TMW #080 | Late-stage social media, do people want a metaverse? Scaling one-click checkout.

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Here’s the week in Martech:

• Late-stage social media: Twitter’s takeover in historical context
• Do people want a metaverse? All the flagship platforms have little to no users
• Scaling one-click checkout: Amazon is bringing payments to a website near you
• Everything else: A global framework for privacy, marketers and traditional advertising, CDPs in 2030, the rising costs of consumer privacy, attribution and gaming, paywalls, and office haikus!

✍ Commentary

Late-stage social media. The spaceship man is buying the bird app. This is not very interesting, it’s just another moment in the history of social media. What is interesting about this moment, however, is how it reflects the past 20 years of the social media industry, and what I’m calling late-stage social media.

Most social networks are now in their teenage years. But for an industry that moves so fast, these platforms are starting to show their age. Late-stage social media is a way to explain our present moment in online socializing, media, and creativity.

Most social networks started out as wild experiments. Facebook was born out of the context of an app to rate women, Instagram was a photo filter app, Twitter was originally an SMS protocol, and LinkedIn was a place to publish your CV. All these companies have matured, become the incumbents, and now are cemented into our social, commercial, and political infrastructure.

If you were working in the technology industry back in the mid-2000s you would have seen an explosion of social media companies as conceptual bets that had high potential but a lot of risks. They represented creative new ways to think about technology, with many of these companies rising and falling very quickly. For example, Myspace, went from the most popular app for teenagers in 2008, to completely abandoned by the end of the year.

But what has changed in the past twenty years is not only the size of these social media platforms, it’s also the way we use them. The experience of Myspace, Friendster, and Tumblr is completely foreign to the generation that is now growing up on TikTok and Instagram. These early-stage companies were fumbling around in the dark, figuring out what would pull people into a social network and the kinds of interactions that would keep them there.

The early days of social networking were built for creativity and connection. In my teenage years, I used to obsess over who’s in my top 8 Myspace friends, and on which lists I was on. I spent time learning HTML and CSS to change my profile page. I would visit the profiles of my friends only to be greeted with crazy loud emo music. It was wild, creative, and interesting. Social media was a place for people to express their uniqueness and build relationships. The patterns of early social media relied heavily on how people socialized in real life because there wasn’t anything else to build up from. Myspace, Tumblr and GeoCities pioneered a new way to facilitate human connection and creativity.

However, only a fraction of these companies made it to mass consumer scale. The ones that did, have come to define how so much of marketing and media gets done today and have grown exponentially. Only rare instances of new social apps like TikTok have been able to break into the land of the social giants by getting to 1 billion users in half the time of Instagram.

After the social media gold rush of 2005 – 2010, the landscape hasn’t really changed. In the mid-00s we had dozens of social networks vying for their spot as the number one app, and consumers had plenty of choices. Today there are only a handful of social networks that have enough users to make them usable: Facebook, Twitter, TikTok, Snapchat, Instagram, LinkedIn, YouTube, and Reddit. The majority of these companies are more than a decade old, which for an industry that was originally highly transient, is very unusual.

Part of what has brought us to this point of limited choice for online socializing is that social networks by their very nature work best as monopolies. There’s no value in any of these companies without users and their content. A Twitter homepage is just an empty shell with useless features if nobody is posting.

Something happened after the early explorations into social networks that convinced founders that the value of these platforms is the network itself and not just the user base. The companies with the largest social graphs make it very hard for competitors to build their own networks because meaningfully participating in more than one or perhaps two social platforms is time-consuming, and the average user had to choose where most of their friends were. In short, a crowd will always draw a crowd.

It's for this reason that social media today has replaced creation and connection with attention as its primary goal. One of the most interesting things about late-stage social media has been its ability to change what most people want out of internet socializing. All of the platforms founded around 2005 significantly changed the user experience of socializing from freeform creative expression to uniformity and constraint. It’s one of the main reasons these platforms scaled, where many didn’t. The most successful social networks turned everything into a popularity contest.

Before 2005 users didn’t have metrics like impressions, views, likes, comments, and retweets. These are all measures of attention and influence. They are also measures of value for people who contribute to social networks. The most impactful shift from connection to attention was the design choices made by these companies.

