social media | Paul Wallbank - Communications Professional

Social media’s fatal attraction

Social media’s desperate struggle to revive the dying business model of print advertising.

The story of Whisper and the betrayal of its users continues to roll on, but the real problem is the way social media services are desperately trying to recreate the dead business model of print advertising.

Whisper’s problems with The Guardian continue as the company tries to salvage its reputation but the irony for the service is that it was trying to shoehorn its business to fit the print publishing model that the internet started to erode twenty years ago.

It’s not just Whisper; almost every social media business from Facebook to Twitter wants to be an advertiser funded publishing company, just like the newspapers of thirty years ago.

A few weeks ago I wrote about LinkedIn’s pretensions of becoming a publishing platform and this week Forbes tells of Pinterest’s adventures at the Cannes advertising festival as it sells its marketing services.

Every social media service has some sort of angle that harks back to the golden age of newspaper publishing where print advertising was a deep river of gold. Most of them want to become publishers themselves.

It would be hard to think of a service less suited to being a media company than Whisper; but then there’s Yelp whose main business of reviewing eating houses and bars seems to be totally at odds with newspapers of yore.

On the Salesforce PayPal Media panel last week, Yelp! Founder Jeremy Stoppelman was asked if he saw the restaurant review site as being a media company, his response was “sure, it’s a blogging platform.”

So we have new media aping the old media business models where these platforms try to lock users into information silos; in the same way that a London Times reader would never buy the Sun.

The problem with that is the internet broke down the geographic barriers and today a Sun reader in London can just easily find celebrity gossip on TMZ and the broadsheet reader might find more thoughtful analysis in the New York Times.

Certainly someone browsing the web for restaurant reviews might find a better site than Yelp while a bride researching wedding dresses could just as easily find ideas on Facebook as much as Pinterest.

In reality, social media sites have nothing of the stickiness of the old fashioned newspapers in the days before the internet.

Of the social media services it might be that Facebook is the best placed to succeed as an old media publishing service with its advertising smarts pushing messages to its diverse and deep user base but that isn’t certain given the widespread user dissatisfaction with its news feed.

For the social media services much of the problem – -particularly for Facebook – lies in their contradictory aims; they are trying to be identity services, buying platforms, publishing services and advertisers.

For publishers that balance between content and advertising was always a delicate one; and one that shifted over time. For online services that balance is far more complex and the future far less certain.

One thing that is clear Is those contradictory aims aren’t going to be easy to reconcile and the quandary may prove to be insurmountable.

What’s clear though are the advertising models of the future are still waiting for a David Sarnoff moment.

ABC Nightlife with Tony Delroy October 2014

Connected cars, smart watches, Microsoft and social media will be the topics of the next Nightlife with Tony Delroy technology segment.

Paul Wallbank joins Tony Delroy on ABC Nightlife across Australia from 10pm Australian Eastern time on Thursday, October 2 to discuss how technology affects your business and life.

Update: If you missed the program you can listen to the podcast at the ABC site or stream it below.

For this month’s spot we’re looking at smartcars, smartwatches, the next version of Microsoft Windows and whether the new social media platform Ello can displace Facebook.

Some of the questions we’ll cover include;

What’s happening with connected car technologies?
Isn’t all this talk about smart cars another way ?
So how far are we off the driverless car?
Are our mobile phone choices going to dictate what brand car we buy?
How does the smart watch fit into how companies are trying to lock us into their software?
A new social media platform called Ello is taking off, what is it?
Do we really need another social media platform?
Microsoft have announced Windows 10, aren’t we only up to eight?
What’s different in Windows 10?
Has Windows 8 been a success?
When will Windows 10 be released on the market?

Join us

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

Tune in on your local ABC radio station from 10pm Eastern Summer time or listen online at www.abc.net.au/nightlife.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Ello, Ello to a frustrated social media market

The rapid rise of upstart social media service Ello is a warning to the industry’s incumbents and the marketers using the platforms

Over the last week new social media service Ello has been in the news as the ‘anti-Facebook’ that doesn’t collect user details or push advertising onto feeds.

Certainly Ello has touched the zeitgeist with reports claiming the service is getting 30,000 new signups every hour. It’s clear social media users aren’t happy with the existing services.

