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Social Media Is Dying
"This is in part because investors in the private and public markets value companies based entirely on growth. They believe a company is “bad” when it stays steadily profitable, because a “good” company is one that grows by double-digit percentages every single quarter for the rest of time." I love this sentence it really reminds me of my ex jobs where everything went to shit the moment we were stable
As someone who makes a living by using the actual products that Meta, Google, Tiktok & Twitter sell (AKA I'm a Digital Marketing Director who pays to put those annoying ads in your feed), I'm shocked by the amount of "Nero Fiddling while Rome Burns" I'm seeing from most of my peers. Tiktok's new method of trapping users in an endless cycle of scrolling provided the first breath of fresh air in the digital marketing space since Meta and Google's stranglehold commenced, and it's caused a lot of people to (mistakenly, in my opinion) believe that something new is or will be coming down the pipeline that is going to make these existential threats to the current way of doing business some how ... just not be that big a deal?
And with Google's new bonehead move of promoting the head of YouTube Shorts (yet another rip off of the vertical scrolling video boom) to the CEO of YouTube indicates that Google is just as pants-shittingly-terrified of TikTok as Meta is and making some pretty large bets that the addiction portion of these algorithms are going to be enough to overcome the gradual throttling of the actual adtech that's made these platforms so much fucking money.
I think TikTok is the only one that's really poised to survive these sea changes, because they don't really give a shit about what you do after you leave the app (which is how MOST of Meta + Google's products tag people with labels like "Would Pay for $30 Socks" or "Probably Would Click On An Ad About a Monthly Subscription Box of Tactical Gear") but instead focus on honing in, with incredible quickness, what sort of weird ass green-screen content is going to keep you on the app for as long as possible while limiting your conscious understanding of just how the fuck 3 hours have passed while you watched a bunch of recipes being made and dudes talking about why 15 minute cities are spelling the end of civilization.
But just because TikTok figured out how to make crack from Meta and Youtube's cocaine, that doesn't mean that things are just going to be rosy for marketers moving past 2024. Of course, that's almost 4 quarterly reports away, so it might as well be 100 years in the future.
"The eternal growth engine of startups has always been “get a bunch of free users and then monetize them through advertising.”"
I return always to Maciej Ceglowski's framing of "investor storytime":
"Investor storytime is not exactly advertising, but it is related to advertising. Think of it as an advertising future, or perhaps the world's most targeted ad.
Both business models involve persuasion. In one of them, you're asking millions of listeners to hand over a little bit of money. In the other, you're persuading one or two listeners to hand over millions of money."
https://idlewords.com/talks/internet_with_a_human_face.htm
As we're now discovering, this is a terrifying prospect for platform operators when the investors go away. They didn't have plans for lucrative, effective products that users might actually want, and now they're flailing. They had just secretly hoped "investor storytime" would last forever.
You know, I'd probably pay for a Facebook that just showed me posts of people I connected to in chronological order, let me DM them, and suggested nothing to me, other than connecting to more friends of friends, or in response to a positive search for groups of interest. As it is I trashed my account without looking back after the Cambridge Analytica revelations. I can only assume they've looked at how much I'm worth as an eyeball versus how much I might pay to subscribe and made their choice. However, I pay for entertainment so I don't have to watch advertising. Maybe there aren't enough folks with my stance to make an ever-growing business.
"They believe a company is “bad” when it stays steadily profitable, because a “good” company is one that grows by double-digit percentages every single quarter for the rest of time. The result is that social media companies are incentivized not to find ways to make users happy, but to find ways to continually extract money from them in a way that may not be sustainable, but immediately placates those who demand eternal growth."
Really hit the nail on the head here of the whole industry/environment that wall street expects. Demanding the digits are doubled every quarter, irregardless of the wellbeing of the users and communities that sustain the companies. Eternal growth no matter what.
The philosophy of cancer.
Very interesting line of thinking. It's been clear for years that companies that retained a notion of the value of their content and services and put the cost up front, got sustainable business models for the long run, selecting for repeat customers ready to pay for something they thought worth it.
Many media companies failed to do this in the 2000s, when old-style "broadcast" advertising began to crumble with the onslaught of Craig's List, et al. They fiddled with paywalls when it was too late (NYTimes) or just failed to protect their brand entirely (WaPo/Newsweek). In the 2010s, they were reduced to either being bought out by billionaires, or hyping targeted, heavily biased content to a narrow audience of "engaged/enraged" users (note they're not called readers any more -- few of these people read). The latter strategy was pioneered by Vox and imitated by the Times. On the right, this strategy was picked up by Fox after the 2018 mid-terms. The strategy's relationship to America's post-industrial class structure and declining democracy, is very well brought out by Batya Ungar-Sargon and her book, Bad News. (Not surprisingly, no major newspaper gave it a real review -- the book hits too close to home.) The only major news outlet to protect itself was Dow Jones (WSJ and Barron's).
Once the one-trick pony of "growth" is exhausted, what will become of the social media companies? They'll need some new model of high-end broadcast (non-targeted) ads and subscription revenue, perhaps combined with premium services. YouTube is haltingly moving toward such a model. We thought it worth it to get YouTube Premium, partly for the kids. It will gradually evolve toward free/ad-supported generic services plus premium archived + live content.
Your argument, though, seems to swerve from a notion that Musk made an unforced blunder (he did, when he spent 44B for Twitter), versus Musk just facing the already-deteriorating prospects of social media. The latter is closer to the truth. By the end of this decade, private and public action, plus pro-active changes by the companies themselves, are going to strip down the "scraping up vast amounts of user information and sell it" model to something much more modest. We might even see a resurgence of physical newspapers and magazines -- as we're already seeing on YouTube -- as outgrowths of sites like Substack.
I don’t do social media. I don’t know why Facebook seemed creepy to me from the beginning. But I have had YouTube Premium for years, and it’s been worth every penny to be able to play videos without any ads. I find it hard to believe that anyone who uses it with any frequency would still put up with that miserable crap, unless they were so poor that they had no choice.
Or Mark and Elon saw that the advertisers are running out of cash, lower demand for ads, and therefore lower revenues for advertisers; coupled with the idea that users are willing to pay for premium models without ads (Spotify premium, Youtube premium etc) and can therefore allow those customers to convert whilst continuing to collect revenue (lower) for the users who cannot/will not become premium
Man, the Martial Art of Craps just keeps on giving. One cannot parlay bets indefinitely and expect to profit because the seven out is inevitable. Yet that is the growth business model, except it's like I was also allowed to take out $10k marker based on the $120 bet on six I had.
Brilliant as always. I'm curious about your thoughts on LinkedIn when it comes to monetizing. Right now you can pay for extra features but it's pretty expensive. You still have to see ads of course. And it's a platform that doesn't let the user monetize content, yet it exists around the concept of work, jobs, careers, and businesses. The paradigm of the platform has changed from 5, 10, 20 years ago (it came out in 2002) when it was essentially a rolodex.
GOOD RIDDANCE