Facebook, Instagram, and Twitter are perfectly uniform in their digital experience. All content is viewed through the same experience, no one can customize their profiles and the way you interact with content is pre-determined by the existing frameworks. By constraining the experience and making it more homogenous, the domain of social media changes from a canvas to a casino. Every post is just another bet to gain attention – the true fuel of the digital age.

The incentives of advertising reinforce the goals of maximizing attention. By providing a uniform experience without any surprises (like having music play randomly when visiting a Myspace page), social media companies can scale advertising placement and standardize user targeting. This is one of the major reasons why Myspace lost to Facebook, they just couldn’t scale ad revenue.

Facebook was superior because they were able to convince people that less choice and constrained creativity was a good thing. Since 2006 we haven’t had a large-scale social network with the goal to enable people to become more creative in their on-platform expression. Late-stage social media has compressed the expression of billions of people into a tightly controlled window of experience.

This context is important when approaching Elon’s main reason for purchasing Twitter – to make the platform a beacon for freedom of speech. Because late-stage social media has turned everything into a popularity contest, there are many influential people who now have the sunk cost of a decades worth of social media effort resulting in thousands or millions of followers. This creates another kind of expectation – a Twitter audience is an asset, and if you’re banned from using Twitter then it violates your right to speech, and more importantly the ability to influence an audience.

Every major social media company has been able to scale its revenue and user base except for Twitter. Despite it being the slowest growing platform, and ranking the lowest in total users, it’s the only app that has the right kind of design and network effects for it to disproportionality influence public discourse. News is made on Twitter and it’s the only platform that influential people go to discuss it. In the same way that LinkedIn is the career social graph, and Instagram is the friendship social graph - Twitter is the discourse social graph.

The problem here is although Twitter is powerful and influential, it is still just an online service. When you signed up for Twitter, LinkedIn, or Facebook, you also agreed to a terms of service. This gives social media companies the right to apply content moderation and police their own platform. A free speech argument is self-defeating here - as long as Twitter is running ads, the company needs to remove content it deems harmful, because if they don’t the users will have a progressively worse experience, and advertisers will deem the platform too risky to have their ads appear next to things like beheadings, or racist propaganda.

These social platforms already have so much control over how we interact with each other online anyway through the experience they provide that it makes the argument of freedom of speech illogical. You can still do whatever you want on the internet, but Twitter is a service with commercial responsibilities, and despite its size or cultural influence, it needs to protect the platform’s users from themselves.

That’s why, in late-stage social media, we need to rethink the models of social networking. Email, SMS, and HTTPS are all open protocols – no single company owns the means of communication. The digital economy was built off the foresight and wisdom of the people who invented these protocols which have all benefitted us greatly.

We have not yet figured out how to build an open protocol with a social graph. One of the main reasons for this is that social media fundamentally is a different format of communication. Open protocols are bidirectional – I send you an email and you receive it. Social networking is multidirectional – I send a tweet and many people receive it, and they comment on it and with each other. This introduces new problems. I own all the emails I send and receive, but in an open protocol do I also own all the comments of people talking with each other? Email has contact lists, but not followers. The distinction is important.

The second and most important reason why all social media is owned by corporations is the sheer computing and storage power needed to manage a social graph. Email and SMS are just servers talking to each other, they are not built to store follower counts, media, and engagement data. Besides, the average consumer doesn’t want to have to manage their own servers, and the weight of responsibility to moderate what they see on social platforms.

Social networks are only as valuable as the people using them. And where the people are, the opportunity is. That’s why Twitter is under the spotlight, and why Trump launched Truth social. To own the audience is to control what people talk about. But this may not be the case forever. Social networks historically have a short self-life, despite their strong network effects. Facebook was the default app for young 20 somethings but became a paradise for the elderly in less than ten years with user growth now in decline. The only thing keeping younger people coming back to Facebook are utilities like marketplace.

There is a glaringly obvious gap in the social medial landscape. Everyone now knows what it means to use social media. We don’t really need to educate people on the value and usability of social platforms, people just get it. This is why a paid version of social media is very much needed. If a social app can reach scale by offering users an environment free of bots, harassment, and features that enhance creativity and connection there’s a slim chance that another app can make it into the company of the social media giants.

LinkedIn is an example of the closest we have to a large-scale social network where the commercial incentives are more aligned with users than with advertisers. LinkedIn monetizes through paid subscriptions, recruitment, sales products, and advertising. This, along with a higher share of verified identities (your professional CV) creates a far calmer environment where people come to find professional opportunities and learn from others. The flaw of LinkedIn, however, is that its revenue is diversified, which means that the company serves many masters and is not focused on the core social aspects of the platform.  

