Facebook Revisited

My last show was the St. Stephens Art Show in Cocoanut Grove, Florida. It’s a venue that brings about 16o artists and runs concurrent with the Cocoanut Grove Arts Festival, a much larger show.

I thought it was a good show, though some of my fellow artists believed that the buying was down from last year.  My getting an award in photography likely biased my impressions. The real problem was that the foreign buyers who are normally present did not show up this year. As a result we had lots of time to reflect on Miami and life in general between our busy times.

South Miami is a crazy quilt of city that changes character, almost, block by block. In addition, it may have the most erratic and impatient drivers in the US. The worst of these motorists seem to be at the wheels of Mercedes, BMWs and a variety of exotic autos. At times, their driving seems motivated by outright arrogance and just a total disregard of others on the road.

It was while driving to the St. Stephen’s show one morning among these speedway demons that I caught the end of an interview with Mark Zuckenberg of Facebook wealth. Maybe arrogance was on my mind, however Mr. Zuckenberg’s last comment of the interview caught my attention. He was discussing his belief that no one could challenge Facebook’s position in social media. At one point he said something like, “Bring it on, no one will ever challenge Facebook!”

His comments followed a statement that if anyone builds a duplicate to Facebook, they would never be able to attract sufficient Facebook’s users to become a threat. This was almost offered as a challenge!

I got to thinking how one might go about doing exactly what Zuckenber said could not be done. Could there be a way?

Before I continue with that thought, I want to note that Facebook recently released to a European citizen of some 1000 pages of information it had collected on that individual’s  Facebook postings. The documentation was released pursuant to lawsuit in a European court. The individual brought the legal action because he was concerned over the illegal collection and use of private information by Facebook, even though he classified himself as only an occasional user. The article said that this release of data was a first for Facebook and was required under certain European laws.

Use and misuse of user information by Facebook is the likely the Achilles heel of of social media. If anything could foster resentment and turn off users, this is one of the more likely issues.

Now on to a challenge of Facebook’s reign:

In my opinion, the Facebook founder holds a position of fame and wealth mostly because he was very lucky. Just like those born into French royalty up until the storming of the Bastille in 1789. Those aristocrats were at the right place at the right time until the rabble took over, then they lost not just their wealth, but also their heads.

I noted in an earlier blog that a case can be made that the real initiators of Facebook’s value are the users, not the stockholders. The users add value by logging on and providing insights into their habits and thoughts, which are then sold by Facebook to others. Those users make a daily decision to log on to Facebook or not to. Nothing  causes them to return other than habit. Get them upset, and those habits could change. There is really nothing the stockholders and management of Facebook can do to insure that any one user logs in tomorrow. If we do not log on, they lose money and value.

This thought can be supported by looking at the demise of MySpace, which only has 25 million or so users, and is barely profitable. It was only 5 or 6 years ago that MySpace was the leading social media. Its current owner has been reported to be considering closing down its site because 25 million users does not provide sufficient incentive to continue. Friendster was a similar giant before MySpace and is almost completely forgotten.

So one way to dismount Facebook is to wait for a really stupid management decision — likely on the collection and use of private user data — that will greatly upset its user base. Think about the recent plight of NetFlix, and Susan B. Koman for the Cure where management misjudged their user base support!

An incentive to drive users away from Facebook:

Well if you are impatient and can’t wait for Mr. Zuckenberg to shoot himself in the foot, there may be a way for an outside source to drive users to another site. That is, there may be a way to incentivize hundreds of millions of users to go elsewhere!

Just devise a way to share the wealth of Facebook’s value with its users, and away from the stockholders! That is, figure a way to reward the users for going to another site.

I think there are several ways to do this, but let me digress to the the seed of this thought.

I recently finished a second read of John Adams by David McCullough. At the end of the Revolutionary War, many wanted to crown George Washington monarch of the new republic. In fact, it would have been very easy for all of our founders to have crowned themselves and duplicated the monarchies of Europe on our shores.

That did not happen. Instead, our founders had a vision for this country and it wasn’t in dividing up the pie among themselves.

In effect Washington and the others took the spoils of the war with Britain and gave it back to its user base: the Americans who soldered against the British. Could not the same concept be introduced into the Facebook  and other Internet communities to shift the control and value of Facebook to its user base?

For example, envision the introduction of a new social network – lets call it “FB2” for this discussion. Consider that for the most part this option promises to mirror the structure and operation of Facebook. But it’s value is to be controlled by its user base, not it stockholders. Let’s say that FB2 is initially owned by a not-for-profit entity that offers to distribute, say 75% of its profits or value, to the charities selected by its user base. Think of it as some big United Way organization covering a broad group of charities and worthwhile causes. You as a user would then contribute each time you log on to the charity of your choice.

If the only differences between FB2 and Facebook are (1) most of its profits are distributed to charities chosen by the user base and not to the owners and (2) decisions on using of private information is controlled by the user base, how might that impact which site you use to sign on?

I do recognize that Facebook may not be providing any profits yet, but it should top so soon, so say millions of potential stock buyers.

All things being equal, I believe that such an offering could provide an incentive to move individuals to stop using Facebook and move to FB2.