A disclaimer in advance of these musings: I’m not saying anything new here, just trying to highlight something. I also know that niche social networking was talked about in 2008, but I believe the environment is more ripe for it today as a business.
In this era of social networking on our computers, on our phones, and now on the silver screen, it’s occurred to me that as the network gets bigger, the noise gets louder and it’s harder to find the signals, assuming there are signals out there. It’s not as if I’m stumbling upon a Nobel-caliber insight, as I’m sure most of you have felt this numerous times. Your Facebook feed is cluttered with pictures of your best friends’ children, your classmates’ travel log, and awkward social media updates by an airline company that you follow only on the chance that you get some deal or coupon down the road; your Twitter stream is full of people who are either tweeting too much, or RTing too much, or the worst — setting Twitter search queries for their own names or startups and then RTing them; your LinkedIN feed is starting to look like a more controlled Twitter stream, but that’s assuming you actually go to the site and see all the amazing (embellished) things people have done.
The theme is self-evident: Lots and lots of noise, very little signal and very hard to find it. This is why new companies like Quora, Flipboard, Pulse, Paper.li and others are getting picked up so fast by users. Content producers have multiple free channels to pound their messages through; content consumers, once eager to share and consume on their own, have already begun to show signs of slowing down on these services. While I haven’t run into many who’ve actually closed their accounts, I do run into pretty well-wired folk who only check out FB occasionally, maybe for pictures, who update their Twitter status 1st and then passively have it update to FB, and who only go to LinkedIN when they need a connection or a job. The consumers want more signal, less noise – and they are willing to try new services to increase this ratio, or else reduce their consumption entirely in order to regain some control in their digital consumption patterns.
I say all of this, because, this slight push-back could signal serious long-run implications for the big social networks to effectively monetize the vast amounts of content generated on their site. For instance, the sheer amount of data generated via FB feeds, status updates, and other shared content is unstructured as of now. That lack of structure makes it harder for the platform to link up targeted ads with their targets, which may (indirectly) explain why FB’s CPMs are so low; that lack of structure is why Benchmark won the right to fund Quora at a $80m+ valuation.
The sheer heft of FB and Twitter and the fact that everyone is one them got me thinking, like everyone else — what about smaller, more intimate experiences. A few months ago, I came across a series of articles on TechCrunch about GoFISHn (one in particular by @erickschonfeld) that highlighted the promising ability of the site to cut into the $45b annual market for fishing hobbyists by giving them a social and informative experience that catered specifically to what they actually cared about. The users turned out to be willing to pay to know where the fish were biting and who caught what fish where, and may not be willing to pay to see their fishing buddy Brian’s new kid in pictures. (Click here for entire Crunchbase page.) Then this morning, @davemmcclure wrote quite a thoughtful piece on (click here) what’s wrong with FB today, though I don’t think any one site can take down FB. But, I do agree with a lot of what Dave asserts and his logic behind it.
McClure believes (1) FB doesn’t value or understand intimacy; (2) social graph data tend to lie at the extremes; and (3) — which I think is the key insight — that “intimacy depends on context, connection, and continuity, which determine closeness, and ultimately, drive commerce.” This is classic McClure and his affinity for businesses to set themselves up in a way “to be close to the transaction.” Put another way, while FB is certainly in an enviable position to continually improve the monetization of the content created on its social network through a variety of services, and because they can buy new startups that help them better structure content and thereby give them a better proposition for advertisers, the massive size of FB and Twitter create “drafting opportunities” for “smaller” social networks.
I put “smaller” in quotations because what may be small revenue relative to FB or Twitter could actually be quite big. In a new niche social network, one that rides the social networking wave Zuckerberg helped kickoff and one that adopts McClure’s Rules with intimacy, graph information on the extreme, and focuses on a hobby or tighter network that feeds into the users’ desire for context-specific information could actually prove to be a lucrative and worthwhile endeavor. Simply picking a community* (like casual fisherman), however, is easy, and building the network infrastructure for those users to communicate, get curated information, and be advertised to can all be done as its been done before. The first hurdle is to pick a community that is both big enough in annual spend that the ad revenue makes sense, but also is committed enough, either as enthusiasts (e.g. casual fisherman) or interest groups (e.g. new moms), to keep your site open in one of the 10 windows they keep open on their computer. That is important screen real estate, and the product offering has to be compelling enough to get that prized status. Finally, growing the users and building loyalty obviously takes time, distribution, targeted advertising, focused incentives, and a bit of luck. In the origins of FB, they got around this problem by taking it upon themselves to put people on the network. That tactic may or may not work in these smaller, targeted plays. If these can be done in a way that offers either an intimate and/or context-specific atmosphere for the users, the creator of that smaller social network will have a terrific chance to monetize all sorts of activity on its site and “draft” behind the lead cars in the race.
*On FB one can create their own smaller groups or lists for specific purposes (such as family), but I don’t see this as so widely adopted as much in my own experiences; same for lists on Twitter.