Sep 20, 2016 - was a vibrant social media platform that focused on entertainment and ... applications or content that allows users to manage their health, and ...
Creative Destruction - What Makes Facebook the Social Media Giant and What Might Upend the Social Media Giant Diana Addae ICT Policy and Regulation – ITS 6020 Upending Facebook 09/20/2016
Executive Summary Schumpeter described the economic mutation as a result of sheer creativity that will incessantly turn around a market and introduce a new market leader. Just like how Apple upended the smartphone market by introducing the iPhone which “creatively destroyed” the then Blackberry, we delve into the area of social media by looking at how Facebook upended the social media platforms by overtaking the then Myspace. The strengths of Facebook that enabled it to overturn the market and what might possibly overtake Facebook in the future are discussed.
Introduction Idea generation/Innovation and Creativity has helped various companies and institutions topple over market leaders or strengthen their lead. It is usually tough for a market leader to be toppled over as they have more resources and the insight to foresee and positively stop any threats that may come their way. Nokia and Blackberry were market leaders in the phone industry since the 90s until iPhone was introduced by Apple in the early 2000s, which was a perfect example befitting Schumpeter’s creative destruction theory [1]. Apple incessantly created a new market lead, and incessantly destroyed the then Smartphone market lead [1].
Myspace Myspace was created in 2003 and at some point became the most visited website in the United States. It was a vibrant social media platform that focused on entertainment and artistes [2]. Individual users could network with their friends on the platform and there were communities where networking took place. By 1
the end of 2006, Facebook took over the social media market as Myspace users declined. This was another example of the creative destruction theory.
Facebook Facebook was created by Mark Zuckerberg around 2005 and implemented similar features as Myspace but had an excellent layout and was user friendly. It allows users to customize their “wall” with pictures and focused on user networking with old friends and new friends. Facebook leveraged on its ease of use and the “Facebook page” idea for users, businesses, artists, institutions, colleges and icons to take over the market. It created user networking with friends, businesses, accomplices and strangers in an easy to use means and thereby creating value which was strengthened by the network effects it creates.
What Drives the Value of Facebook / Strengths of Facebook? The modern Facebook allows users to share their thoughts, feelings, videos, pictures, activities and to interact with their circle of friends and companies by easily posting updates, comments or “liking” pages, and creating groups, events, checking into places visited, viewing friends of friends, visiting a company’s page for information, checking the activities of a popular figure (e.g. a musician), following trending stories and news as well as allowing businesses to advertise their products by targeting the appropriate audience. Thus, there’s some level of emotional attachment on the part of the audience towards Facebook. Coupled with the large network of friends and family the Users have built, it will be very difficult to have the Users move to another platform. The major driver hence for Facebook is the network effects, the emotional attachment and the large customer base. Facebook leverages on large customer data to target the right customers with the right product and information.
Weaknesses in Facebook The features above coupled with a brilliant and rich layout have strengthened Facebook’s lead in the social media market. However, Facebook has some areas of concern: these include the ease with which new accounts can be created thereby allowing the creation of fake accounts and users who may target vulnerable individuals to scam them. Applications created by developers to run on Facebook are good but
2
there are those applications (e.g. candy crush) which users keep annoying their friends with requests to join a game. The major problem is “verifiability”. Content shared or posted cannot be independently verified to be true or not. Anyone can post content and claim they are legit, location updates can be changed to reflect false locations and scammers can market fake products or goods. Some offensive content are sometimes shared and these inappropriate content may circulate for a while before being taken down.
Upending Facebook Dominance If any platform will exist that will be devoid of any of the above weaknesses in Facebook and incorporate the exciting and easy-to-use features provided by Facebook and additional features such as lifestyle applications or content that allows users to manage their health, and lifestyle in general, the said platform may pose as a great competition to Facebook. There have been a few social media platforms which have been acquired by Facebook due to the fact that they were growing in users. Instagram and WhatsApp are examples of the acquired platforms [3]. If a social media platform will exist such that it will be devoid of fake profiles, fake products, fake posts, offensive pictures and videos, the said platform may pose a great competition to Facebook. The major challenge of such platform will be the network effects already built by Facebook where users are already enjoying the value Facebook provides. It will be a lot of work before the competing platform topples Facebook over. Conclusion Creative destruction as a result of new technology or new ideas has caused some market leaders to lose their lead. Facebook took over the social media market and relegated Myspace. The reasons for the lead was addressed and the possible reasons Facebook may be toppled over have been addressed as well. In a nutshell, Facebook will continue to dominate the social media market until a new technology, idea or creativity topples it over.
References [1] Capitalism, Socialism and Democracy, Chapter VII, by Joseph A. Schumpeter [2] https://en.wikipedia.org/wiki/Myspace [3] http://money.cnn.com/2014/02/19/technology/social/Facebook-whatsapp/
3
