Facebook is the clearcut leader in social. We all know this. No one else is even close (except maybe Google). There are all sorts of reasons why they are succeeding — namely due to the billion people using the site.

However, like all industry leaders, Facebook is under attack from all sides. As the well-established elephant in the room, they’ve lost their “cool” factor. And the cool factor for any “social” venue or activity is finite. Bars and clubs both are more often than not shut down and re-branded every five years. Particularly as a service that revolves around “social,” Facebook’s window of being “cool” is limited — and, I’d argue, has already passed.

Facebook’s struggles with monetization are well documented. In eight years, I can truthfully say I’ve never clicked on an ad while browsing the site — mostly because I’m not in a transactional mindset while on Facebook (Facebook is what I do to waste time). Their new mobile ads are irrelevant, and detract from my already sub-par experience. (Why they haven’t launched a payments platform to compete with PayPal is beyond me, but that’s another topic by itself).

Once communities get too big, they lose their intimacy — and get flooded by marketers. Both of those have happened with Facebook. I truthfully don’t know exactly how many people I can maintain true relationships with, but it’s probably right around the 150 mark research has shown to be true. Facebook, for myself and most others, is well beyond that. It shows me a lot of information, about a ton of people — but very little real substance occurs there anymore. The people that matter, have been lost in the noise.

All that said, here’s why I think Facebook is on the downward slope: Privacy. Privacy and data usage is clearly the elephant in the anti-Facebook room.

We’ve been in private beta with my startup, Oh Hey World, for the past month or so. We figured a Facebook login would be easier than having people create yet another account to keep track of, and part of our service is showing you people you know living nearby — so Facebook was the login system of choice (with no option to sign in without it). However, we’ve been getting feedback like this on an increasingly frequent basis:

I have privacy issues with Facebook and don’t want to login — but I don’t think I’m the normal use case.

Yet, when person after person repeatedly says the exact same thing, that is indeed the normal use case. I haven’t kept exact stats, but I’d venture a guess that 40 percent of people say they are extremely uncomfortable using Facebook to login and refuse to login to our beta site as a result. The other 60 percent all bring up privacy concerns, but are OK with the trade-off. Here are a few quotes from a Facebook post asking whether people would login with Facebook or free-form if given the choice:

“fill out form, fb makes me worry about security too much”

“Never Facebook. Using FB as a login has only downside and no benefit. You open your personal data to companies you don’t know well, you expose yourself to the risk of spamming your friends, you give more info to FB that they’ll use to throw ads at you. What do you gain? half a second?”

“Never FB. I post enough of my own useless crap. I don’t need outside companies posting useless crap too or accessing any of my FB info.”

Trust is the lifeblood of the web. And people don’t trust Facebook.

That’s a SIGNIFICANT problem if your entire business revolves around billions of people trusting you with their personal data.

What’s needed for a competitor to beat Facebook?

  • A decentralized location to store profile data, social connections, and photos (think WordPress.org). Users need to know their information is going into a spot that will be around in 5, 10, 20 years.
  • User data is not sold
  • Partner with leading sites in 5 industries to adopt the login system alongside Facebook and market the value proposition, nd eventually have the partner sites shut off FB login entirely.
  • A significant community building effort to convince the top 10 percent of content creators to switch platforms. If interesting content stops showing up on Facebook, people will go seek out information from their trusted sources wherever they publish it.
  • No advertising would be ideal. Charge the users $.50 per month, or make enough money from donations (Wikipedia) and/or developer fees.

Of course, the most important component of the equation is the right entrepreneur, with strong connections at a wide range of companies, to lead the charge and devote a few years of his or her life to it. Something tells me WordPress creator Matt Mullenweg would be in a prime position to pull this off. There also happens to be an initiative out there that fits this bill — Being Collective — started by Scott McLeod as a side project (who I met at Startup Abroad in Bali a few months ago).

Drew Meyers

With a billion people on their platform, I know I’m in the minority. But Facebook is in a vulnerable position. The tides are against them.

