Why Facebook may be topping out in the US

There are all kinds of social movements, including bull markets, political movements, entertainment obsessions, and many others. And they all come and go — sometimes leaving people and things changed permanently, sometimes not. But one trait they all share is that they all tend to blow themselves out just at the point when it appears that they have become the new reality.

Just a week before Black Friday ushered in the Great Depression, respected economist Irving Fisher said, “Stock prices have reached what looks like a permanently high plateau.”

By 1971 (which is when the Sixties actually arrived for most of us), it appeared the Age of Aquarius really had dawned. Pot was everywhere, everybody had long hair, and people were signing up for meditation classes. Sure, we Nixon for a president, but the groundswell seemed irreversible — at least for Baby Boomers. Then, about 1974, it simply vaporized. Most of it, anyway. The demise of Nixon and the end of the Viet Nam war took all the wind out of the sails. Like all movements, it left us changed, but by 1975 or so, college students had quit going to TM classes and returned to traditional beer busts. Today, the Baby Boomers who made up the peace movement can be found at Tea Party rallies.

In the early 2000s, speculation was running rampant in real estate — especially condos and homes in Florida, Nevada and California. A developer would announce a new condo tower and people would come running. The flippers (speculators who would buy a condo and sell to a “greater fool” for a quick profit) would move in, and a unit would have three or four owners before the foundation was even finished. Everybody was convinced that the party would last forever. Then, in the fall of 2005, it all ended. The lucky flippers took their profits and went home, and the unlucky ones were left without a chair when the music stopped.

I know I’m oversimplifying this, but these and other movements all seem to have several characteristics at their end of their lives. One is that (almost by definition) they’re bigger than ever. In fact, so many people have jumped on the bandwagon that there are few people left to feed the movement. Then several things begin to happen. Velocity slows. Think of it the way you would a ball thrown into the air. At its highest levels, it looks like it may go forever, but gravity is taking hold, and the object finally begins to fall. The analogy breaks down there. Social movements don’t always crash to the ground. Some just reach a maintenance level where they become part of the landscape, but not the whole thing. My guess is that this will be Facebook’s fate, but it’s nothing more than a guess. I can’t prove it with numbers, but my sense of things is that some people are getting bored. Some have reconnected with friends and established non-Facebook ways of communicating with them, and they find their enthusiasm for the experience dwindling.

As Facebook runs out of people to add, the company’s only path to growth in the US (there’s still plenty of room to grow internationally) is to get people to stay online more. That’s because its primary way of making money is by showing you ads. The more you’re online, the more ads you see, and the more money Facebook makes. So Facebook keeps adding features and overhauling the site — to give us more to do and keep us online. But there are other factors that may be distorting the “time online” numbers, including third-party applications that keep people plugged in for Facebook chat purposes but don’t necessarily mean they’re on the site. That’s bad for business, because when we’re not on the site, we’re not seeing the ads and Facebook isn’t making money.

We have to assume Facebook’s engineers can tell which users are actually on the site and which are using apps like Digsby, Pidgin and eBuddy, but they keep that data close to the vest. They carefully spoon out the numbers that suit their purposes — total users, growth, etc. But when a social craze begins to blow out, the early signs aren’t always visible. How many are still members, still online regularly, but posting less? How many are reading less of their feed? Are people actively seeking new friends, as they do when it’s new and fresh, or are they content to stay with what they have? How much time are they spending on their profiles and photo albums? If the answers to these are available publicly, I don’t know where to find them. And if I were Facebook, I wouldn’t release them.

Visit Pew Internet Research

One thing we can see is the dramatic success of third-party sites and resources (Tumblr, Posterous, Blogger, WordPress and scores of others) where people can post longer thoughts and simply put links on Facebook, Twitter and other microblogging services. When I finish this post and save it, a WordPress plugin will automatically post it. The Disqus comment utility will route Facebook and Twitter comments back to mediaguycarl.com, and I may not even look at the Facebook page. Millions are doing the same.

Looking more broadly at the Social Media phenomenon, see the accompanying chart in which the Pew organization tracks use by age groups since 2005. It is interesting that Social Media use generally fell among the youngest group measured, and growth seems to be flattening for the groups over 50. On a year-to-year rate-of-change basis, some of these changes are dramatic. Among the all-important Baby Boomers (ages 50-64), use of social networks grew by a whopping 88% in 2009-2010, but in the past year it grew by less than 8%. The oldest group (and the last to jump on the social bandwagon) — those over 65 — doubled a year ago, but the growth rate fell to 26%. These numbers, of course, are not specific to Facebook, but given Facebook’s huge piece of the pie, they still provide some useful hints, because Facebook tends to be the “entry level” social media site. I see lots of people in their 80s and 90s on Facebook, but not on Twitter.

One question that’s obsessed those of us who pay attention to such things is, what will replace it? Google+? Twitter? Something else entirely? We forget that the answer may well be nothing at all.

Since I’ve been a critic of Facebook’s privacy policies and its new features, such as OpenGraph and the new timeline, let me add that I’m doing my best to keep my own dissatisfaction out of this. I’m not predicting the end of Facebook. It isn’t dying. It’s not even sick, on the whole. It’s just hitting that point in its life cycle where the cracks begin to appear.

The other question is whether this is just about Facebook or about social media generally. It’s just a guess, but I think we’ll see the entire phenomenon lose steam in the next year or two.


One Response to Why Facebook may be topping out in the US

  • ScottW says:

    I think too that FB may be flattening out Carl. Since I deleted my account over a month ago, I no longer have access but I do know my wife stays on the site only long enough to check up of some folks and play a few games. All told, maybe 30 minutes. She never looks at any ads (I installed an ad blocker per her request) so she’s not contributing to FB’s bottom line.

    The thing about Twitter however, is that it just seems to keep on going. Almost like it feeds upon itself. It’s grown to become a staple of the social networking mainstream so it may never become obsolete unless it does itself in somehow. 

    But then again, like you said…the entire phenomenon may lose steam soon. Wow! Wouldn’t that put a lot of people out of work?! Or at least scrambling to come up with a reason to stay in business.

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