There have been countless articles written on the true size of the Social Networking world. I’ve contributed to the deluge with a couple of posts on my own site (Myths of Social Networking and More Myths of Social Networking).
Anderson Analytics recently released an extremely useful study on the SNS market. You can read a summary of the study in today’s Ad Age. The article focuses on the “Mini Profiles” that highlight the differences between the users of the four primary sites; Facebook, MySpace, LinkedIn, Twitter. The big headline that is being picked-up online seems to be “Titter users are more into sex”.
But, I think a much more interesting finding is being overlooked. According to Anderson, we may be running out of new SNS users.
According to Anderson Analytics 110 million Americans are current SNS users (defined as having used on of these four sites in the past month). In other words 59% of the US online population have used Facebook, MySpace, LinkedIn, or Twitter in the past month. If that is even close to being correct, it is a phenomenal number. THAT’S JUST HUGE.
Have used a Social network in the past month (US Only)
But, an equally interesting number is the statistics on the Non-Users. According to this data, SNS has just about reached its upper limit. 73% of Non-Users will be trying SNS: “Not in my lifetime”.
Non Users of Social Networking (US Only)
If we’re reaching the ceiling on domestic growth, that suggests we’re going to see a fundamental change in the SNS marketplace. A shift from a Growth Strategy (just get more members) to a Value Strategy (provide a better service).
With a shift to a Value Strategy I’d expect to see these networks invest heavily in adding value to:
- Their feature set in order to retain members and steal share from other services.
- New ways that marketers can communicate with and leverage members.
- Understanding their members, so they can demonstrate to marketers how their members are unique, better, different than the members of other sites.
It is clear that the market is placing more pressure on SNS to develop realistic and near-term revenue streams. As growth slows, this pressure will only increase and providers will either finally start charging users some fees or provide much greater access to members for advertisers, or both.
As I’ve said before, consumers are very willing to pay for the services they value. The fact that these SNS don’t charge, represents a fundamental lack of faith in the value of their services. If it provides value, people will pay. If they’re not willing to pay for it, stop wasting everyone’s time and go start a new company.
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6 Comments
Hi Jacob,
Your article was certainly thought provoking and interesting. I would wish to put forth two of my observations and perhaps have members comment on that
1) With reference to your take on growth v/s value, I believe that almost all social media sites would desist from charging all their customers how mcuh ever incremental value they provide. My observation stems from the fact that somewhere in 1999/2000 there was a popular free email service called usa.net. Almost everyone I knew had an account with them. And mind you that this was in India where internet penetration was still catching up. Suddenly one fine day, usa.net decided to go paid offering a host of eye catching services but hardly anybody continued with them. In the same way, if LinkedIn (considering its global appeal) decided to charge a very small fee for even its basic service, I guess they would be faced with the danger of losing most of their subscribers.
2) Staying with the value strategy gambit, I would like to introduce you to a fairly new business networking site, http://www.brijj.com. The similarity in the interfaces between brijj and LinkedIn is startling and perhaps becuase of this fact they claim to have a subscriber base of over 800,000 in such short span of time.
What say !!!
I agree that these SNS need to start providing more value to their sites. Howabout a way for a local business to track followers, friends and invites to their Twitter, Facebook and LinkedIn accounts respectfully.
Great article thanks!
Jacob, thanks for sharing, this is really intriguing stuff!
Very interesting article, however I think in the future these sites will become less busy as more and more people and businesses develop there own web 2.0 websites. Creating their own niche communities instead of struggling finding a real use for Twitter!
You have done good analysis, keep us updating.
This is a great post and look at how social media is at a bit of a crossroads now. In many ways, the current social media environment reminds me of the early days of television: consumers didn’t pay for content and marketers were still trying to figure out the best ways to communicate with the large audience that had been assembled.
In the short term, I think the revenue is more likely to come from advertising or other corporatre sources rather than paid subscriptions from the users. As more and more companies build marketing strategies around social media, there is more value in the sites to them than there is to the average user.