Sorry for sounding like a broken record, but, man, social media is really changing the world. In this article, I look at the 10 biggest social media stories from the past year, including skyrocketing startup valuations, the coming rise of location and the ongoing rise of video, and the suffering of social services like Digg, Google Buzz and Myspace at the hands of Facebook. Unsurprisingly, as the clear king of social media with nearly 600 million users, Facebook features prominently in the majority of the following stories.
The picture below is a perfect representation of the state of social media at the end of the first decade of the 21st century: nearly universal. Paul Butler, intern on Facebook’s data infrastructure engineering team, explains here how he created the friend relationship visualization using Facebook data.
1. Astronomical startup valuations
In mid-June, Zynga raised $147 million from Japanese telecom company SoftBank, and is now valued at some figure over $5 billion. A couple weeks later, Facebook closed a $120 million round from Elevation Partners, valuing the company at $14 billion, though it was trading on the secondary market for about $24 million. Now, that secondary market valuation has skipped and hopped up to $30 billion, to $35 billion, to $50 billion and, finally, to a breathtaking $60 billion two weeks ago. Twitter, which just raised a $200 million round led by Kleiner Perkins Caufield & Byers, is now valued at almost $4 billion. And only one of these three "startups" (Zynga) has proven it can actually make money to match its valuation. Everyone can see pretty plainly that Facebook and Twitter are extremely valuable services, but investors have yet to see viable or creative revenue models put in practice beyond traditional advertising. Will 2011 be the year that these social media behemoths prove their worth?
2. Location going mainstream
It's not quite close to being mainstream (i.e. my dad doesn't use it), but it's getting there (my mom does). To be more scientific, Pew says only four percent of adults use check-in services. Still, that number is growing. Location-based applications have been cropping up all over the place for years, but they didn't really start catching on until 2010. Foursquare now has five million users, according to co-founder Dennis Crowley, and sees almost two million check-ins per day (including one from space). Nine million people use Google Latitude on all non-iPhone smartphones (the iPhone version just launched at the beginning of the month). But do you know what location network already has over 500 million (potential) users? Yup, Facebook. In October, a single source at Facebook told Business Insider that about 30 million of those 500 million had tried Facebook Places. If it were true, that would mean over six times more people use Facebook's location services than Foursquare and more than three times than Google Latitude. We'll need check-in stats, though, before we can call anyone the champion of the location wars.
3. The Social Network / Mark Zuckerberg
First, I was surprised that someone was making a movie about Facebook. Then I was surprised that my favorite musician from high school, Trent Reznor of Nine Inch Nails (along with production partner Atticus Ross), was scoring the film. Then I was surprised by the overwhelmingly positive critical reaction to the film; at this point, it even needs its own Wikipedia page just for all the accolades it has received so far from organizations like the American Film Institute (AFI), guild awards and critics groups. The two hour film has gross revenue so far of $192.3 million, and it's still playing in some theatres, even though it was first released on October 1.
But probably the absolute most surprising thing about The Social Network was its failure to turn public wrath against Facebook founder and CEO Mark Zuckerberg, portrayed as something of a backstabbing twerp in the film. I'm not saying that was director David Fincher's intention, but usually successful and critically acclaimed films--even ones that use fiction liberally in portraying real-life subjects--have a profound effect on how the public sees that subject. Not so with The Social Network. In spite of the film's success, Zuckerberg is not seen as some heinous villain out to benefit nobody but himself, but rather as some sort of great innovator and philanthropist, perhaps best exemplified by his being awarded Time's Person of the Year 2010: "For connecting more than half a billion people and mapping the social relations among them, for creating a new system of exchanging information and for changing how we live our lives." Will we always think of him so highly?
Kleiner Perkins Caufield & Byers announced sFund in mid-October as an investment fund dedicated purely to startups and developers working on the Facebook platform. The sFund is supposed to be to social what the iFund was to mobile, and the iFund had some solid success in startups and services like location-based app Booyah, ngmoco (which sold for $400 million this year), social gaming startup Zynga, and music discovery app Shazam. Some critics say that Kleiner is late to the party, however, while still others say the platform is unproven since social gaming startup Zynga is really the only company to see any substantial success there. The first startup to be supported by the sFund is a "Friend Relationship Management (FRM)" startup called CafeBots, with a $5 million round, but it's is still operating in stealth mode. While sFund could prove to be a dud, only 2011 can prove that.
5. Video all grown-up
YouTube, still the most popular video site on the Web, turned five years old in 2010, and hit three huge milestones to boot: one billion views, legitimization, and something close to monetization. Pop sensation Lady Gaga was the first artist to reach one billion video views (on all sites) in March and then just on YouTube in October. More importantly, a District Judge ruled that YouTube cannot be held accountable for merely having an awareness of illegal content on its site, throwing out a $1 billion lawsuit brought against the site by Viacom. Finally, even though co-founder Chad Hurley announced in late October that he's more of an adviser than a chief executive these days, there's a growing possibility that Google might be close to reaching profitability on the site, as newer and more creative ads seep into videos. YouTube delivers about two billion videos daily, but SVP Jonathan Rosenberg says they're only monetizing two billion page views per week; see the potential?
6. The Like button takes over the Internet
When Facebook launched new developer features for the Web back in April, I'm not sure anyone quite understood how influential those features would be. While there was some pretty heavy backlash from privacy advocates and even four prominent Democratic U.S. senators, it now seems like the wave of social plugins like the Like button and new ways to integrate the Open Graph API were inevitable. Over 250 million people "engage with Facebook on external websites" in some way, according to the company, and, since the launch of these new developer features, an average of 10,000 websites integrate with Facebook every day. More than two million websites have already integrated. And any startup worth it's stuff will include the option of registering with Facebook, in addition to the standard email/password combo. Remember when we used to Digg things? Add Digg to the list of Facebook casualties: in spite of its newly designed site in March, Digg continues to lose users and had to lay off 37 percent of its staff in October. The Like button wins.
7. Facebook messaging
Facebook has been relatively quiet about this ever since the mid-November announcement, but it's still a very big deal, and here are two words why: email killer. Usually calling something an "x killer" is just a whole lot of hype meant to make eyes turn, but in this case, email is already dying. There are so many other avenues of communcation--text, IM, Facebook messaging, etc.--that it can hardly be argued that email is the digital communication medium of choice anymore. Recognizing this trend, Facebook has been busily working on a comprehensive messaging system, one we don't have very many details for yet, that aims to coalesce all those mediums into one seamless messaging experience. Topped with a limitless conversation history and social inbox, this could potentially have a profound effect on the way people communicate in the 21st century. Oh, and we're all getting @facebook.com email addresses. That's pretty cool, too.
8. Google Buzz flops
8.5 million. Usually when you launch a Web service, the number you want people to remember most is how many users you attracted to your service in its first month or year, not the amount of money you had to pay to settle lawsuits related to the service. Google announced in early November that it had agreed to pay $8.5 million to settle a class-action lawsuit for automatically enrolling Gmail users in Google Buzz, the social service launched by Google in February. