The Anti-Network Effect
By: Andre Redelinghuys
Tags: Technology, Advertising, Facebook, Culture, Social Media

The Anti-Network Effect

As social media platforms grow stronger they grow weaker too. This will eventually open the way for a meaningful alternative to Facebook.

Despite waves of privacy concerns, Facebook has a powerful grip on us all. The ubiquity of the platform and the time invested in building connections deters people from leaving and in turn deters would-be rivals from building alternative platforms. Their scale and success has us locked in. This success has an Achilles heel though — and it’s your mom.

Metcalfe’s Law essentially describes how networks grow exponentially not incrementally in value with the addition of nodes or users. When you add one node to a network of a million, there are potentially a million new connections not one. The law addresses the technological and quantitative side of networks but ignores the qualitative value of networks. The Network Effect is fundamental to the power of social media networks, however they are fraught with human complexity too. A network with 10 of your close friends is worth much more than a network of 1000 strangers.

There are many reasons why Instagram is growing while the main Facebook platform is declining in places. The cleaner product features and visual nature of the posts are key factors, but so is the age of the network and its users.

When I joined Facebook in its infancy, everyone invited everyone to connect. I’m connected to an exhaustive list of my high school, university and early career peers. When I joined Instagram, years later, I was more selective. It’s become a more meaningful network for me as it offers more relevant engagements with close friends. In a sense, rebuilding my contacts there (which was relatively easy as it was already owned by Facebook then) was like spring cleaning. When I look at my teenage nieces’ Instagram accounts though, they are again connected to thousands of their school peers. There’s a high likelihood their Instagram accounts will eventually be stuck to 2019 the way my Facebook account is stuck in 2009.

Social networks grow stale.

Our personal networks — the connections we build on social media platforms — age and degrade over time as we go through phases in our lives and as the platforms themselves evolve. Many of my connections have largely withdrawn from Facebook activity while my parents and their friends have found it a great tool to keep tabs on the family and grandkids. Some of my parent’s peers have connected with me. Can you really say no to uncle whats-his-name? Unfortunately though, he is not very internet savvy and generally shares low quality content and smatterings of misinformation.

When you add a node to a network it grows quantitatively. When a user adds a connection on a social network there is a quantitative impact and a qualitative one. You are likely to add your favorite people early and as time passes you move further from there. As you continue to build, diminishing marginal returns set it. Eventually, If one’s network grows so big and impersonal, negative marginal returns can set it — where with the addition of a contact you lose more than you gain. Now, the value of the network effect has been completely outweighed by the qualitative degradation.

Facebook benefits from the asymmetry of being a media company that does not produce content. It’s users create and propel the content. They are both the audience and the authors. It always made sense for them to grow to cover as much of humanity as possible — They are currently just shy of one third. With this massive scale though, the platform has become like the telephone directory of the internet, where much of the activity has shallowed to light or functional interaction and dodging your grandparents.

Compounding the natural aging of personal networks is the inevitable increase in advertising as user growth slows. Any ad driven media platform must trade off its user experience with business performance. Eventually, to make more money they must run more ads. Balancing this is critical for any service that is predicated on being ‘social’. Declining personal interactions, coupled with increasing commercial messaging is a double edged sword that will accelerate a platform’s lifecycle.

Eventually someone will pitch a replacement to Facebook where users must rebuild their network and it’s going to stick — where the upside of a better product outweighs the downside of having to rebuild. The sunk costs will be written off.

It’s becoming easier by the day to imagine a better platform product than Facebook. Consider this hypothetical pitch:

“We’re building an alternative to Facebook that won’t be ad funded, so there won’t be constant pressure to compromise your personal data. Our focus will be on making social truly social again, promoting quality content and looking after people’s wellbeing. You are invited to join the Beta.”

Increasingly it looks like Facebook’s key challenge in the future will not be the journey of a primary platform but rather managing the rise and fall of different platform products, migrating users and avoiding interception. If Instagram replaces Facebook, that’s fine. What will replace Instagram though and will it be theirs?

Facebook is not going away soon but as its users’ personal networks age, its challenges and business will change rapidly.