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FaceBook challenges run deep and are fundamental

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Back in 2007, then in 2016 I looked at the FaceBook business model and compared it to AOL.

Here is the thing. AOL which was the US #1 internet source at one point, lost out because its mission was to retain users within the walled garden. It is not the first time this argument has been used but consider …. AOL strategy was all about building tools within their own garden, and as early as the 1990’s they even had their own browser and their own markup language (think proprietary version of HTML). They had their own CD which let you install AOL on your computer. The AOL ‘platform’ was a CD. Platform, tools, apps; the parallels are remarkably close.

My context then seems narrow now. But FaceBook remains a walled garden which expects to attract users and is required to continually provide reasons to be attractive to users, and yet make money.

The attraction FaceBook provided was to challenge traditional views on privacy and imply that they had that covered. Zuckerberg continually challenged traditional views on privacy and was rewarded with 2 Bn users.

Fast forward to now, and the walls are tumbling. Sandberg comments today tell us Mark will no longer be at the helm in short order.

Relevance to Bankwatch:

I have always been critical of internet and web as a media tool. I remain steadfast on that. I believe in pay as you go subscription models for news. I know who I trust and I know who I mistrust.

Facebook has no attraction for me as media. I understand the attraction of my relatives sharing family pics but I do not understand the relevance for news.

I know and trust Lionel Barber, Rana Foroohar and Gillian Tett (look them up). They carry weight and credibility. That is what distinguishes actual news.

Meantime FaceBook has been attracting users beyond the friends and family people based on spurious information that is not even called news. Those people were attracted under false pretences. Sandberg noted today that “To this day, we still don’t know what data Cambridge Analytica have”

Finally this from 2009 from 2009 where I summarised the coming media crisis using pieces from several others.

In 2004 people were asking about blog business models. Now it is social network business models. I have suggested other ways to deal with business models, but the mob continues to aim directly at advertising as the answer. It will pollute the web, and result in the opposite result than what is desired. It will not bring sustainability for them using advertising.

Written by Colin Henderson

April 5, 2018 at 23:34

Posted in Uncategorized

FaceBook finally gets smart and plans exit from news


Good article in Medium about the long time coming shift from FaceBook.

Here is how Zuck defended the move:

“The research shows that when we use social media to connect with people we care about, it can be good for our well-being. We can feel more connected and less lonely, and that correlates with long term measures of happiness and health. On the other hand, passively reading articles or watching videos even if they’re entertaining or informative may not be as good. Based on this, we’re making a major change to how we build Facebook. I’m changing the goal I give our product teams from focusing on helping you find relevant content to helping you have more meaningful social interactions”.

Written by Colin Henderson

January 15, 2018 at 18:05

Posted in Uncategorized

Facebook fake news is not new


This is the thin edge of the wedge that goes way deeper.

Back in 2006 the Walmart fake marketing situation erupted. The basic theme goes back to the “on the internet nobody knows you are a dog”. You can say anything with conviction and supposed analysis and it must be true because it is there on the internet.

Now there is an even deeper school of thought that this is not new, and that marketing has always been this way.

However the adoption of technology with the complete absorption by a whole new demographic means fake news becomes real news. We have a rapid ignoring of MSM by all generations.

However I am not sure that it is any worse than it has ever been with biased opinion-ed comments in MSM. But Facebook is more pervasive and visible, and all problems point to Mark. That does make this a new problem.

Now, having said all that the talking points that Mark outlines below are frankly useless. For example the reference to fact checking is just that … a reference.

I publish this blog and I post periodically, much less than before due to actual work matters but it is here and it is me. The people who read my blog have some interest in banking technology. Whereas Facebook et al have the problem of talking to everyone with varied interests.

This is an extreme comparison but it highlights the problem Facebook faces. It is possible to become so large that you influence such a large group which was never expected. How do you manage that.

 

 

 

__________

Mark Zuckerberg
November 19 at 1:15am ·
A lot of you have asked what we’re doing about misinformation, so I wanted to give an update.
The bottom line is: we take misinformation seriously. Our goal is to connect people with the stories they find most meaningful, and we know people want accurate information. We’ve been working on this problem for a long time and we take this responsibility seriously. We’ve made significant progress, but there is more work to be done.
Historically, we have relied on our community to help us understand what is fake and what is not. Anyone on Facebook can report any link as false, and we use signals from those reports along with a number of others — like people sharing links to myth-busting sites such as Snopes — to understand which stories we can confidently classify as misinformation. Similar to clickbait, spam and scams, we penalize this content in News Feed so it’s much less likely to spread.
The problems here are complex, both technically and philosophically. We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content. We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties.
While the percentage of misinformation is relatively small, we have much more work ahead on our roadmap. Normally we wouldn’t share specifics about our work in progress, but given the importance of these issues and the amount of interest in this topic, I want to outline some of the projects we already have underway:
– Stronger detection. The most important thing we can do is improve our ability to classify misinformation. This means better technical systems to detect what people will flag as false before they do it themselves.
– Easy reporting. Making it much easier for people to report stories as fake will help us catch more misinformation faster.
– Third party verification. There are many respected fact checking organizations and, while we have reached out to some, we plan to learn from many more.
– Warnings. We are exploring labeling stories that have been flagged as false by third parties or our community, and showing warnings when people read or share them.
– Related articles quality. We are raising the bar for stories that appear in related articles under links in News Feed.
– Disrupting fake news economics. A lot of misinformation is driven by financially motivated spam. We’re looking into disrupting the economics with ads policies like the one we announced earlier this week, and better ad farm detection.
– Listening. We will continue to work with journalists and others in the news industry to get their input, in particular, to better understand their fact checking systems and learn from them.
Some of these ideas will work well, and some will not. But I want you to know that we have always taken this seriously, we understand how important the issue is for our community and we are committed to getting this right.
A lot of you have asked what we’re doing about misinformation, so I wanted to give an update.
The bottom line is: we take misinformation seriously. Our goal is to connect people with the stories they find most meaningful, and we know people want accurate information. We’ve been working on this problem for a long time and we take this responsibility seriously. We’ve made significant progress, but there is more work to be done.
Historically, we have relied on our community to help us understand what is fake and what is not. Anyone on Facebook can report any link as false, and we use signals from those reports along with a number of others — like people sharing links to myth-busting sites such as Snopes — to understand which stories we can confidently classify as misinformation. Similar to clickbait, spam and scams, we penalize this content in News Feed so it’s much less likely to spread.
The problems here are complex, both technically and philosophically. We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content. We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties.
While the percentage of misinformation is relatively small, we have much more work ahead on our roadmap. Normally we wouldn’t share specifics about our work in progress, but given the importance of these issues and the amount of interest in this topic, I want to outline some of the projects we already have underway:
– Stronger detection. The most important thing we can do is improve our ability to classify misinformation. This means better technical systems to detect what people will flag as false before they do it themselves.
– Easy reporting. Making it much easier for people to report stories as fake will help us catch more misinformation faster.
– Third party verification. There are many respected fact checking organizations and, while we have reached out to some, we plan to learn from many more.
– Warnings. We are exploring labeling stories that have been flagged as false by third parties or our community, and showing warnings when people read or share them.
– Related articles quality. We are raising the bar for stories that appear in related articles under links in News Feed.
– Disrupting fake news economics. A lot of misinformation is driven by financially motivated spam. We’re looking into disrupting the economics with ads policies like the one we announced earlier this week, and better ad farm detection.
– Listening. We will continue to work with journalists and others in the news industry to get their input, in particular, to better understand their fact checking systems and learn from them.
Some of these ideas will work well, and some will not. But I want you to know that we have always taken this seriously, we understand how important the issue is for our community and we are committed to getting this right.

Written by Colin Henderson

November 21, 2016 at 01:33

Posted in Uncategorized

2007 reprise: Could FaceBook risk becoming another AOL?


