The Boom and Bust of Social Media

Okay, I’m predicting another mass dot-com die off within 18-24 months of this writing. This evolutionary catastrophe will pale in comparison to the scope of the dot-com era demise in 2001, but it’ll be just as bloody, quick, and meaningful. What I’m talking about is the consolidation, re purposing, demise, and afterlife of social media. We are due for a mass-feeding, a frenzy of acquisition and merger, and rapid re-channeling of investor capital.

So here are my reasons:

1. Time isn’t elastic. Time is scarce. It’s finite. Certainly there’s not enough to go around. The average consumer of social media can only watch so many Tweet’s, post so many pictures, read so many updates to people’s lives. Even with the use of mobile applications, there’s only a finite number of things humans can pay attention to and absorb. At some point, consumers make practical decisions to abandon maintaining their blogs or Facebook page, or, reading digital content, and will scale back their activities.That diminishes demand and diminishes readership/views.

2. Too many outlets. There’s an abundance of social media channels these days. Too many, actually, given the time scarcity problem.

3. A lack of monetization. Right. Financially, all of these companies are fiscal disasters and nobody has come up with a way to make a lot of money from them.  They are huge resource drains requiring ever-more attention to software, database, and telecommunications resources. The bigger it gets, the more it costs, and there’s no monetization model feeding the growth, or, building off of the economy of scale. What is built is brand, and online community, and maybe somebody smart will come around and leverage those things. Right now, however, online advertising revenues are at record lows and nobody knows how to make money with these assets.

4. Investors will wise up. It’s been five years since Facebook launched. Hence, that five year itch will creep in; somebody – somewhere – is going to ask: “Hey – where’s my 20%”? There’s no mass IPO (Initial Public Offering) hysteria anymore (that was _so_ 1990) so there’s no get rich quick scheme for investors. Sooner or later, investors will want a plan for returning their investment and in the face of these other problems (the elasticity of time, rampant competition, diminishing ad revenue rates, no real business model), the prudent investor is going to determine they can invest their money in something else.

5. Too Much Noise. Twitter is great and I use it all of the time, but I think I spend more time ignoring it than reading it these days, simply because it’s just intellectual pollution. Click this, buy that, save these things, see my pic here… Twitter hasn’t developed a practical way to control spam so the medium risks irrelevance.  It’s getting to a point where I feed Twitter through RSS which really isn’t novel, but, it does allow me to control the spam and focus-in on reading stuff that matters. Same with YouTube – it makes “99-percent of everything is crap” proof-positive.

So, I’m gearing up for another dot-com die off, and in particular, the remnants of the Web 2.0 and social media population boom. What’s interesting is to think about where the content will go: where will all of our thoughts, pictures, ideas, conversations – petabytes of data stored on private assets liquidated to return something to shareholders… where will all of that go? I think it’s an extraordinary idea: the collective imagination of hundreds of thousands (maybe millions) of people disconnected from the grid, then, archived somewhere, like in an Indiana Jones-like warehouse, the intellectual capital just a wasted return for a for-profit enterprise, or fossil’s stuck in a tar pit for later archaeological investigation. Fascinating…

R

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