Part of this discontent is due to social media’s growing pains as the platforms search for the business models to justify their massive valuations, with the consequence of users finding their streams being polluted with invasive and often irrelevant advertisements.

Social dilemmas

For Facebook in particular this is a problem as they have to balance the service’s relevance to users against the demands of ever desperate advertisers who want to post as many ads as possible into the feeds.

Adding to the discontent is suspicions on how the existing social media services intend to trade users’ information. While many internet mavens may claim ‘privacy is dead’, most people are concerned at how a history of their likes, friends or conversations could hurt future relationships or job prospects.

Which ties into Ello’s manifesto.

Your social network is owned by advertisers.

Every post you share, every friend you make, and every link you follow is tracked, recorded, and converted into data. Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.

We believe there is a better way. We believe in audacity. We believe in beauty, simplicity, and transparency. We believe that the people who make things and the people who use them should be in partnership.

We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce, and manipulate — but a place to connect, create, and celebrate life.

You are not a product.

While Ello’s founders are right that Facebook, and to a lesser degree, Twitter are advertising platforms at present it may well be that social media’s days as a marketing tool are numbered as the business models mature.

The evolving social media model

Facebook’s announcement that it is going into the payments field is an indication that the businesses are maturing beyond the broadcast advertising model that worked so well for television and radio while Twitter’s struggles to shoehorn the old marketing tools into its business continue.

The most successful social media platform to date is LinkedIn which makes less than a quarter of its revenues from advertising — down from 30% two years ago — with the company building revenues in its corporate talent finding services, something that makes LinkedIn’s ambitions to be a global content publisher somewhat strange.

So it may well be that Ello aims to solve a problem that may not exist in the near future.

Ello could turn out to be the ‘Facebook killer’ however the odds are stacked against it, what is clear though is the social media marketplace is telling the industry’s leaders that consumers aren’t happy. It’s something the marketers staking their future on social media need to keep in mind.

Facebook becomes the storefront

Facebook’s Buy Now feature could be the future of social media and ecommerce

Last week payments service Stripe confirmed they had partnered with Facebook to power the social media platform’s ‘buy now’ feature.

The buy now button concept ads a button to posts, either sponsored or organic, in a user’s feed which lets them purchase the product being mentioned. This could be a powerful call to action for those advertising on Facebook and a potentially substantial revenue stream for the social media service.

Late last month Stripe co-founder John Collison spoke to Decoding the New Economy about the evolution of online payments and Facebook’s role in the industry.

“We’ve seen Facebook’s announcement a little while back that they’re letting you pay with your Facebook credentials. You can have a little ‘buy with Facebook’ button and if your card details are on file with Facebook then you don’t have to fill out all your details.”

Stripe’s strategic advantage

At the time Collison wasn’t letting on just how integral his company would be to Facebook’s payment services and coupled with company’s privileged position with Apple Pay, Stripe seems to be in a leading position with some of the biggest and well positioned players in an industry that’s being turned upside down.

Those changes are good news for business as I wrote for Technology Spectator last week with the increased competition in the sector is making it easier for new companies to enter their markets.

Making it easier for new entrants is something that drives Stripe’s Collison; “I think one of the things that’s held back online commerce for so long is there is such a high barrier to it and so if you go to a coffee shop and you pay for your coffee — you swipe your card and that’s that.”

Letting businesses sell more

“It seems to me that in five to ten years time we will not be in the same world where people like Facebook and Google are improving the identity story,” continued Collison. “This is exciting because it means merchants can sell more.”

The integration of Buy Now into Facebook’s services also indicates a different direction for social media services beyond being the passive marketing platforms many see them as being today.

It may well be that social media platforms are more the storefront than the billboard.

Social Media’s difficult adolescence

Social media is struggling with its identity as it enters adolescence.

Like teenagers, social media platforms are struggling to understand their position in the world.

For the last week I’ve been dipping into the Sydney sessions of Social Media Week and what’s quite clear from the panels and keynotes is the industry and the services themselves are struggling to find how they fit into society.

Two weeks ago LinkedIn’s senior management were in Sydney describing their ambition to be a global publishing platform, something that’s at odds with the company’s success in becoming the dominant professional social network.

Compounding the feeling of confusion about what LinkedIn is, CEO Jeff Weiner followed up with a discussion of how the service had an ethical crisis over its entry into the Chinese market.

