Privacy problems will kill Facebook
Posted on | May 24, 2010 | No Comments
Author:
Jason Voiovich
Ecra Creative Group
Key Points:
1. Facebook’s user behavior is a typical “long tail”, where the vast majority of users interact very little.
2. This is typical of many electronic marketplaces and social networks, and represents solid business potential.
3. However, increased privacy concerns could tip the balance of perceived risk for the huge number of casual users, sending them away in droves.
400 million users.
Wow. That’s a lot of people on Facebook. And I’ll admit, the number has the power to stick with you. I know it did for me. If you think about it in context, that’s more than the population of the United States. It’s certainly bigger than any other social network by a couple of orders of magnitude. Authors the world over have predicted the end of Google, Microsoft, and Apple at the hands of the Facebook juggernaut.
But my personal experience never really meshed with all of the hype. It just didn’t sit well with me. I know there are a lot of users, but the company isn’t making any money. At least not on the scale of the three giants it hopes to unseat.
Add to that a spate of complaints regarding Facebook actively working to change the notion of online privacy, and something just smells funny.
To get my head around the issue, I started with a quick analysis of my own social network on Facebook. I have a reasonably diverse “friend” base, with contacts from grade school, high school, undergrad, and grad school, along with personal contacts, friends of friends, and people I used to coach. All told – a little over 100.
For a period of one month, I counted the number of interactions for each friend as posted on their wall (and therefore, on my news feed). It doesn’t catch everything, but it’s a pretty good barometer of activity.
Here’s the result set:
As you can see, a very small group of people in my network accounted for a huge percentage of all of the posts, comments, and interactions. A much smaller group posted a few times. A larger group interacted only once. About half had no activity whatsoever.
If we fit a curve to the data set, and make the assumption that my data are representative, we can see a familiar pattern emerge.
Statisticians (and author Chris Anderson) call it “the Long Tail”. It describes the situation here reasonably well; a large group of people interact with Facebook very seldom, but not zero. From a business perspective, it costs Facebook next to nothing to provide services, games, and tools to this group – all with the individual potential to monetize the activity.
What we’ve done is create a “utility curve” – a way to see the usefulness and value of a social network technology across its user base, from the hyper-users to the passerby-users.
When we look at other social networks, we see a similar pattern.
Twitter has fewer opportunities for intense interaction (it is a simpler system, after all), but drops off in much the same way. LinkedIn falls off as well, but provides a bit more usefulness even at the far end of the curve – an online professional resume has more value “just sitting there” than a dormant Twitter or Facebook account.
But that didn’t really answer my original question. And here’s where the privacy issues circle back and helps us clarify the real problem.
It all comes into focus when we realize Facebook does not have a “long tail” distribution – one in which the right end of the curve approaches (but does not cross) zero. Facebook’s utility curve does cross zero and move into negative territory. In other words, for some users, using Facebook can actually be harmful, not simply “of limited use”.
The graph below illustrates that difference.
Think of “negative territory” for Facebook users as real or perceived harm. Toward the left of the “zero point”, the harm might be modest – slightly embarrassing pictures, time-wasting games, etc. But at the far of the curve, think of people who have lost jobs (or spouses!) from Facebook posts. Don’t think it could be that bad? Ask someone who’s been stalked on Facebook.
But as long as privacy settings are in place, and robust, the potential for harm exists, but it’s limited. Frankly, it may be no more likely than a mirror of normal social situations.
However, as Facebook obfuscates its privacy controls in an effort to monetize the network, you can see the utility curve shift to the left. This dramatically increases the area under the negative end of the curve. Put another way, a larger group of people will either perceive or experience harm from continued participation in Facebook.
And with a large group of people – who all use Facebook a little bit – the whole “long tail” business model falls apart.
That is Facebook’s fundamental problem.
For a huge number of Facebook users (93-95 percent of them, or all but 2 million users), the social network is a low risk, low reward endeavor. Neat to be on, but nothing special. But dial up the perceived risk, and that huge number of users will reset their own risk tolerance. Without much benefit to keep them engaged, they’re gone.
My prediction: It’s only a matter of time. More specifically, the rate of decline. It may start off slowly at first, but a social network’s power (and value) comes from its size as well as its ability to deeply engage a small number of people.
Without a major rework on the privacy front, I give Facebook 12 months.
Related Links:
How to permanently delete your Facebook account
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About
Jason Voiovich
Ecra Creative Group
Phone: 651.209.2778
Principal and co-founder of Ecra Creative Group, a Minneapolis, MN based creative services firm specializing in brand development, reputation process management, naming/trademark, and product launches to drive measurable business results.
