The Inevitable Social Media Shakeout (Or: Social Media Gets Real)

June 8th, 2010 by Brian Posnanski

Is your head spinning from social media overload… the sheer number of networks out there… the amount of content being written about these networks? There are emerging signs of a coming social media consolidation. Some would call it the beginning of the end of the social media bubble. We prefer to call it the end of the beginning.

Writing recently in MediaPost, Erik Sass notes a number of parallels of our current social media infatuation with the original Web bust 10 years ago. And the parallels are striking: lots of networks that do the same thing (do we really need Naymz and Plaxo if we have LinkedIn?), breathless media frenzy about social media trends and a whole bunch of sites that aren’t making any money. Even The Onion got in on the action recently with a hilarious send-up of some social media puffery from The New York Times.

But let’s face it: for some time, social media, just like any other “industry,” if you want to call it that, has been dominated by a Big Three: Twitter, Facebook and LinkedIn. All of these networks continue to grow and show their immense value, and two of the three are easily cash-flow positive (We know you’ll get there eventually, Twitter). Not to mention that all of them have huge user bases. These networks, or competitors like them, will be around for some time, and businesses are deriving value from them. (We count YouTube as its own phenomenon.)

When it comes to the rest of the herd, however, we’re bound to see some thinning. Consider some of these recent developments:

• Digg, one of the earliest social media “bookmarking” sites, has seen its visitor traffic plummet by a third in just one month. We’ve always been a little skeptical of the utility of Digg and other social bookmarking sites like Delicio.us and StumbleUpon for most business users, but we know plenty of other PR folks feel differently.
• Ning is a social networking platform we like. We’re amazed at the number of people who haven’t even heard of it, but hundreds of thousands of individuals and organizations, from MMA star B.J. Penn to multi-threat star Ellen Degeneres, use Ning to create highly social and interactive communities (back in the day we used to call these things websites). Ning recently announced that it is switching to a pay-only model. We’re rooting for Ning and hope this heralds the beginning of well-deserved profitability.
• Then there is the famous Bebo bought by AOL just two years ago for $850 million. AOL now says it is ready to shut the once-hot service down if it can’t find a buyer.

So where does all of that leave us? Separating the wheat from the chaff often has an elucidating and salutary effect. Just think of the champions of Web 1.0 – from Google to Amazon to Craigslist (Craiglist! who woulda thunk?) – who have no doubt changed the way we live. But how many folks remember (or even care about) pets.com, Webvan or even Excite?

We would hope, if not expect, that a consolidation in social media could herald greater focus on the social networks and social channels that are real and effective, and the further development of best practices therein. That will lead to social media as a more coherent craft and less confusion for just about everyone. A fair amount of homework and discipline, of course, will still be required.

Tags: bebo, digg, facebook, linkedin, mediapost, ning, plaxo, social media, social media bubble, twitter