The equipment costs a few thousand dollars, something that is easily affordable, if not by you, than by your local businesses. Toyota will fabricate parts for your car at your local garage. At the closest IKEA, you’ll be able to get custom furniture, created for you on the spot.

Collaborative design is the key to the future

The economic implications of production proliferation are huge. Just-in-time production will remove the need to store or ship anything but raw materials, and yet, every shop will have anything in stock just for you. The impact on global worming, etc. is all good, but the major change in our lives will come from the personal innovation of stuff. Stuff 2.0.

MIT has a project called FabLab, which builds $20,000 small fabrication labs all over the world. These labs allows the local inventors solve local problems:

My colleagues at MIT’s Center for Bits and Atoms and I developed fab labs as a modest outreach project to provide access to prototype tools for digital fabrication. These labs unexpectedly spread to communities around the world, from inner-city Boston to rural India, from South Africa to the north of Norway. Read more

They’re being set up in these places because of an instrumentation and fabrication divide that lies beyond the digital divide, because of a desire to measure and modify the world as well as access information about it. Fab lab projects are developing antennas for wireless data networks, computer terminals to connect to those networks, solar and wind turbines to generate energy, and analytical instruments for agriculture and healthcare. Fab labs are also attracting and training students, and incubating businesses.

The killer application of personal fabrication labs, in spite of what I’ve mentioned before, isn’t what you will be able to buy at wallmart. It will be what you will produce for yourself. Personal fabrication will allow you to create products for a market of one.

You can buy such equipment at home, for about $2,800. This open-source 3D printer, or “fabber”, can replicate itself. So if three thousand dollars are too steep for your pocket, you can organize a small purchasing group. You buy one fabber and just replicate it for all other members. The price of a fabber can be reduced to the cost of materials.

I think that the fabrication revolution will change our lives in ways that are as profound than the Internet, and it has started yesterday.

No porn for you. Come back one year!

Good and Evil are in battle over our internet. Good, in this case, will be represented by freedom of information. This leaves Evil with the difficult job of censorship. During the last years, it seemed as if Evil is fighting a losing battle. Last time, I’ve mentioned how the media moguls are losing grip over the media channels, and how we are now exposed to more sources of information than ever before. This means freedom is increasing.

However, I neglected to mention a danger brewing on the infrastructure of the Internet. As more and more of our information is moving onto the net, we are losing other ways of communication. There are no substitutes to the Internet. As distributed as the content on the Internet is, the gateways into it are few and well controlled, and the few that once controlled news channels are replaced by a few who control the Internet.

I’m talking about Internet censorship. The most famous operation of this kind is the Great Firewall of China, playfully named after the great wall, is, in fact, no laughing matter. Google took a relatively bad hit for complying to the demands of the People republic of China. The company’s mantra of Don’t be Evil has been tarnished so badly, that it is no longer recognized with the company any more. Google is now a little bit evil.

Censorship is a slippery slope. Censoring illegal activity, for example, sounds like a good idea, when “illegal” refers to pedophilia. It sounds terrible when it is “illegal” to disagree with the government. Where do we draw the line?

Big brother is always watching

Technology is not on the side of good. Technology is impartial. That is why I love computers so much. They’ll never hate me for who I am (even though some people will feel otherwise). The same technology that powers our search engines and the plethora of new semantic ad placement algorithms, is now creeping into internet blockers. As technology gets better, more and more countries will be able to deploy their own net over the net, and filter out any “bad influence”. There will be no need for the army of cheep labor that China can command, and we’ll see it more often. Heck, even Australia has a system in place to automatically flag websites.

In some countries there is a desperate need for a way to bypass these filters. During the Iranian election, the only means of communication between people had been sites like Twitter and YouTube. You’ve seen how well the news reported the issues.

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Real-time is faster, for now

For now, the manual filters are slow. No matter how many people you can put on the filtering side, there will be more people on the information broadcasting side. So, in the mean time, the real-time media is faster than the governmental firewall. This is why real-time media is so important. For a long time I’ve been looking at Facebook, Twitter, etc. as places to go to when I’m bored. But where speech is NOT free, Twitter and FriendFeed are the only way to get around censorship. That is why China turned off Twitter, completely.

We need a way to bypass the Internet. Only by doing to the Internet gateways what blogs did to news sites, we will ensure the victory of Good.