History Repeats – Facebook is the new AOL

Interesting take, Jay. I never really thought about that. I'll have to let that stew in my head.

Hi Jay - It's funny you posted this, cause it's exactly what I have been thinking: that Facebook is a new version of AOL.

The thing that's ironic to me is that many people left AOL because they realized they were being limited from accessing the full internet (and they moved on from dial-up, where AOL was stuck, to high speed). But now people STAY with Facebook, because they feel like if they're not there, then they're being limited from accessing the full interactions of their friends, family - their social community.

I've seen people try and "quit" Facebook only to comeback, cause they missed the interactions and updates from friends, co-workers, family, etc. I've also seen someone said they read Facebook status every morning like they used to read the morning newspaper: to see what's new in the world.

I think IF Facebook ever dies out, or shrinks, it could be because some of the younger people on their are not sure how to deal with having their grandma, their Mom, school friends, and boyfriend/girlfriends - even their pastors, priests, or rabbis - all seeing the same content (updates, pics, etc.). It gets complicated and awkward to balance how they act and speak to these different groups when they all see the same thing. I think that Facebook could lose it's "cool" factor for them or the privacy they want with how they act/interact in these different social groups.

As a few have already said, boredom could be the very undoing of Facebook.

Facebook will be around for a long time. But I doubt people will continue to use it like they do now, or where they use it now.

Once it stopped being about me and my college friends, and started being about zynga, ads, brand pages, and recommendations to friend my friends' younger sisters and grandparents, Facebook lost just about all it's appeal for me; and many of my friends who'd considered themselves power users of the service. I only stick around because I absolutely love their photo sharing functionality.

The "cool crowd" leaves overly popular, commercial platforms. Especially when they see "losers" hanging in the same spot. And other people follow the cool crowd -- even the "losers" (a.k.a. late adopters). However, I assume that FB will have morphed in some way to follow these users around the web by the time this happens, regardless. But that will definitely change the relationship folks have with the FB.

I also suspect that though FB usage will wane; usage will remain high in some demographics and regions. I understand that Friendster is still the most popular social network in SE Asia; and Orkut is Brazil's most popular Social network. I wouldn't be surprised if FB remains king of the hill in the Middle East, but disappears from the daily consciousness of most Americans.

Just my 2 cents.

IMHO Facebook as all popular online networks has a great advantage over newcomers. Mainly because it has momentum. You need a large population to "Make things work" because nothing is so depressing as a friends page without friends. Being big makes that you can get away with a bit more than others, but the biggest battle FB will have to win is not of growth. They will have to improve / renew themselves over and over and over. It is the way evolution works.

This is a great piece Jay. No one company will dominate the social/ mobile web. There's another breakthrough about to happen... and another. And so on.

There is always someone out there with the vision, balls and determination to change the world. And changed it shall be. Nothing stands still, no one stays on top forever and the brightest stars of the future are yet to come. Repeat.

Cheers Jay!

This is a really great writeup. Thanks for pulling together these ideas concisely.

When social media shifts, and it will because that is human nature, Facebook will need to shift or get lost in the shuffle.

I often wonder if and when FB will go down. So many large companies rely on FB as their main source of info gathering and advertising. Nowadays if you do not have a FB page, then you almost don't exist. People look for, not your site or blog, but for your FB and Twitter page to get updated DAILY with coupons, the latest sale or latest news.

So much is riding on FB that is is scary. Even Google is scrabbling to be more like FB. A little scary? I mean, who takes on Google?

Yes, don't put all your eggs in one basket.

~Allie

http://skew.dailyskew.com/2009/09/decline-of-america-online-why-aol-sucks.html
look at what KEEPS people on FB- messaging, pics and games... as people find those elsewhere and more accessible via mobile... that is what is going to hurt FB down the line...

I think Facebook is working more like news channel as well as social website. but if a user need some information he would move towards a search engine to find.
I agree its a good way to promote your business by engaging users with different ways like having fun and providing latest update regarding your niche as well as from other world.

Very interesting. I agree though. Facebook's power is not necessarily on its own web site, but in its total reach on the Internet.

