Anti-Social Media

For anybody over the age of about 25, the enthusiasm with which society as a whole - and particularly those under that age - have for sharing their every single thought, movement, photo, likes, hates, fears and dreams with anybody who cares to listen (and increasingly those who don't) is a rather unfathomable mystery.

For anybody over the age of about 25, the enthusiasm with which society as a whole - and particularly those under that age - have for sharing their every single thought, movement, photo, likes, hates, fears and dreams with anybody who cares to listen (and increasingly those who don't) is a rather unfathomable mystery.

I read a very learned paper recently which argued convincingly that this public baring of life and soul is an extension and reflection of celebrity culture - particularly celebrity of the Big Brother/OK magazine variety. Possibly.

What is for certain is that it has now become so normal that millions of people globally give it not a second's thought. Increasingly those, such as myself, whose job it is to read, understand and influence mass consumer behaviour are pouring ever more sophisticated efforts into understanding and harnessing this change. And of course, as sure as eggs is eggs, many, many smart minds are trying to work out how to make money out of it.

Of course there are naysayers - there always are. It puts me in mind of Michael Faraday's response to a heckler after a demonstration of electromagnetic power at the Royal Society. "But what use will there ever be for it?" he was asked. "Sir," he replied, "electricity will be of such import that one day it will be taxed." Twitter users beware.

Mr Zuckerburg's tax return is already of such magnitude that it has taken a bite the size of a small country's economy out of the Californian state debt. But what conclusions should be drawn?

Facebook's founders have clearly proved that they have been able to make money out of this phenomenon - and there is a tiny gaggle of pilot fish companies nibbling a jolly good living off the Facebook Whale Shark. But can anybody else?

The Schadenfreude surrounding Facebook's stock-price travails is well-documented but, as Warren Buffet famously observed: "In the short-term the markets are a voting machine; in the long-term they are a weighing machine." The markets initially voted, but now they turn to weighing they find Facebook rather lighter than they thought.

All stock-prices in the long run (i.e. when being weighed rather than voted upon) are decided on forward cash flows: projections of money they will make in the future. The $100bn question is how will Facebook - and anybody else trying to monetise social, do this? It won't all come from Farmville, that's for sure.

Knowing the intimate details of 900m people should be (and in Facebook's case has been) hugely lucrative. But therein lies the problem. One of the main ways of realising this potential is using those intimate details in ways users would not really want them used. And certainly in ways governments around the world might be squeamish about.

Monetising social is a profoundly different model to Google, with whom Facebook's flotation is regularly compared.

Furthermore, I believe there is something very different about being part of a huge and vibrant community run by a geeky Harvard drop-out, and being a member of a publicly-listed company's database.

Previously Facebook had choices about the extent to which it tried to exploit and monetize its members. Now it doesn't. The share price will, according to Warren Buffet's rule, be decided by the weighing machine that is forward cash flows. Nothing else.

I am not a naysayer: I am prepared to accept that Facebook is run by people far smarter than me. However, I do believe that the unavoidable pressure they now have to generate very large cash flows will not just be controversial (data protection is a subject governments are very interested in). It will also inevitably, in my opinion, change for good the organisation's relationship with its members, and potentially the face of social media as a whole.

Close

What's Hot