How Niche Social Networks Could Catch Hold February 28, 2011Posted by David Card in Uncategorized.
Tags: actual social networks, application ecosystems, application programming interfaces, applications, apps ecosystems, career network, consumer electronics, consumer electronics manufacturers, niche social networks, platforms, real-time feeds, social services, Stack Exchange
The increasing dominance of Facebook, and the fading of other sites like MySpace and Classmates.com, makes me wonder about the concept of one ruling social network. Human beings, after all, naturally belong to a variety of networks based on different contexts like shared interests, work, school, geography and the like. So it seems logical that there is room for specialized or niche social networks oriented around those specific groups or activities.
Three things make me think so:
- A handful of social networks delivering specialized functions have big audiences.
- Facebook’s effort to add specialization to its network is immature.
- Other networks can harness social services through open APIs — if they’re careful.
Facebook’s flaws give niche social networks a chance.
Social networks enable their users to share information and experiences through conventions like personal profiles, linked contacts and real-time feeds of communications and status updates. But companies have gained large audiences using social networking techniques to deliver focused communications without the help of actual social networks like Facebook or MySpace. Examples include Twitter (175 million micro-bloggers and readers), LinkedIn (90 million users of professional and career-oriented contacts), Foursquare (6 million users doing location-based check-ins) and Instagram (2 million mobile photo sharers).
Meanwhile, Facebook’s own attempt to deliver niche networks within its own general-purpose network is Groups. The company revamped its Groups service last October. The service lets users create subsets of their contact networks in the hopes they will create things like family photo albums and local soccer clubs. But Groups isolates communications and activities within a group, rather than filtering them. That means users must duplicate their efforts if they want to share across groups. And Groups isn’t open to marketers or advertisers, even though activities on the service are often more desirable for campaign targeting.
Managing an open API ecosystem has its risks.
At the same time Facebook’s solution to niche social networks is incomplete, it is providing companies and apps developers APIs and services to build their own, like BranchOut‘s career network within Facebook. To be sure, it can be risky to depend on another company’s platform. Last week, Twitter locked out UberMedia and TwapperKeeper for using unapproved URL shorteners, and for archiving and re-licensing data without an official Twitter deal. Last year, Facebook and Google blocked each other from harvesting contacts, and Apple had to remove Facebook connectivity from its Ping social network due to the “onerous terms” Facebook wanted as compensation for Apple’s presumed heavy usage. The takeaway: Specialist social networks should negotiate before implementing.
Hunch co-founder Chris Dixon suggests that developers should trust platform companies who are open with their product roadmaps, or at least exhibit predictable strategies. Platforms without established revenues, such as Twitter or Foursquare are less transparent. Compared with them, for instance, Facebook’s business model is clear: It sells advertising and collects a percentage of spending on virtual goods via its Credits system, and usually only bullies big competitors.
Companies should use Facebook and the others for customer acquisition, then ease off technology dependencies. For example, use Facebook log-in initially, and then migrate users to an OAuth-based process later by suggesting they update their password for security. After importing social graph data, build up your own database of friend connections by tracking specialized communications.
Promising niches require specific audiences or contexts. Consider for example:
- Disney is attempting to create a kid-safe social network with parental controls.
- Stack Exchange has nearly a million monthly users of its Q&A for programmers, essentially using Google as its front end, and is adding a career network. Other professions could mimic this approach.
- Zynga, after building its audience on Facebook, may be creating its own social gaming hub.
- Kaboodle integrated Facebook Connect for log-in and Like sharing on its shopping content social network. It offers sponsored sales, but hasn’t integrated social commerce like daily deals.
Question of the week
Best of 2010: Movies February 24, 2011Posted by David Card in Media.
Tags: Academy Awards
Yikes, the Oscars are this weekend and I haven’t posted my usual “best of” yet. Here are my faves of 2010:
- The Social Network. High craft. Will launch a thousand start-ups.
- Toy Story 3. Huge heart. Up there with Pixar’s best.
I gave each of these 3.5 stars out of 5 on Flixster. Last year, I handed out five 3.5 star ratings and in 2008 one 4-star (The Dark Knight) and two 3.5’s. I reserve five stars for absolute classics like Casablanca, Duck Soup, The Big Sleep, and Chinatown.
Best of the rest (each gets a 3-star rating):
- Winter’s Bone. Ozark neo-realist gothic.