*whose playbook they stole

Hi, Jay, had to learn who Urkel was, but other than that, smooth reading. Agree with Gini Dietrich's take on Facebook's incessant issues with privacy, account settings, etc. They have a civic responsibility to be more respectful of their user base, more transparent and proactive in communicating changes in functionality.(Changes that are not always viewed by users as "upgrades," but seen as
annoyances.)

This is a really interesting observation and hopefully this does not mean that Facebook is going down (and forgotten) in the next 5 - 10 years. I mean, Facebook has shown some resilience thus far and there is just something about it that keeps users coming back from day 1.

Back then, people enjoyed Facebook's 'pokes' and 'giving gifts' features and that threw social network giant Friendster under the bus. Now people are engrossed with games and businesses are on it and it is showing no signs of stopping... or is there?

Well, I guess no one saw AOL going down or Google coming up back then, either.

There is no doubt that the internet has forever changed the world in which we live. So it can only be expected that it would change the way we sell and marketing our businesses globally. At this point privacy is the main concern in FB. If some new tool is launched people will tend to move to it.

It's true. I don't think facebook is a longterm (10 yrs +) contender because its entire business is social and pop culture. These exist in flux. People will move on and better things will come around. Facebook pushes features before they are ready and often they're "next big thing" is glitchy.

Whether they are on top or not, facebook has changed the Internet and the way people communicate. The social aspect of the web isn't going anywhere.

Jay,

Once again, another great post. A couple of observations:

1. Ease of Use: One of the reasons that AOL was so comfortable for many was the ease-of-use aspect. Run the .exe file, add some payment information, and you're "surfing", albeit in the shallow end of the Internet pool. Or, as one friend likened AOL, "Training wheels for the Internet." To show how entrenched they are, my mom and sister STILL use AOL email accounts. Facebook, while not offering email addresses, certainly falls into this category (unless you count the privacy settings crap that we constantly deal with).

2. Convenience: Not only was AOL easy to use, it was convenient. Everything under one roof, like when you stop into the Circle K on your way home from work. Sure, it's not the best selections, but it's got pretty much everything you'll need, from smokes to motor oil to shampoo to donuts. (yeah, I know, that sounds like the ingredients for a party out in Apache Junction...). Facebook has certainly excelled in this...wrapping many "off FB" utilities into a one-stop-shop.

3. It's the digital equivalent of "Cheers": All your friends were on AOL ("your" = 3rd person plural, I was never on AOL), and everybody knew your name. Same-same with Facebook. It took a little time, and unlike AOL it was "free", so it wasn't a stretch to suddenly find many, if not most, of the people within your social circle on FB. And, of course, the more who joined, the greater the critical mass at bringing aboard the reluctant (I had an FB account for a couple years, but never posted, never read it...only in the past 2 years or so have I used it). Of course, one thing people neglect remembering is that when you have a critical mass, a nuclear explosion follows.

As for your discussion of the search function, what would stop FB from partnering or licensing Google technology to do this? In the short-term, it'd be win-win for both companies since Google would capture even more traffic, and FB would capture even more metrics on what FB users are looking for. Sure, it might cost FB to do this (but I don't see that it'd be a requirement, given the upside for both), but I could easily see it paying for itself to help refine ad-targeting even further.

I agree with Marc-Alain that Facebook will take a dip in the next few years.

All of the articles touting how fast Facebook is growing seem to have dried up. (Obviously, it'd be hard to keep the insane pace that they had in growth.)

Also, in the past year, I've heard plenty of stories from early-adopter types about dropping Facebook not just for the typical reasons (privacy issues, FB's constant changes, etc) but because it's such a time drain for pretty low payoffs.

Back in the day, it was all about obscuring your outward identity (thus, all of the HelloKitty3282-like email addresses and profiles) and Facebook is pushing toward complete openness. I think whatever's post-Facebook will give people the flexibility to do either or even both in some contexts.

Really powerful thoughts. A lot to mull over here.

What fascinates me is the concept of capital here - social capital and financial capital. We need to be having deeper conversations about the value we are creating for Facebook - and is it worth what we get in return?

