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Social Networks Pt 3 - April 7, 2008

I'm going to post part of Sean's comment because I think he makes an excellent point.

[snip]

But after things are nice and open, something else happens. Smaller walled gardens appear, persist, and thrive. Keep in mind, a lot of Facebook's initial appeal was the fact that it was rather exclusive (colleges only.) There are other social networking sites out there that thrive in relative obscurity because they give users a feeling of being special or better. Often they're invite-only.

Part of me wonders if Facebook would have been better off (in terms of creating real value) if they hadn't tried to be a walled garden that appealed to everyone, to try and compete with Myspace.

You can be a walled garden and survive, but you have to give up the dream of appealing to everyone, of being the biggest. Facebook's strategic blunder has been that they're trying to have their cake and eat it too.

I think Sean is absolutely one hundred percent correct here and he touches on something that I've been thinking about but haven't really written about yet. It is better fill a niche and have users who are radically invested in your success than appeal to a broad base of people who are only lukewarm about whether you survive or not.

Think about the difference between Apple and Coors Light. There's a core group of Apple users who are absolutely fanatical about their products. Then there's a group of people who aren't fanatics but use Apple's products and would miss them if they disappeared. I'm in the second group. I've got an old PowerBook, an iPod and I'm a little obsessive about renting movies on iTunes. If any of those three disappeared tomorrow, I'd miss them as there's no other product that is a complete replacement. And if Apple stopped making computers and I had to go back to using a PC I might shoot myself in the face (I might be overstating that but Microsoft is churning out dogshit for OSes these days and my only real alternative to OS X is Linux and I've never been a huge fan of Linux on the desktop but I digress).

Now imagine if Coors Light disappeared tomorrow. Yep, that's the sound of no one caring. Now, which company is in a better position?

But neither of those are a walled garden and that's where this conversation started. I've said that walled gardens can never compete with the Internet and they can't. But what about a walled garden that isn't trying to compete with the Internet? That's really the heart of Sean's comments. When you use the fact that you're small and exclusive to your advantage you can absolutely succeed as a walled garden. The fact that you shield your users from the flood of crap on the Internet can be a very powerful draw. The history isn't written on Facebook yet, so they're not a very good example but lets look for a moment at a site called Heelpress.com. When I first found heelpress it was very much a walled garden. It was a site for writers who were in college. You needed to have a .edu address to sign up and while anyone could come to the site and read the writing posted there, the only people who could submit writing were people with a .edu address.

When I first found heelpress I loved it. I posted a lot of my early stories there because it was a great way to get feedback and to connect with other people like me. College aged writers. There were even other people in my creative writing classes at UCLA who were on the site and we used to talk about the site in class. We were well on our way to becoming fanatics.

Then heelpress did two things that moved it from awesome niche site to just another art site. They opened registration to anyone and they changed they focus from writing to art. And when they changed the layout of the site, they put the art above the fold and the writing below so you had to scroll down to see what was new in writing. They basically shit all over the people who had supported them early on (they've since put the art and writing next to each other).

I bet you can guess the day that I stopped logging into my heelpress account. What I was surprised to find (then not now) is that the people in my class had exactly the same reaction. It had become "lame, stupid, boring" and while no one muttered the magic "sell-out" phrase, we were damn well thinking it. Look at it another way. What if tomorrow flickr announced they were adding blogs. Could there be anything more lame?

But don't take my word for it. Look at their alexa ranking. They went from having a rank in the 20k range two years ago to being at 300k.

The worst thing facebook did was open themselves up to the world. They were never going to run out of college students to provide them with a userbase but they got greedy. They wanted as many eyeballs as they could get but they didn't realize that in the process they lost the very thing that made them special. They diluted the community so much that now they're just another social network site.

