FaceBook vs. MySpace

FaceBook now welcomes everyone. FaceBook became wildly popular with the college crowd by catering only to college students and creating unique FaceBook communities for each college. You needed a valid .edu email address to join an exclusive college community. Recently Facebook opened up to select corporations, and later select high schools. Now the flood gates have opened and anyone can join "geographic" communities.

Kevin Briody says "This is a Bad Idea. A classic example of inappropriately twisting a business model to justify investor demands and market expectations."

FaceBook is trying to compete with MySpace which caters to the teenage / high school market. MySpace has become one of the top sites on the Internet with 83% of the social networking market compared to 7% for FaceBook.

In a fight between a grizzly bear and an alligator the terrain determines the victor.  The grizzly bear would win a fight on land, but the alligator would win if the fight moved to the water. The lesson for business is to keep the fight on your own turf. FaceBook just moved off their power base (colleges) and moved into MySpace's turf. I think I know how this will end.

Kevin Briody also correctly points out that FaceBook should have concentrated on optimizing their revenue model and improving their advertising engine for their very lucrative college market. Instead they have waded into muddy waters to take on MySpace.

Existing FaceBook users strongly reacted to a recent FaceBook change that allowed users to be automatically notified of any new information about the "friends" in their community. They viewed this as an invasion of their privacy. I think these kids have a lot to learn about the concept of privacy on the Internet. In a word, there is none. However, they were outraged.

Hip, trendy, cool communities and brands are hard to build. FaceBook did it by focusing exclusively on college kids and building exclusive communities for each school. By opening the flood gates to everyone that exclusive feel of a community may evaporate.

There is certainly a need for communities for recent college grads who are joining the workforce. They want to network to find jobs, rent apartments, buy cars, and stay in touch with their former college friends. FaceBook has attempted to serve that market by opening up to corporate communities. Does the FaceBook crowd want their Friday night persona to carry forward into the corporate world? Probably not. There is a new startup, Wis.dm, focusing on exactly this market opportunity. FaceBook is facing competition from all sides.

There is a long history of early innovators being eclipsed by fast followers. FaceBook needs to make some smart strategic decisions or they too could join the list of early innovators who got beat by imitators.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column.

Comments

[Josh J]

I totally agree Don. Facebook had the collegiate (sp?) market cornered - it was their's for the taking. They owned it. Then Zuckerburg got too greedy, other than capitalizing on the lucrative 18-25 year old crowd, he wanted to own a bigger slice of the pie. We'll see how it all pans out - but, as a 25 year old guy myself, I can see where Facebook is going; straight down the tubes.

Moral of the story? Stick to your core competencies.

[Mr Wave Theory]

The real reason FaceBook opened up was to boost its traffic in anticipation of a deal with Yahoo! Inc. FaceBook has signed a no shop agreement with Yahoo! Inc which means it is in exclusive negotiations with Yahoo! Inc. Of course, no shop agreements have expiration dates. You can just bet that FaceBook, aka Mark Zuckerburg, wants to keep the Yahooligans hot and heavy while the corporate development is pouring over the traffic numbers from FaceBook.

Read More

http://mrwavetheory.blogspot.com/2006/09/real-reason-facebook-opened-up-yahoo.html

[Lloyd D Budd]

I really enjoy the bear and alligator analogy, and think your article is completly on the mark.

People in college don't like to be called kids ;-) Neither you nor Facebook should be surprised that they were outraged. It is not about privacy, it about the perception of privacy and a somewhat false feeling of control. There is a big difference between knowing the internet has no privacy and having someone stick your own information in your face(book).

[Alfred Thompson]

I agree that Facebook should have spent more time on making the most money per user before trying to add so many more members. I disagree that this is a play to beat MySpaces or that it is a fatal error.
The presure to add members is driven, I think, by an attempt to increase sale value of the company rather than to make the business itself more profitable. That may lead to still more mistakes like the recent privacy issue which could be fatal. It seems like the best thing that could happen to Facebook is that a new more experienced professional management team comes in either by hiring from the outside or being bought out.

[Kevin Briody]

Mr Wave said: "You can just bet that FaceBook, aka Mark Zuckerburg, wants to keep the Yahooligans hot and heavy while the corporate development is pouring over the traffic numbers from FaceBook."

And that goes to my core argument - more traffic isn't always better. Look right at MySpace, and ignore the latest $15B valuation junk. They are having difficulties getting a solid revenue stream out of on network ads. Facebook, in the core college student market, is sitting on a dramatically more lucrative audience, even if the overall #s of users are smaller.

This is all getting very Bubble 1.0, "eyeballs" and such. What good is MySpace's massive user base if they can't make money off it?

[M.Schurink]

Some people see this action as straight down the tubes. The Youtubes perhaps, since it seems that all these websites want to jump into the next hype after the next.
On the one hand it is obvious that on the still fast growing internet you have to keep up with everything, on the other hand staying unique can also mean succes and if all communities grow to each other it will be hard to see which one is the best and none will be unique
Wis.dm seems to be a website/coomunity for serious career making, and indeed it might be that this would be a better option for grads than to just stick with the Facebook fun profile. Another option could be Studyfriends.com which also seems to be a serious website for students, so without the over done and 'could hurt your future' options but with some serious options that can indeed help your studying life and career.
Whether new websites and new ideas will stante pede be integrated into the current giants can probably be answered by a yes, but sometimes the simple one focused Goliaths can win on specific fields.