- I Am Love. Boy, those rich Milanese know how to live. And make sensuous, operatically over-the-top melodramas.
- Red Riding Trilogy. Like a great Mystery series touched with evil: This is the North, where we do what we want.
- The Girl with the Dragon Tattoo. Quite possibly better than the book.
- Kick-Ass. Silly, silly critics, it’s not a satire, it’s po-mo fanboy superheroics taken to their logical conclusion
- Valhalla Rising. Undoubtedly awesome if one is on drugs: stoner Christian Vikings meet the heathen on the edge of the world.
- The King’s Speech. Three good leads; takes no risks. Will win many Oscars.
- Potter 7A. If you love our three heroes, you’ll love this installment; otherwise it may seem long and a little lonely.
I liked How to Train Your Dragon and Unstoppable also, but not quite enough to put ’em in the top 10. The Academy nominators agreed with four of my favorites, one less than last year. Like the newly enlarged Best Picture noms, I like a mix of movies aimed at kids and grown-ups, with a range of budgets and box office performance.
A slightly encouraging sign: some good movies for adults actually made money this year. Toy Story 3, that appeals to both kids and adults, topped the charts.
It’s always fun to look at the year’s box office. Not a lot of movement on the hits vs. long-tail, kids vs. grown-ups, or “Can’t Hollywood Do Anything Creative” fronts. Last year’s total dollar take was roughly flat with 2009, though boosted by 3D ticket prices. There was one $400 million hit in 2010, and roughly five $300 million sellers, with 29 over $100 million. In 2009, Avatar was a $750 million monster, with a single $400 million seller and a few at $300 (32 over $100 million). There were five or six franchises in the top 10 both years, though more animation in 2010.
Where Will Zynga Go Next? February 21, 2011Posted by David Card in Uncategorized.
Tags: Bing Gordon, game mechanics, geolocation, Get Glue, location-based services, SCVNGR, Social, Social game maker, social gaming, social networks
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Last week began with stories that social game maker Zynga was raising $250 million at a valuation north of $7 billion. By the end of the week, the company was close to raising twice that, at a $10 billion figure. But bubble talk aside, why would anyone think Zynga was worth that much?
“Gamification” is an early contender for this year’s buzzword, as companies apply game mechanics to businesses as diversified as media, shopping and job hunting. Zynga is the most prominent exemplar of social gaming. Bing Gordon, who used to head marketing for Electronic Arts and is now a Zynga investor, says Zynga combines four disruptions in one: social media, analytics, alternative payments and apps ecosystems. And Zynga may only represent the tip of the social gaming iceberg.
Why Zynga Dominates Social Gaming
Zynga says 45 million users play its social games on a daily basis. Building off Mafia Wars and poker, the company has delivered a consistent string of hits with franchise titles like FarmVille, and spun off even more successful sequels like CityVille.
Its games run primarily as apps on Facebook, where it dominates the apps charts. Zynga coexists successfully — if a little uneasily — with Facebook. When Facebook changed how games could access its news feed, Zynga had to find other customer acquisition tricks. Now it combines lots of Facebook advertising with aggressive cross-promotion. When Facebook required apps companies to adopt Facebook Credits as their currency system, Zynga integrated the one it had built for itself.
Another factor in Zynga’s success is its multiple revenue streams. Most of its estimated $850 million in sales comes from selling virtual goods like power-ups and farm critters. But the company is growing an advertising business based on sponsorships, and even has licensed accessories.
Competitors abound, but so far Zynga has fended them off. Disney has struggled to master social gaming even after acquiring Club Penguin, and traditional videogame leader Activision doesn’t want to get in the business. Electronic Arts does, via its Playfish acquisition, but only 20 percent of its revenues are online or digital.
What’s Next for Zynga?
Here’s what Zynga’s likely to do to maintain its momentum:
- Expand its distribution channel: Zynga will add complementary channels to Facebook. It has signed up Yahoo and may be working on establishing its own site. A Zynga gaming hub would help in launching more mobile games and might even attract third-party studios.
- Improve its advertising platform: Others are experimenting with offers as virtual currency “cash,” and Zynga hasn’t done much with in-game product placement. I’m skeptical that its customer data is useful for ad targeting yet, so an analytics play may require Zynga to deliver different styles of interactivity via quizzes, other entertainment formats, or shopping.