There is an illusion of "free" but the reality is, we pay for Facebook with the investment of our selves, our time, our data, and our social graph, much more than it ever cost us to subscribe to AOL. What is interesting is that we are surrendering our personal social capital to another entity who is turning that into financial capital that they keep for themselves. And maybe people are starting to realize that this is what is going on. The Huffington class action helped stir this up a little, I think, and it's a good discussion to bring into the spotlight.

We have to keep in mind that we don't get nothing for that investment. Better experience is worth something. The question is, what, exactly, is it worth?

So I think the tension is, as people become more aware of the real cost of using the service, will Facebook be able to address the WIIFM factor beyond it's just ubiquitous or easy for people to use.

Couldn't agree more.
As soon as Facebook launched their open graph, the writing was on the wall. Facebook wants to be your portal to the internet. Like AOL, they want every major function of the Internet to be performed inside of Facebook.

There is one large functionality that Facebook hasn't yet mastered... search. But give them time. They'll be releasing their own search engine soon enough. Probably a Bing based algorithm layered heavily with social/open graph data.

scary and everyone's up in arms over Apple? Sounds like Apple isn't even small potatoes to Facebook and it's impact on our private lives.

Nice post Daniel! I should have checked with you first!

Does that mean in ten years Facebook users will be considered clueless and laughable?

This may sound ridiculous, but I think Facebook will sink over the next 3 years simply because users will become bored with it. We are quite fickle these days and our attention spans are shorter than ever. Add to that a growing awareness, concern over privacy issues and marauding competitors . I wrote a piece about it months ago:

Why Facebook Will Die:

http://lecompany.blogspot.com/2011/02/why-facebook-will-die.html

One huge difference: AOL was never considered a company stacked with the best and brightest. Facebook is similar to AOL in terms of metrics & what they are achieving, but with Google's talent.

Another great post, Jay. What's REALLY amazing is that they've achieved this impact and yet have still barely scratched the surface of their potential with Baby Boomers and the corporate world.

Jay,

You struck a chord with me with the AOL references.

Another interesting point to consider is the aspect of customer retention and service. Facebook has zero live support and every aspect of their service is designed to be ran by scripts. AOL however had a significant cost (as well as financial interest) in providing live help and support to customers around the clock. This greatly helped with keeping users active and mending service/brand issues (but it also has ignite them).

AOL's main source of revenue since '95 was not from subscriptions. It was specific co-branded business development deals and advertising. A stat that was thrown around was on average, AOL would generate $70/monthly per account from advertising alone. Toss in another $23.90 and you are just swimming in cash. But relevancy was key and that was the demise of AOL.

Anyhow, there's a lot more to discuss on this. Perhaps the fact that Facebook now sees what people do, what people think, where they go and other psychographics of their online behavior. AOL pioneered this, Facebook is carrying it forward.

Will it stay? Will it go? I think it'll stay for the next five years but relevance may fade. People like to try new things and new experiences on the web. Remember MySpace?

Great article, Jay - keep it up! :)

Great post.

How much of the data that Facebook is gathering about us is truly useful in the long run? Liking something on Facebook is becoming so easy that I don't necessarily believe that "Liking" something really means you like it.

For example, a friend asks me to "Like" his clothing company that sells blue t-shirts on Facebook. He provides me the link and it is easy enough so I help a friend out. I don't really like his clothing line or blue t-shirts and would never buy anything from his store or even from a company selling blue t-shirts.

Was my "Like" really worth anything to Facebook? It was worth something to my friend because it helped him increase his "Likes" but as far as mining data about me, Facebook has basically mined misinformation. In theory they will now start serving me with blue t-shirt ads which I will ignore.

Wouldn't it be more valuable if a "Like" took some effort? Facebook could really gather useful information about me as a consumer if I had to actually put in a little bit of effort to "Like" something. This would prevent me from basically throwing away "Likes" on things I really had no interest in.

Of course, the number of "Likes" would go down but the actually people liking things could potentially be served more relevant ads.