Money Is The Death Of Social Media

Do you ever get the feeling when talking to someone unaware of the concept of a socially connected online world (the Grandmother in my example), that they just don't understand the value of social media?  The idea, while seeming wholly legitimate to yourself just seems preposterous to them, no matter how much you demonstrate or present.

This sort of thing happens on the trading floors of NASDAQ as well; but the interpretation is quite the opposite, as you've probably seen from the tumbling stock price of Facebook, since Zuckerberg rang the bell.  As investors look upon a social network they don't see community, they see influence and a possible return on their investment.  This is a fair enough analysis of the situation, anybody would want to see their money returned with extra; but in the grand scheme of things it's a fatal blow to the very product they're investing in.

In 2003 Tom Anderson created a network that spurred on an idea of socially connecting online beyond the likes of a Hotmail IM service.  It allowed for expression of onesself through profile design, content output, even the choice of an automatically playing song for whoever visited your page.  In 2005, eUniverse (the parent company of the network) was bought by News Corporation for $580 million, and over a three year course of nil innovation and no forward direction for the company, Myspace became stale.  It's still very much alive, as you all know; but it's going to be a struggle to remember the last time you logged in.

On May 18th 2012, Facebook began to trade their shares with a valuation of $104 billion.  Since this, the initial price of $38 per share has dropped to $28 as of today.  The simple question is why?  And the even simpler answer is because nobody understands the value of social media.

Granted, they didn't put all their eggs into one right-wing-media-conglomerate's basket; but even at the wildly extreme amounts that money is transferred in the world of stock offerings and company purchases, $580 million would be too much for Facebook, never mind Myspace.

It's the simple science of common sense, and a common deduction that when a social network has either sold itsself on or gone public, it's not usually done as well as people predicted.  And as a company reaches that metaphorical end-goal, of receiving the billions and feeling like rockstars within the social space, innovation dries up.

That's because it's not a business, that seems to be the inescapable point.  Social networking is not supposed to be an idea you can take to the stock market and make a profit from.  For people to make a profit off people being social is quite the stroke of genius.  And they will continue to do so until the people with the money cotton on.

Not to say social networks shouldn't be sustained, and since money is the route of everything it's the only way to keep them going; but the wild over-valuations for something nobody really understands has to stop for the benefit of future innovation and community aspects of the internet.

Jason England