- Create an affiliate network: if Zynga creates a gaming hub, it could achieve and track that needed variety of activities. Likewise, its virtual economy could embrace other kinds of goods, both digital (music, books, videos) and otherwise (offers, affiliate e-commerce, coupons).
How Others Can Respond
Social gaming has moved beyond critical mass into mass-media territory. There’s room for innovation from Zynga competitors like the gaming companies named previously, as well as companies like Google, MySpace, and others:
- Without a hub, Zynga has to rely on advertising and cross-promotion. Consumers recognize the brands of entertainment titles and artists, not studios — aside from Disney. That means others can build hubs, and/or use Zynga’s own distribution tactics.
- Unlike previous online casual games, social gaming attracts both genders. Besides poker, there should be social gaming genres that appeal to hardcore-gamer guys but aren’t World of Warcraft. How about fantasy sports on social networks?
- Likewise, someone should aggregate other time-wasters, and perhaps specialize them for women. GetGlue’s check-ins for watching TV shows, movies, and music could play here. And LivingSocial is missing an opportunity to integrate daily deals with its Facebook apps like Visual Bookshelf.
- SCVNGR and, to a degree, FourSquare, mix location-based services with games around collecting things and leaderboards. They should add more rewards and loyalty programs, and explore other gaming experiences, like gambling and multiplayer competition.
Question of the week
What We Can Learn From comScore’s Year in Review February 14, 2011Posted by David Card in Uncategorized.
Tags: Advertising, analysts, communications platform evolution, Internet data collectors, media industry, Mobile, mobile social networking, online advertising, Rue La La, RueLaLa, Ryan Kim, Social, Social networking use, unified communications
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Last week, market researcher comScore released its U.S. Digital Year in Review report that’s chock full of useful data for competitors and investors in the social media industry. For the record, comScore is one of the most reliable Internet data collectors. It combines panel-based tracking technology with census-style collection, and its numbers are the currency used by many media buying agencies for online advertising planning and evaluation.
Ryan Kim wrote up a good, quick summary of the report. Now, let’s take a look at the industry implications of some of those key facts and figures.
Facebook is now an imposing industry force. Social networking use as a whole is up, but Facebook totally dominates the category. Most important, the social network now consumes more of U.S. users’ time spent online than any other site, passing stalwarts like Google and Yahoo for the first time. Time-spent is the single most important web stat because it is driven by audience size, frequency of usage and page views. Remarkably, even with Facebook’s growing reach — it is well beyond youth and early adopters into mass-market audiences — its users continue to visit more regularly and spend more time on the site.
As a result, Facebook now shows more ads than any other online property. But advertisers don’t value those spots as highly as they do the ad inventory of other companies. Researcher eMarketer estimates Facebook did $1.86 billion in ad sales in 2010. Compare that estimate, which might be on the high side, with Google’s 2010 actual sales of $28 billion. Still, Facebook may be approaching Yahoo’s $5 billion and Microsoft’s approximately $2 billion, and has probably passed AOL’s $1.3 billion.
But retailers tell me that Facebook ads don’t convert to direct actions as well as others’ ads, although companies like Zynga and Groupon optimize Facebook ads fairly effectively for customer acquisition. Facebook’s inability to command high prices for its ads begs re-asking the perennial question: Is a communications-based medium simply less effective than a content-based one? It’s always been difficult to build effective advertising campaigns atop IM, chat and display inventory near email. Besides continuing to improve its targeting and optimization tools, Facebook must improve the richness of its formats and sponsorships to tap brand-advertising budgets.
Communications and Social Commerce Trends
The comScore report’s decline of email chart — time spent using web-based e-mail, to be exact — is getting a lot of coverage. Overall usage is down a bit, although it’s essentially flat for 18 to 24 year olds, whom you’d think would be the ones replacing email with mobile mail or social networking. Likewise, although teens’ 59 percent decline gets headlines, teens don’t use email much in the first place. Now, if texting were down, that’d be a story.
The report shows spectacular traffic growth to daily deals sites Groupon (7x growth) and LivingSocial (4x), as well as solid growth for flash sales sites like Gilt and RueLaLa. Social commerce is definitely hot, but these businesses depend on email newsletters. If there’s anything to the email decline story, those companies will have to rely even more on ad spending to maintain their growth.