A conflict of interest

During the Social Media Week sessions panellists and the audiences agonised over their struggles to engage audiences or how social media services, particularly Facebook, were limiting their reach.

Facebook has a particular problem; its users want to know about their friends, families and interests while not really caring about brands but its advertisers – the people who pay the bills – desperately want to embed themselves into their followers’ lives.

So Facebook has to throttle back the amount of brand content and marketing material to prevent users being irritated by excessive advertising. Understandably advertisers get upset with this, although its hard to feel much sympathy for businesses and agencies who thought they had a free broadcasting channel in the social media platforms.

Twitter and every other social media platform is suffering similar problems, albeit without the revenues and stock market valuation.

An even more stark illustration of social media’s immaturity is the industry’s reaction to privacy with, at best, a shrug about concerns over the handling of users’ information – this is something that will almost certainly damage the industry in coming years.

One of the problems for the social media industry could be that its overvalued and overhyped; while there’s no doubt a valid role for the services in modern life most of the companies won’t turn out to be as valuable as they and their investors hope.

Startstruck platforms

Part of that quest to increase value results in probably the saddest adolescent aspect of social media: The need to be liked by the cool kids.

Like a lonely teenager, social media platforms are often starstruck; LinkedIn has gone through its phase of being in the thrall of high profile influencers for its publishing function, Twitter desperately courts celebrities and Google Plus in its fawning towards music stars, all of whom seemed exempt from the real name policies that caused so much grief for the company and its users a few years back.

For the social media industry, adolescence is a tough time with many struggles about its own identity similar to those of its users. It will be interesting to see how it matures.

Jeff Weiner and LinkedIn’s Chinese cultural struggle

LinkedIn’s move into China challenges the company’s values and its ambitions to be a content publishing platform

LinkedIn CEO Jeff Weiner believes the company’s culture and values are one of its most important competitive advantages, however moving into China has tested those strengths he told a conference in Sydney two weeks ago.

During the fireside chat Weiner went over the company’s development, the challenges he faced taking over from LinkedIn founder Reid Hoffman as CEO and the importance of the company’s ethical base.

“It’s important for companies to define what culture and values mean to them before they get to what the specific values and culture are,” Weiner said in an answer to an audience question.

Defining values and culture

“At LinkedIn we think culture is the collective personality of our organisation and it’s not only who we are but who we aspire to be and that aspirational component is really important,” Weiner continued.

“Oftentimes you’ll see company executives get onstage to introduce culture and values or talk about changing culture and values and it’s not necessarily something the company already does and it loses the trust of the employees and the audience when that material being presented because people know is not necessarily true.

“If you allow yourself to include this aspirational dimension when defining the culture it gives everyone an opportunity to play up to where your setting that bar and I think that’s important,” stated Weiner.

“Values are the first principles upon which we make day to day operating decisions, that’s how we make the distinction.”

Culture as a competitive advantage

“I think once an organisation has defined for itself what it means by culture and values it’s then obviously important to codify its culture and the pillars of the culture and the specific values that it operates with.

“Its not enough to codify it, we went to the trouble of defining it and then putting it in our public registration when we filed to go public and that’s a good start but all too often we see people talking the talk with regard to culture and values and not walking the walk.”

For Weiner, that commitment to the company’s culture is the company’s strength in the marketplace: “Today, I’ll tell you it’s our most important competitive advantage.”

The China Problem

LinkedIn’s culture though has been tested by its entry into the Chinese market where its aspirations of being a content publisher met the limitations of the country’s censors.

When asked by this writer about the quandary LinkedIn finds itself in the PRC, Weiner reconciled this with the company’s mission to connect the world’s professionals.

“China’s one of our largest opportunities in terms of the value we can create for members in China and for companies in China.”

“One in five knowledge workers and students reside in China so it’s a huge part of connecting the world’s professionals and to achieve that kind of scale so we can create value for people who are living in China it’s important that we’re able to do business there.”

“At times means complying with law that forces us to do things that are very challenging and difficult and we always knew the importance of operating in China and for us we wanted to be extremely thoughtful in terms of how we did that.”

Favoring freedom of expression

“Obviously we are very much against the idea of censorship and very much in favor of freedom of expression but in terms of operating there and creating economic opportunities for what could be potentially a 144 million people from time to time we may have to make some very difficult decisions. That’s the reality of doing business there.”