Facebook has lost the trust of its users. I believe, without trust, a web site is doomed. And lastly, I firmly, firmly believe the future of the web lies in niche communities.

All this leads me to believe someone is going to make a serious run at Facebook in the next 18 to 24 months. Whether that be App.net, Path, Google, or someone else — who knows.

You with me? Or you think I’m crazy?

Drew Meyers is founder of Oh Hey World. Global nomad originating in Seattle. ex-Zillow community builder & biz dev. Entrepreneur. Microfinance advocate. Travel addict. Fan of Red Hot Chili Peppers and Kiva.

Comments

  • scott_mcleod

    Yes its downfall is coming. They helped create “Social Networking” a standard, but I smell a better alternative, and better standard emerging…

  • The_Tim

    New post idea: Drew “Facebook is on the downward slope” Meyers vs. Galen “I’m betting my retirement on FB” Ward Facebook cage match.

  • n8

    Diaspora offers the decentralized aspects of social networks. I’m not a techie, just someone who like to be informed on what is happening in technology and I too don’t use FB login for other sites and sign out of FB when done. I don’t understand how it all works, but it sure feels like FB would have too much access to my info if I used it’s universal log in.

    Instagram was FB’s biggest threat which is probably why FB bought it.

  • http://www.joulespersecond.com/ Paul Watts

    In the original version of our product over a year ago, we had FB-only sign in and got very simliar reactions. Since then I haven’t read or heard of a single product that hasn’t gotten some bad reaction (and more than some 1-star reviews) because they require FB sign in. As you say, there is simply no trust there.

  • http://twitter.com/chrisamccoy Chris McCoy

    Silly post.

  • http://wac6.com/ William Carleton

    I’m with you, Drew.

    The company’s core problem is a lack of imagination. As late as this week, a Facebook rep tweeted, in effect, that Facebook had no choice but to depend on advertising. https://twitter.com/Lavrusik/status/279247013936234498

    With but a sliver of the kind of ambition Amazon shows, Facebook might have re-invented commerce.

    • http://ohheyworld.com/ Drew Meyers

      FB could easily charge users a small fee to use the site and show no ads. The notion that they “had no choice” is absurd, IMO.

  • http://twitter.com/robofhood rob hammond

    Eh…I don’t think that Facebook’s stock is a good investment but, the company isn’t going anywhere anytime soon. Think about it, all of the new social networking platform/things are built for the early adopters they need to attract as customers while Facebook is busy building/buying features that appeal to the mainstream market (where the money is).

    • http://ohheyworld.com/ Drew Meyers

      I don’t think they are going anywhere either, but I do see them consistently losing relevance. More and more people are starting to realize their lives are perfectly okay without spending 5 hours a day on FB — and that’s a good thing.

  • http://www.facebook.com/tyson.supasatit Tyson Supasatit

    The killer app on FB is photos shared among family and friends.

    • http://twitter.com/SusanFelicity Susan

      You can do that on Twitter.

    • http://ohheyworld.com/ Drew Meyers

      You’re right. People tagging in photos is what makes it so hard to move platforms.

  • Mike_Acker

    why not use DISQUS?

    • http://ohheyworld.com/ Drew Meyers

      disqus is indeed in a good spot to make a run at this

  • http://twitter.com/SusanFelicity Susan

    I deleted everything on FB, then deleted the account. Of course it can be reactivated, but no publication has been enough to tempt me to log in to FB just to comment. So, I don’t bother with publications that link to FB. I think you’re right, it’s going to go down, to me – mostly because it’s so bloody boring and stagnant. Twitter is much livelier.

  • http://twitter.com/iC cliveb

    Around the time Dave Morin left to start Path, Facebook privacy controls started changing so often the online social network lost a feeling of trust. A fair exchange of innovation for handing over personal data somehow always seemed to default to transparency benefiting Facebook.