A social media platform that people pay to use with a hyper-focus on human connection is something that does not currently exist. Just as social media transformed from a way to be creative online to a way to draw attention to yourself, it can transform again. The key to the problem is the ability to create a large user base while being fully aligned with the user’s needs. Hundreds of millions of people pay for content streaming, why wouldn’t people pay a small monthly cost for high-quality social media? A premium platform to socialize online is sorely missing.

What is happening today with Twitter is just the consequences of a late-stage social media cycle. For far too long these companies have become too large, or in Twitter’s case too influential, because the goals of ad-driven social networks have made it this way.  Links: ELON & TWITTER.BACK TO THE FUTURE OF TWITTER. HOW ELON WILL FIX TWITTER.TWITTER AS A CITY STATE.

📈Chart Of The Week  

Do people want a metaverse? All of the flagship metaverse adjacent ideas - Decentraland, Axie Infinity, and The Sandbox are all seeing surprisingly small adoption numbers after the initial hype late last year. Some with less than 1,000 daily active users. At this point, it’s hard to see any meaningful mass consumer adoption for these metaverse concepts. Link

📰 Latest Developments

Scaling one-click. Amazon is testing a one-click buy with Prime button for DTC websites. Clearly, this is Amazon saying, “don’t beat em, join em.” But I can't think of a better acquisition tool  Amazon’s sellers. Link

This week in privacy. The ad industry is pursuing a global framework to interpret and apply global privacy laws, while another state in the US is about to pass a data privacy bill. Google implements a better way to reject cookies and Apple relooks at privacy enforcement. It’s been a big week! Links: GLOBAL FRAMEWORK, US REGULATION, GOOGLE, APPLE.

BigCommerce buys BundleB2B. This is interesting in how eCommerce is increasingly becoming a default experience for B2B buying. BigCommerce works with B2C retail and eCommerce brands. Change is on the horizon. Link

📚 Reading

Reflecting on privacy change. Two pieces reflecting on how GDPR and Apple’s recent implementation of ATT have affected the digital economy. Links: DIGIDAY, NDA.

Traditional advertising. Why marketers are embracing non-digital channels again. Link

CDPs in 2030. The best part of this analysis is the commentary on the changing role of the data warehouse. Are most CDPs just a band-aid in the absence of a great data warehouse setup? Link

🔢 Data & Insights

The rising costs of privacy. The amount of data deletion and do-not-sell requests are on a sharp growth curve, while the costs to manage privacy compliance for the average company has doubled. The analog for this is kind of like owning a physical store, you have to pay rent, utilities, and there are bills to heat and cool it. Owning a digital store has other costs, but a more important one is the increasing cost of keeping customer data private. Link

Agencies are growing through Martech. An interesting case study about WPP’s growth and how it's attributing it back to its increased focus on enabling marketing technology for brands. Link

Skills gap. An interesting Australian study on the skills gap in the marketing technology industry. The gap is wider than I thought, and it’s becoming a major problem for enterprise brands. Link

💡 Ideas

Attribution and gaming. More marketers are entering the domain of gaming as other channels become harder to get a return. The big problem is that the gaming industry isn’t set up for measurement.   Link

No paywalls, please. This week on social media I asked the question – when, if ever, do paywalls delight customers? Someone sent me this article, and I agree with the premise that patronage could be a smarter move than paywalls. The Guardian is one mass consumer use case, but there’s still an opportunity to offer something other than content for payment. Link

NFTs and narratives. I have a strongly held belief that the big opportunity, if anything, for the crypto community, is in the ability to create compelling narratives. You only need to look at how much the Marvel universe sustains a huge, global community of fans with its highly complex and interlinked plots, characters and worlds. Marvel started selling comic books 80 years ago. If NFT projects want to create this kind of staying power, then they will need to move beyond financial incentives and start telling stories. Link

✨ Weird and Wonderful

Office haikus. Very funny poems about corporate life. Link

Proof of love. A dating reality TV show, but on the blockchain. What could possibly go wrong? Link

Accenture Song. The company rebranded to a new name with a very abstract explanation, something about “sustained customer relevance at the ever-changing speed of life.” Link

Stay Curious,

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