What to Watch for in 2011
My industry outlook report is here, and based on what comScore saw in 2010, here are some other potential trends:
- Communication evolution: Watch closely to see how Facebook Messaging affects email usage, and whether mobile social networking (used by 25 percent of Facebook members) gains critical mass.
- Engagement measurement: Time-spent is critical, but doesn’t capture attitude, conversion or marketing objectives like increased awareness or purchase intent without adding pre- and post-campaign surveys and attribution tactics.
- Social media and commerce leadership: Will Facebook continue its dominance? I expect players like Google and Amazon will soon play big roles as social launchpads for e-commerce.
- Search quality impact: ComScore shows continued search dominance by Google. I think Google can maintain results quality in the face of spammers and content farms by tweaking authority settings in its algorithm, but other observers are skeptical.
Question of the week
Are Comments Facebook’s Next Big Service? February 7, 2011Posted by David Card in Uncategorized.
Tags: application programming interfaces, applications, comment systems, comment tools, IntenseDebate, Livefyre, ratings and reviews, social media sources, user-generated content
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Speculation didn’t quite reach Facebook phone level, but the buzz around last week’s CNET story pre-announcing upgrades to Facebook’s nascent comments service makes it sound as if the social network is about to launch another potentially world-dominating technology and crush companies like Disqus and Echo in its wake. Which would be tough, since there’s still plenty of room for competitive innovation as far as comment systems go.
Facebook has a comments plug-in for its widely-adopted Connect service that sites like People magazine are using. It added voting and threading to the plug-in last year, and may be working on a very basic credibility scoring system for commenters. Like Facebook Likes and Connect, a comments system could weave Facebook threads far beyond its own site, while potentially providing rich data for Facebook ad targeting. So far, Facebook doesn’t charge for any of these services, but rather uses them to enhance the overall Facebook platform, make its services and brand ubiquitous for its users and lock in other companies’ sites to its network.
Competitive Comments Landscape
Sites can choose from many full-featured third-party commenting systems that can often pull in related content streams from professional or social media sources, including other comment tools. They typically support multiple log-in mechanisms, and commenters can post and share comments through Twitter and Facebook status updates. Some maintain their own ID system and all create a network of comments across their customers. Players include:
- Disqus has been around since 2007. It offers online publishers tiered levels of service ranging from $19 per month to $1,000 per month and up. The higher-priced services include analytics, single sign-on, theme customization, better API access, guaranteed uptime and customer service. Customers include CNN, Fox News and Engadget.
- Echo started life as widget maker JS-Kit in 2006, and has a new product launch event scheduled for February 8. Part of its pitch to publishers is that it won’t compete with them with its own ID system, or by hosting experiences on its own domain. Its customers include a few Time Warner properties (Time, Sports Illustrated), the Washington Post and Technorati.
- IntenseDebate is owned by Automattic, the company that owns the big blog platform WordPress (see disclosure), which acquired IntenseDebate in 2008. Many WordPress blogs integrate its comments. IntenseDebate also supports Blogger, Tumblr and TypePad.
- Livefyre is one of the newer players. It uses the FriendFeed engine and promotes itself as the comment network that’s closest to real-time.
Outlook for Facebook Comments
Likes and Connect caught on like wildfire, and if Facebook is serious about comments, it will get plenty of attention from publishers and other sites that embrace consumer comments (e.g., retailers, corporate sites, financial services). Comments could even play a role in enterprise collaboration. Comment competitors and companies evaluating alternatives should realize Facebook’s advantage in this space is limited to its user base and potential distribution. How can other comment systems differentiate themselves? Here are a few ways:
- User identity: Current players use the old familiar “embrace and extend” strategy by enabling and integrating Facebook log-ins with those from Google, Yahoo and the publisher’s own. To date, Facebook has not integrated other log-ins, and it delivers single sign-on by superseding the native log-in system. Nor does Facebook share “ownership” of the customer, or data about him. Some sites may want to preserve user anonymity or support different user personae.
- Customer service: Facebook’s developer resources aren’t infinite. Companies can likely do better customization and integration with content management systems, and offer white-label unbranded options.
- Moderation and ratings services: Comment systems should invest in tools supporting moderation and commenter credibility, and even consider offering professional human-based moderation. Livefyre has a clever points system to encourage quality and prevent flames and off-topic commentary.
Disclosure: WordPress is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.