In being asked if this creates a struggle with the company’s culture, Weiner answered “that was one of the things we took so much time on.”

“From the time we decided we needed to be in China and how important it would be in creating the global platform and adding value for members and the time we entered into China with the local language version of the site it was of the order of 18 to 24 months.”

“Discussions took place among our executives asking some very difficult questions in terms of our culture, our values and where we would be willing to compromise and where we would draw hard and fast lines and that will continue to be an ongoing process.”

For LinkedIn and Jeff Weiner the challenge of being a trusted global publishing platform and a leader in the Chinese market raises some serious ethical questions; it’s a challenge that is going to test the company more in coming years.

Navigating a world of silos

Blogger Robert Scoble sees social media silos as the cost of distribution in the new media world

Having seen Robert Scoble interview dozens of startups and founders, it was fascinating to get him on the other side of the camera for a Decoding the New Economy interview.

One of areas I was keen to explore with Scoble was his experience of moving from his blogging platform to Facebook and particularly the risk of being locked in a silo, something previously discussed with Doc Searls.

“I’d rather all my content wasn’t in Facebook,” Scoble observes, “but those days are over.”

Unlike Searls, Scoble sees the social media networks — particularly Facebook — as being a useful distribution tool while accepting their limitations; “I find I get a lot more engagement and distribution on Facebook.”

“Unlike a lot of other journalists I don’t have to make my money out of advertising so I don’t care about taking my eyeballs off the blog and onto Facebook.”

“It does limit my storytelling ability because you can only use one video and I can’t do a lot of typographic stuff,” says Scoble, “people are seeing these on mobile phones anyway so they don’t want to see all of this stuff anyway.”

The mobile aspect is key to the business world going forward, we stopped midway through the interview to buy an iPhone 6 which went on pre-order right in the middle of the discussion.

For the mobile world Scoble sees the rise of various ecosystems like Google’s and Apple’s forcing people to make choices about which camp they are going to join.

Like many in the tech industry, Scoble is very cautious about looking too far ahead; “none of the people, even the investors, are looking more than five years ahead.”

The key though is miniaturization as devices get smaller and more portable, the potential for technology becomes greater.

Whether that potential is limited by the desire of vendors to lock users into silos remains to be seen.

A unicorn in the wine industry

The wine industry once thought the internet was a cute idea, now companies like Vintank are showing them what it means

“I was a closet tech guy until the 2000s,” says Vintank’s founder Paul Mabray in describing how digital technologies are changing the wine industry to the Decoding The New Economy YouTube channel.

We’d spoken to Paul before about the forces changing the wine industry and visiting him in the Napa Valley gives some perspective on the opportunity the sector has in capturing the enthusiastic US wine market.

Paul’s first venture into wine technology was with Inertia Beverage Group in 2002, “when I started Inertia I said ‘hey, there’s this thing called the internet'”, Mabray recalls. “They said ‘hey Paul you’re so cute, the internet won’t be around in a couple of years.'”

The internet being a fad turned out not to be the case and Vintank evolved out of the rising importance of social media to industries like wineries.

“Vintank is the mission control of social media, the one stop engagement platform for the wine industry,” says Paul of his social media listening service which he and co-founder James Jory established in 2009.

Wine is lagging other industries in adopting social media and other digital technologies because it’s avoided many of the disruptions other sectors have had to deal with.

“The wine industry is the last industry that hasn’t been changed by the internet,” Mabray says. “If you look at hotels with expedia.com or restaurants with Yelp or Open Table, that hasn’t happened yet.”

A key facet of Vintank is its use of the freemium business model in offering a basic service for free; a common practice in the consumer (B2C) market but fairly rare in business (B2C) software services.

“It’s a very different way to do freemium in B2B. Freemium in B2C you do mass adoption — that tiny fraction that pay makes it profitable because so many people have it.”

“In the B2B freemium model what you have to do is distribute it for free and then you measure the usage; who is using it the most is where you send the sales team in.”

For Mabray, we’re in early days of using digital media and the wine industry is one of the sectors that needs to adopt the technologies quickly: “The driver for me is this horribly complex problem that needs to be solved — the wine industry needs digital to survive.”