Posted by Ben Corman at 10:42 PM

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I think you're letting what you should believe color the truth of the matter. What about FB has been hurt by it being a walled garden? I can't name one thing. What have they lost by opening up and trying to be just like Myspace? They lost their simple interface, the undying love of college students, it lost it's cool factor etc. What did it gain? More users - who are infinitely less valuable then their lifetime lock on the next generation.

Besides, Rudius is a walled garden and thats precisely why it works so well. Some people can't and shouldn't be let in because they ruin it for everyone. It's a conscious decision companies need to make in their infancy - do we want to appeal to everyone or just some people? Even your Coors and Apple example - who is more open and less nichey? You'd have to go with Coors. Apple is a walled, exclusive club that so pleases its core that other people are beating down the doors to get in.

That's what Facebook HAD but gave it up to be Myspace 2.

Posted by: Ryan Holiday at April 8, 2008 08:26 AM

I'm not going to jump into the internet social network debate because I don't feel I have a solid enough base to comment one way or the other. I do, however, recognize a parallel into real life (or the physical world) and exclusivity as opposed to the electronic world discussed thus far. I've stated in a few places before that I don't have facebook, nor any other "social networking" accounts because artistically and as an individual, I truly appreciate the face-to-face experience in life. That's not to discount the usefulness and potential of social networking -- not at all. I recognize that I am mostly alone in this blanket preference. In fact, I would go as far as to say that I am acting contrary to logic in my defiance, but it holds an intangible significance for me.

Ben, your discussion of heelpress and the early exclusivity it offered by catering to a specific crowd got me thinking about some of the in-person social networks I've experienced. I live in a city that's been bathed in oil money over the last decade. The cost of living has sky-rocketed to unimaginable levels and it has become almost impossible for me to succeed in an art based career when I could hop across the street to become a database monkey for "Whatever Oil" and pull more than double the salary with 25% annual bonuses. Yet, I choose to struggle below the poverty line to do what I love.

One complaint I hear day in and day out in this city is that the art scene has been killed by Big Oil. The artistic types are threatening to bail out of the city to head to a non-oil large cities with a flourishing art scene. I disagree. Sure, bringing billions of dollars overnight into a city fucks a lot of people over, but it also brings in billions of dollars. The people that bust their asses droning 9-5 need a distraction. They want something to entertain them and renew their spirit - and what is one possible solution? Art.

Over the past two years I have witnessed a fresh art scene develop, albeit sometimes in spite of the existing one's demise. The new scene is in its embryonic stages, but that is exactly what I hope to be a part of. The people that are moving away from the city are, with a few exceptions, the sheep that do not have the motivation or desire to be a part of something before it's "cool" to be a part of it. The problem with most exclusive networks with great potential is that due to some factor (mainly financial vs. demand) they will eventually reach a tipping point, and the masses will flood in.

When I think of great movements, they always seem to have a thrilling rise, an explosion in popularity, followed by a tragic decline. In this way, I think that the masses are almost toxic to any great exclusive community because everything that made that community/movement/etc. special needs to be dumbed down to the lowest common denominator in order to bring mass appeal. Facebook is one exception because it appeals to that lowest common denominator so well, but several others, heelpress for example, self destruct under their own weight and popularity.

An example I can think of during my lifespan was the rave culture. It took a while to make it over here, but for a brief time, maybe about 3 months, it was an experience of community and partying like no other I've seen before or since. Then words got out and before you know it people are ODing, drug dealers and shooting the place up, people are pouring out of bars and into the all night raves, the government gets involved and the spirit gets sucked dry until the movement dies a pathetic death. And the craziest part is that I wasn't even a "raver" so to speak, just an average guy that got to be part of an exclusive culture before it was popular.