Here is something I wrote in 2007. (Could Facebook Risk becoming another AOL). The context was different, ok, a lot different given that is 9 years ago and I was thinking about Lending Club who were only available within FaceBook, but I believe the conclusion stands. In fact the reality that has shown the shifts over those 9 years towards an open and mobile dominated internet supports the point. No-one has the final answer, because there is no final answer.

FaceBook are chasing their tails.

Here is the thing. AOL which was the US #1 internet source at one point, lost out because its mission was to retain users within the walled garden. It is not the first time this argument has been used but consider …. AOL strategy was all about building tools within their own garden, and as early as the 1990’s they even had their own browser and their own markup language (think proprietary version of HTML). They had their own CD which let you install AOL on your computer. The AOL ‘platform’ was a CD. Platform, tools, apps; the parallels are remarkably close.

How do make a walled garden successful over the long haul? How can you make people remain within a walled garden without them being constantly bombarded by “grass is always greener” incentives that is the internet today.

The graphic below is a chart of active users on different social networks. If we dig behind the words “social network” what we are looking at his how people communicate with friends and relatives, or at least that is how the “social network” got its name. Meanwhile along the way in an effort to make money, advertising is introduced and co-incidentally people seek different models, whether simplicity, lower bandwidth, mobile friendly, ad-free, etc..

One striking aspect of the names on the graphic below is that they all have different models, different ways to engage people, and most distinctively different was to adapt to mobile. Who will be there in 2025? How will that list look in 2025?

So reading this Techcrunch story today which is one of a succession of initiatives by FaceBook to adapt to the AOL problem just makes we wonder.

 

myWPEdit Image

Written by Colin Henderson

June 29, 2016 at 15:52

Posted in Uncategorized

Latest trends in mobile development platforms from Venturebeat–Facebook API and Javascript big gainers


Venturebeat reviews a report on mobile technology platforms.  The big news is that html5 has dropped in favour of faster native app platforms with Javascript the biggest gainer.  Objective C which was popular in the beginning is dropping in favour.

There is a recognition that we all experience that mobile must launch and run quickly with potentially spotty data connections.

Latest mobile dev trends: Facebook’s mobile API & Javascript are hot; HTML5 & old web architecture are not

Facebook has now swiftly become the most popular social service for devs to connect their apps to, according to the latest mobile trend report from mobile dev platform company Appcelerator. And that’s despite the fact that many developers didn’t even consider Facebook a mobile company several quarters ago in a previous Appcelerator report.

Similarly, developer interest in HTML5 has been on a steady decline for over a year. While HTML5 would allow developers to build apps that could be easily deployed across multiple platforms, it still offers a noticeably less polished app experience compared to native development. Around 60 percent of developers surveyed said they were interested in using HTML5 in their apps, down from a high of 73 percent in mid-2012.

Perhaps related to those two trends, Appcelerator found that devs now view Javascript as the most important programming language for mobile development. 47.2 percent of devs ranked Javascript their No. 1 language, while Java and Objective C trailed with 23 percent and 20 percent, respectively.

Written by Colin Henderson

December 20, 2013 at 00:33

Posted in Uncategorized

Chronology of SEC – Facebook correspondence leading up to IPO


This is a complete chronology of the communications between the Securities Exchange Commission (SEC) and Facebook in the months leading up to their IPO.

Facebook Fought SEC to Keep Mobile Risks Hidden Before IPO | Bloomberg

The incident was part of a two-and-a-half-month volley of messages among SEC officials, Ebersman and Facebook’s law firm Fenwick & West LLP. A dozen letters, published a month after the May 17 IPO on the SEC’s website, depict a management team hesitant to disclose information and still guessing at even rudimentary aspects of its business just weeks before the company held the largest-ever technology initial public offering. Many of the issues raised by the SEC and now unnerving investors were foreshadowed in the then-private correspondence between the SEC and Facebook.

