Internet | Music + Technology | Social Science | Culture | Arts | Humanities

Currently Reading:

Any opinions expressed by me on this site are my own opinions, not those of my employer.

Brands on Facebook should note that the Internet does not guarantee permanence

Strange times.

I often wonder what leads up to, or creates, the tipping point for a web company. And by that I mean the tipping can be either up or down. There's plenty of history out there - here's Wikipedia's List of Well-known Failed Dot Coms and cnet's list of Top 10 dot-com Flops both of which show us some of the big names that never lasted. MySpace may soon be added to this inglorious honor roll. It's worth noting that cnet's list shows the top 10 web company failures as occurring between 1998 and 2000 - only a decade or so ago, but out of sight, out of mind.

Clearly there have been many other less well known companies going under over the last 11 years, but it's the big names that attract attention. I think it's fair to say that the tipping points for these failed companies were reached by the burning of the invested monies and the failure of the "big idea" to catch on. And yet greed played a part. When investors smell easy money a gold rush mentality takes over.

The history of the web is short but it seems that human memories are shorter. Just as we will most likely learn nothing from the housing market collapse of 2008 - 2010, never mind taking a look back at it for learnings, we seem to have forgotten the excesses of  the dot-com boom. This is from cnet -
"The most astounding thing about the dot-com boom was the obscene amount of money spent. Zealous venture capitalists fell over themselves to invest millions in start-ups; dot-coms blew millions on spectacular marketing campaigns; new college graduates became instant millionaires and rushed out to spend it; and companies with unproven business models executed massive IPOs with sky-high stock prices. We all know what eventually happened. Most of these start-ups died dramatic deaths."

Yes they were start-ups without income streams and giddy expectations for huge profits, even though most of them didn't have a business plan, but it was the investment bankers that inflated the bubble by backing the dreams of entrepreneurs, even if they were ultimately chimeric. Of course Facebook has a business model, even if it does change with the wind, yet the latest news seems to predict a tipping point. Which could go in either direction, by the way.

Last week Goldman Sachs, along with a Russian billionaire, bought shares in Facebook, investing $450 million that now makes the company's value a nice and neat round number - $50 billion. Yet, rather oddly, another Goldman Sachs unit, when offered an opportunity to invest in Facebook, politely passed on it. I can't help feeling that we are about to have history repeat itself.

This Business Week report was one of the very few articles that I have seen, that points out that we've been here before. It was when America Online grew so big and feisty that bankers on Wall St helped engineer a $180 billion merger between AOL and Time Warner. It was meant to create the world's biggest and best online entertainment conglomerate, embracing the analog and digital properties and the combined intelligence of each company. It ended in failure.

A tipping point had been reached.

About the only thing that is certain about the Internet and the Web is that change will occur. And although websites can live forever on the Internet, web companies are not guaranteed permanence.

Here's a conclusion that Douglas Rushkoff reached in his article Why Marketing Threatens The True Promise of Social Media
The real opportunity of social networking looks a lot more like Burning Man and WikiLeaks than it does like P&G’s word-of-mouth campaign or whatever Twitter is hatching in its new analytics lab.

We are building the social organism together. That’s all the Internet has been doing from the beginning. But it seems as soon as we develop a new tool or strand of connectivity, it is hijacked by business, robbed of its power, and then replaced by mechanisms that connect us to things, rather than people.

I thought I'd share some of the articles I've found online that discuss Facebook in terms that we don't normally discuss it in, such as when will we see the demise of this storied web company:

Facebook Hype Will Fade - Douglas Rushkoff

Are Facebook Pages Killing the Corporate Website? - Sysomos

Your Followers Are No Measure of Your Influence - Advertising Age

A Goldman Unit Is Said to Have Rejected Facebook - NY Times

Facebook - A Tipping Point? - NORTH

And for the record, just a year ago, who'd have dared to say that Myspace might go away? Hot Social Networking Site Cools As Facebook Grows - NY Times

Thoughts about Klout and so-called social influence

An interview by Roll 35 at the Portland Digital Marketing Conference