About two years ago I decided that if there was one thing I wanted to do with my life, it was to be a writer. Since that decision, I have geared 90% of my efforts, either directly or indirectly, towards achieving the existence that I think will bring me the greatest happiness. About six months in, I started seeking out writer's groups to participate in, and it was a terribly dejecting experience. A majority of the people were fucking hacks that wanted to be writers without actually being a writer. Some were weirdos, and I don't mean the good kind of weirdos. I mean probably raping animals in their spare time type weirdos. I don't know if you've ever showed up to a Pub to discuss writing and found six fat, middle-aged married women drinking COFFEE (in a fucking pub, honestly), but I have, and it sucks balls. Then I realized that looking for exclusivity where the sheep look for exclusivity is not the answer. If I'm joining anything that is pre-established and requires no effort, then I'm appealing to my lowest common denominator. Since then, I've made a few writing buddies, and half the time we get wrecked and end up screaming at each other about some abstract, pointless philosophical matter, but this actually means something to me.

In regards to Rudius as a walled garden, I view it as very much so. You have and are building/participating in something special - something that hasn't reached it's tipping point yet; something that, who knows, people might look back upon nostalgically as the start of something great like Joy Division playing in Manchester in the early 80's. Right now Rudius is fulfilling an internet niche, but what happens if the IHTSBIH movie takes off? How long can exclusivity stand in the face of popularity? How does one stop the masses' inevitable parasitical onslaught? Maybe for something to be great it has to be wholly consumed and decimated by the masses -- and then everybody looks back and says, "what happened? It was so great. I wish I was a part of it when it began."

Posted by: Gris at April 8, 2008 10:48 AM

Ryan,

I'm not sure if I did a poor job explaining myself but we're in complete agreement. I was trying to say that walled gardens work when they use their exclusivity to create a community that is protected from the general internet.

And in terms of facebook, I think they created more value when it was just a community for college students.

Posted by: Ben Corman at April 8, 2008 12:32 PM

Yeah, I don't really get Ryan's comment. You two are agreeing that walled gardens sometimes work (so long as you're willing to give more value to each user rather than absolute numbers) I thought that was the point of Ben's post, wasn't it?

Apple is the more exclusive, niche brand. FB was better off closed (In fact, I'd be surprised if a college-exclusive Social Networking clone/competitor isn't currently in the formative stages.)

If you want to be big, be open. If you want to be loved, be small. Each are valid strategies with their own advantages, disadvantages, and ways to create value. Failure comes with giving in to the temptation to be both, thus failing to be either.

----

Somewhat separate, but related issue:

I have to say, though, Ryan's post is the first time I've seen one issue I've been curious about explicitly mentioned.

I was wondering, for a time, why you guys didn't just automate the Rudius process. Say, for example, you could set up a writing site where anyone can create a branded sub-site, with user support/reader votes/algorithms determining who benefits from cross linking on other popular pages, with a threshold for editor services, Bunny's brand-consistent artistic services, and cross-media pitching (books, movies.) Or you could just a straight-up offer those, open to any user willing to pay (ala flickr where some users pay for premium services to support the rest.) I think such a site could work, (and may even exist without me being aware of it.)

That's the hypothetical alternative to your strategy, though. The Myspace to your college-only era facebook. Ryan's comment is the first time I've seen anyone acknowledge the choice of being the walled garden instead. If it won't hurt you in any way, I was just curious why you guys chose the current path rather than the hypothetical alternative I laid out?

Posted by: Sean at April 8, 2008 03:52 PM

If I'm not mistaken, I've seen you mention before that you read The Dip by Seth Godin. I find that the Facebook strategy coincides a lot with what Godin was discussing in the concept of "be the best in your world."

Facebook itself was the best in the world, that of a walled garden of networking for college students. When they decided to change their definition of the world to 'the internet,' they messed up big time. By opening themselves up and doing battle with MySpace (who was already an incredibly popular open networking site), they lost a lot of the things that made them so strong (see Ryan Holiday's comment). It could have been avoided if they continued to honor their original definition and focused on what got them there, instead of focusing on how they could extract more from the internet.

So, to reiterate, this coincides with Godin's concept of world, in that when you define yourself in whatever regard, you need to stick to be the best in that area. By trying to compete with others in a different sphere, you open yourself up to unforeseen problems.