The letters and phone calls paint a much uglier picture than we believed at the time.  We knew there were deep rooted doubts about:

  1. ability to lever mobile advertising
  2. risk of loss of revenue from Zynga
  3. accuracy of user count

However the correspondence here suggests was living in the dream of having 3/4 billion users and will make money somehow, as opposed to the required diligence involving a public offerring.  There is a real desire to ignore risks, rather than accept them and provide mitigation rationale.

There are some amusing things in here too.  Because all blackberry traffic gets routed through Canadian servers in Waterloo, the count of Canadian users is completely inaccurate.

Written by Colin Henderson

October 12, 2012 at 09:40

Posted in Uncategorized

FaceBook stock decline is a business model and management issue


This is an important piece at the NYT.

When the Network Effect goes into reverse | NYT

James Stewart covers Facebook, as well as Yelp, Groupon, LivingSocial and Linkedin.  The title is somewhat provocative and the article notes that the network effect has not yet reversed.  But he makes two main points that are possibly related:

  1. Revenue growth is not as rapid as user growth
  2. Mobile usage is the most rapid growth, yet traditional advertising on mobile is not clear given the small screen size

He also speaks about the FaceBook employee shares coming up for sale in November and notes others comments that this is a red herring relative to the share price decline.

I believe that FaceBook stock decline is a business model and management issue, and goes to the core of my beliefs about internet and marketing.

Lets look deeper.

Relevance to Bankwatch:

I have always been bearish on internet as an advertising medium, and especially social media for advertising and continue to to believe that.  This comment is in the NYT piece comments, and sums it up for me:

Stu’s Law: Over time, most of the value created by network effects will be captured by the users of the network, not by the builder of the network.

Brilliant.

Everyone I know is active on FaceBook.  They use it to both observe their family and friends activities and to stay in touch.  For that use it is brilliant and fills a voice that letters and even emails cannot.  With pictures, stories and comments people can asynchronously and conveniently follow each other.  When we layer on the advent of apps smart phones with location and photo capabilities, that convenience factor grows exponentially.

But then what.  As the user base enjoy that convenience and new found access to their friends and family the network owner is increasingly pushed into the background and the winners are the users.  The idea that their convenience would be interrupted by intrusions such as ads flashing across the screen is considered ridiculous.

By the same token the network owner finds it ridiculous they must spend all this money developing the network with no benefit.

So we have a stand off, and meantime the stock is dropping and P/E ratios are brought in to question and stock prices will align with traditional media unless some creative thinking is brought to bear.  That would price FaceBook stock at $6 +/- just to put the problem in perspective.  But that speculation is for other blogs.  My concern is business model related.

Lack of creative thinking:

Online advertising has grown little since the original banner ads in the ‘90’s.  There is a host of sophistication in the back end designed to place the right ad for you based on your implied preferences, implied location, and implied demographic but at the end of the day its just a banner ad that intrudes on your time and screen space.

Is a banner ad really the only way to get attention from people?  This is is old thinking that comes from newspaper, radio, billboard and television.  I would have thought that by 2012 and 20 years after the first graphic internet web page, that someone would come up with new models.  In fact with the user base and smart people, why has FaceBook not accomplished that, instead falling back on the ancient advertisement interruptus model.

I do not even pretend to know the answer, but it has to have its roots on some co-operative model that engages users as part of the process.  The ubiquitous “Like” and “G+” buttons go some way but not very far.  The outcome will still be a banner ad, an email or some notification.  Where is the sophistication that takes the Likes and engages users without interrupting them.

Is internet even the appropriate place for advertising as we know it?  I have always been chastened by the idea that internet was designated ‘media’.  Somehow the marketers took over web site management in the 90’s, something I was not happy about but that’s another story.  Internet is a tool that provides utility.  I do not expect to see an ad on my hammer.

That’s why I believe this is a problem that will not be solved by marketers.  Sorry folks to all my marketing friends.   The tools and training just do not allow for a solution, and that’s why Groupon, and Facebook fail at advertising.  the more people they drive ads to the larger the ad supply and the prices drop.  What happens when ad prices drop to zero FaceBook.  That day is coming.