    However just as sharded MySQL and Postgres ushered in the web 2.0 era OSNs. We probably have to wait for the leading open source implementations of big graph databases based on Google Pregel to emerge before the next era of OSNs gets to dislodge the current king.

  • http://apered.tumblr.com/ Ape Red Media

    40% – 60% of what? With a FB user base of millions upon millions, how much data are you basing your research on?

    • http://ohheyworld.com/ Drew Meyers

      I’ve talked to about 100 people. It’s certainly not a huge survey by any stretch of the imagination. That’s why this is an “opinion” piece. I’m not attempting to report research the way a journalist might.

      • http://apered.tumblr.com/ Ape Red Media

        Really? ‘Yet, when person after person repeatedly says the exact same thing, that is indeed the normal use case. I haven’t kept exact stats, but I’d venture a guess that 40 percent of people say they are extremely uncomfortable using Facebook’ ….. A small quote from the above, sounding quite authorative in a journalistic kind of way, but thank you
        for making it clear that your opinion are based on about 100 users from the 1,000,000,000 user base.

  • http://www.facebook.com/matthew.meadows Matthew Meadows

    i completely agree with this, it’s already happened, and they just don’t get it. i just posted about it today, my 4th post in as many months. part of the reason they’ve lost their appeal is because they’re the most punitive, off-putting and condescending piece of software i’ve ever used, and as a programmer for 20 years, i’ve used a lot of software. so sick of being “punished” and “sentenced” by them, it’s disgusting.

    http://rangothedog.com/2012/12/16/operation-rango-facebook-shame/

  • brett

    In the examples Drew cites, I think he may be missing the point – it’s not that people aren’t trusting Facebook – it’s that they aren’t trusting “Oh Hey World”.

    Facebook has been somewhat experimental with their API over the last few years. They’ve given out a lot of power to app-developers and it’s been abused. People’s walls/pages/timelines have been spammed and it’s not only annoying, but can be downright embarrassing. Facebook has tried to react with increased privacy, reducing app-permissions, changing their login/permission flows etc – but it’s somewhat too little too late. People don’t trust what apps will do with their data, and once burned prefer to stay on the cautious side.

    App trust can certainly be overcome with a strong brand and a high pay-off for the privacy violation. For example – American Idol app wants ‘offline permission’ to vote. The most evil permission of all, didn’t stop millions from granting it for voting convenience.

    Whoever the new cool-kid is on the block is in Social – at some point when they grow big enough they are going to face the same platform-challenge: how do you open up the API enough to encourage a strong ecosystem, yet ratchet down security enough to keep user trust high. I’d argue that part of G+’s shortcomings is that they’ve held the API far too close to their chest.

    If played right, I think FB’s ad-platform will keep them in pole position for quite some time – its segmentation-power is unprecedented.

    Undoubtedly there will be many serious attempts to dethrone them in the next 18-24 mos.

    • http://ohheyworld.com/ Drew Meyers

      There are two privacy issues I’ve heard. As you mention, certainly one of them is they don’t trust “oh hey world” yet (and multiple other apps they won’t use FB to login with). The other is “Facebook already knows so much about me, I don’t want them knowing even more”.

  • Sandeep Khomne

    This is a nice article and highlights the facebook struggle in the days to come. If you dig in a bit deep, you can pin point to the emergence of app ecosystem as the root cause for the facebook troubles. The same is true not only for facebook but for any internet related company / product including Google. I have tried to encapsulate the problem and possible solutions in my blog… you feedbacks are welcome.

    http://somoin.wordpress.com/2012/10/07/wayforward/

  • http://twitter.com/Alconcalcia Alasdair D Murray

    I agree. Ten years ago we thought bulletin boards and messengers were here forever. In five years time Facebook will still be around but on the wain, a bit like Myspace has been for the last few years. We’ll look back and laugh at how so many worshipped at the shrine of Zuckerberg as we picture him counting his billions on some shore fronted home, his race run, his fortune made through cashing in on others title tattle and personal information.

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