Posted by: dumbjock at April 9, 2008 05:09 PM

I haven't read The Dip by Godin. I read his blog but I haven't had the chance to check out any of his books.

But it sounds like we're talking about the same thing. Find a niche and be the best at it.

Posted by: Ben Corman at April 9, 2008 08:28 PM

Sean --

We've had a lot of discussions about automating the submissions process. That's something we're going to move forward with when we've got the resources which right now, with a movie in production we just don't have.

But it's a good thought and one that will be necessary as we get more exposure and we have more people who want to work with us.

Posted by: Ben Corman at April 10, 2008 11:26 AM

I think Gris had a very good point in saying that, with many things there is "the thrilling rise, an explosion in popularity, followed by a tragic decline", however I don't think Facebook is as far gone as some people think. Granted they gave away some of their niche appeal by opening up the network to everyone, but they seem to have recovered from that nicely. They are in the middle of the explosion of popularity right now, but I don't think that the writing is on the wall for it yet.

Seann mentioned how he wouldn't be surprised if a college-exclusive clone is in development, but I disagree with that. I think Facebook, with people in their early 20's (the college age generation they started with), has become such a main piece of most people's social lives that the switching cost to go to a new offering just because its college exclusive is too high. Facebook took a hit initially, but since then (and especially with the introduction of apps) it has become even more predominant. I am basing this off anecdotal information, but I am the only person I can think of who's usage has dropped off since Facebook added all the new features. I think they have offset the damage of losing their walled garden status through the extra value they have given with new features introduced recently.

In addition, I see it more and more becoming entrenched with older generations as well. Granted, it may just be because it is a new toy, but I see many people who's ages range from mid 20's to mid 30's letting Facebook become a part of their day to day lives through social networking, entertainment, etc.

Don't get me wrong, I am not a big fan of Facebook, and I personally agree with Ben and Ryan that there was more value (for me, at least) when it was college-exclusive. I just don't know that that is a widely held opinion. I do, however, think they are at a tipping point. I don't necessarily think its the tipping point Gris was talking about though. I think Facebook is at a point where, depending on their next few moves, they can either cement their status in the social conciousness across broad demographic and generational ranges, or they will begin the tragic decline. Even that, however, is dependent on there being an alternative. There are niche social networks out there, but none that offer the full range of services that Facebook does. Even if Facebook hasn't made itself irreplaceable (the way Ben's Apple products are to him) I do think that the broad offering social networking experience is irreplaceable to a lot of people. And until there is a viable alternative, most people are going to stick with Facebook. And while you could argue that people will just spread out their use of all the features Facebook provided across niche networks, Ben has already written (correctly, in my opinion) that that won't work because it requires too much effort to have an active presence in too many walled gardens.

Posted by: Bryan at April 10, 2008 10:06 PM

Bryan --

Saying that facebook is too entrenched to be replaced doesn't hold a lot of water. That's like saying that friendster is too entrenched for myspace to ever replace it. The truth is that we simply don't know what is in development out there and what features that site will offer.

Myspace's success is actually an accident. The early version of the code didn't strip html tags out of the user input fields. So when people discovered this, they discovered that they could customize their pages and lack of customization was a major beef that people had with friendster. So who can say what the next big thing(c) will be?

Of course the facebook killer won't simply be a facebook clone only open to college students. That's been done, but you can't bet on entrenched players just because they're entrenched. If that were true then google could have never competed with yahoo which could have never altavista.

But you're right that facebook is at a crossroads (or tipping point) but I'm not sure that they have the DNA to make the right choices. Look at their last few moves. Beacon and social ads. For my money, I haven't seen anything that would make me bet on facebook doing the right thing. Facebook is more concerned with monetizing their users in the short term then then are creating sustainable infrastructure for the future.

Posted by: Ben Corman at April 10, 2008 10:57 PM

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