No, this is a technology problem that involves, algorithms, big data, site design, page design, different user engagement and more.  There are some clues in Vendor Relationship Management (VRM) which is a concept I believe in but has yet to manifest itself successfully.  The idea is that you, the user, control your advertisers (Vendors).  This is the correct line of thinking.  While as extreme as traditional advertising is on the other end of the scale, it should drive a better line of thinking that will allow for a model that produces revenue for network builders, and satisfaction for users.  VRM says that users decide if, when and how they will interact with merchants.  I can hear aghast marketers crying foul, and they will lose their 0.001% penetration rates.  Really?  How do you know you would not get better and more meaningful penetration?

Business model considers all alternatives for revenue, including subscriptions, freemium charges, and others.  Being stuck on advertising and advertising as currently structured is a losing proposition.

Meantime FaceBook is a short sell, and it is not because of all those employee shares coming on the market in November.  This is a business model problem, just as was Groupon.

Written by Colin Henderson

August 18, 2012 at 15:39

Posted in Uncategorized

Some thoughts on internet marketing and the challenge facing FaceBook and Twitter


Every once in a while I have to get back to the value that is yet to be proven for internet marketing.  When I say yet to be proven I am thinking here of the promise to get beyond sub 0.5% conversion rates usually seen in traditional marketing.  This is the promise that is held out for the Twitter and FaceBook models that somehow they have transcended the value which traditional interruptive marketing brings.  (For my thoughts on Groupon)

Mathew Ingram writes a succinct summary of the problem on GigaOm:

Both are seeing their share of the ad market grow, but there is still one big question standing between them and the multibillion-dollar valuations they have received from investors — namely, do ads inserted into social activity actually work?

Brilliant.  Everyone gets excited about volume of eyeballs, but that is old thinking.  Mathew summarises the problem perfectly here.  Will people actually buy things that somehow are selflessly promoted by their friends.

The bigger story is highlighted in this thoughtful piece from Brad Stone on Business Week.  There are several anecdotes about GM, Ford and Newt Gingrich levering twitter in ways that reflect more on the troll like activity we used to see in 1990’s newsgroups, than in valuable sharing of valuable insight.  There is nothing about product quality or why I should buy in.

Where do I see shared value?  It lies in places where control is exercised by the owner and gaming is not possible.  Amazon recommendations for example are (I believe) largely based on my own activity.  That makes me more loyal to Amazon and more likely to use them, the more I see the value in the recommendations.  There is another important point here;  no-one can game what I do and buy.

A similar trend exists on Goodreads.  I choose who I observe, and their book choices hold value for me when I associate with what I know about them and what they are reading.  Again it is very hard to game because it would stand out if a thoughtful friend or person I know and respect who specialized in war history suddenly started buying bodice ripping romantic novels.

So there is another trend there;  knowing the individual on the other end.

There are possibly three things that marketers could learn from these small observations over a period of time:

  1. My own behaviour is valuable to me
  2. The behaviours of real friends and of people I know and/ or respect are valuable.  Their recommendation’s less so.
  3. I am highly distrustful of big media trying to interpret me based on my postal code or click preferences.

I don’t know if the book model I describe is extendible at scale but FaceBook at least has some of the pieces in place to be thinking about that.  Twitter I have no hope for.  Twitter is that yappy group in the corner, and while I might pick up on gossip from them, and even get a smile or two, it will not impact my purchasing habits.

Written by Colin Henderson

March 3, 2012 at 17:30

Posted in Uncategorized

Facebook now as big as the entire Internet was in 2004 | Pingdom


An interesting take on the size of Facebook.

image

Written by Colin Henderson

October 5, 2011 at 22:57

Posted in Uncategorized

Al Jazeera english still available on FaceBook


Al Jazeera remains down this hour at http://english.aljazeera.net/watch_now/ but it is up here on FaceBook http://www.facebook.com/aljazeera

 

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Written by Colin Henderson

February 3, 2011 at 08:37

Posted in Uncategorized

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