How Facebook beat Myspace and Why Google worries about Facebook
Myspace was a big thing before Facebook came along. But now it’s a “social entertainment destination” which not many people go to. The key difference in their business model is the management styles. Myspace was purchased by a big company and adopted professional management style with detailed plans. However, the founders of Facebook adopted the White Space management style which has no rules and not really any plans. They were pushing the technology to do anything the users wanted. And they kept listening from their users for what could be their next application. They just followed what the users want and they succeeded. After all, nobody knows what users want better than users themselves. After attracting the early adopters, the networks effect kicks in: more apps are conceived and developed, more users are using Facebook, more contents are generated, which attracts even more users, and more apps… Because of the large amount of users, Facebook also attracted celebrities, companies and organizations to create their own Facebook pages, which retain the current users and make them spending more time on Facebook. People could spend hours per day on Facebook, and ultimately, time spent on it represents the “value” of a website. Because more time spent on the website means more profitability of its advertising. Google’s fear is that someday businesses might be more willing to pay Facebook to advertise rather than Google.
Facebook use is motivated by two primary needs: (1) the need to belong and (2) the need for self-presentation. As Emma Stone said in Birdman, “People fight to be relevant every day.” This is especially true for college students, which are the initial targets of Facebook. After persuading a small fraction of population to use Facebook, the trend will spread across a college, several colleges, the younger generation, which are the main users of internet, and eventually the whole world. User generated content from people you know are more relevant to you, and many user generated contents on Facebook are not accessible by Google’s crawlers. People feel connected when using Facebook because they are looking at things shared and agreed by friends they know in real life, not some random guy on the internet, but the intimacy is not there when using Google. As more people around you using Facebook, and as the Facebook search engine continues to improve, Google does have something to worry about.
However, as Facebook grows bigger than bigger, it also gives others the chance to surpass it bit by bit. Instagram and Twitter are two prominent example in the niche markets. They targeted just one area (or one population) and tried to do a better job than Facebook. And they did succeed and attracted large amount of users, but they didn’t push Facebook out of the market because there are just too many people using Facebook right now. Companies could also adopt what Facebook did to Myspace, which is finding a target population that are not into Facebook and try to attract them as the early users. But as Facebook gets larger, this is harder to accomplish, because the network effect is so large that other than the Great Firewall of China, not many things can stop it. Network effect is not a necessary ingredient for success, but it’s indeed a great shortcut to it. And again, as Emma Stone said in Birdman, “You don’t even have a Facebook page. You’re the one who doesn’t exist.” That’s when Facebook dominates the world.
http://www.forbes.com/sites/adamhartung/2011/01/14/why-facebook-beat-myspace/
http://www.wired.com/2012/05/network-effects-and-global-domination-the-facebook-strategy/
http://www.sciencedirect.com/science/article/pii/S0191886911005149