Let’s face an uncomfortable truth: social media has permeated almost every aspect of modern life. You turn on the TV, your favorite show has a hashtag to go along with it. You try to find a job, you have to make sure your LinkedIn and Facebook are updated and “clean.” You strike up conversation with a friend, and they expect you to have seen a random tidbit they posted online. We’re essentially living in two worlds: one in which we interact with other people, partake in life experiences, and are surrounded by opportunities and challenges; and another that we struggle to keep up to date with the rest of our lives in an effort to “connect” us with our peers.
Despite whatever pretense of interpersonal connection these social networks project, they aren’t the ones working to enrich our lives: we’re the ones working for them. And that fact is becoming increasingly clear to most of these networks’ user bases.
This isn’t the result of any social networking company being inherently evil or anything of that sort, it’s just the most accepted and proven monetization model of a free service. The networks want to keep their services free for users, so they pay the bills by letting advertisers run ads on their site. To make the ad space more valuable, the networks use the data users have given them (interests, activities, location, etc.) to give advertisers a more targeted way to choose which users see their message. With this added value, these networks have a major selling point for companies who are interested in reaching a very specific demographic.
While this is the way Facebook and similar networks have been operating for quite a while, the series of leaks regarding the NSA and data privacy in general have resulted in a mass paranoia regarding how our data is used. People have noticed how intrude these services really are, and are either leaving the networks (albeit in relatively small numbers) or are looking for alternatives that encroach less on their personal privacy. In light of this, there’s been a lot of press about a new contender in the social networking field: Ello.
Ello is a social network built on the concept of being the “anti-Facebook”: instead of selling your data and delivering ads to you, they promise to be ad-free and minimalistic, with the option of purchasing advanced features to enhance your user experience. In doing this, they are effectively selling an idea rather than a product, which is all the more apparent when you look into their manifesto. This is definitely a disruption in the current social networking space, as it shuns everything these websites have been built on in the current era.
As elegant as the idea behind Ello is, though, there’s a crucial flaw with the plan: it isn’t a sustainable business model. Social networks are offered as services, which require a constant revenue stream to deal with things like server upkeep and maintenance. Ello’s current revenue plan is to remain both devoid of advertisements and free to users, which mean the new features they develop have to be consistently convincing enough to get a large number of people to buy in if they want to turn a profit. However, with such a prevalent view that social networks should be free for everyone, there’s only a small percentage of users who would ever pay to enhance a service like this. This model has only really worked for services like LinkedIn, which promise real-world returns (like an actual job) in return for some investment on the user’s part. Unless Ello can deliver something like that, it isn’t likely to stick.
This is why I believe the social networking businesses of the modern era will happen in a cycle: Services start out user-friendly while gaining investors, then are forced to enact a sustainable business model at the expense of the end user, who then becomes disgruntled and migrates to a friendlier alternative. MySpace dominated the market first, then Facebook supplanted it, and now the market is once again primed for upheaval due to the recent downturn in public opinion. My theory is that the best way to upend Facebook et al. is through a major disruption in the business model and a practical social product, and Ello is right in trying to shake things up. However, they haven’t created a strategy that can actually carry the service in a sustainable way.
Advertising in itself may not be the piece that needs to be removed from the social networking model – these businesses’ fault may just be in the way they handle their user’s data and the pervasive nature of their ecosystems. A new competitor’s monetization strategy can’t compromise their end users’ notion of privacy, and must serve a purpose people will actually see significant value in: ideally, something more than being able to award fake Internet points for a picture of a cat and a dog playing together. These companies need to keep their customers as the ones who benefit, while also using their technology in such a way that enables their own sustainability and keeps the customer base coming back for more.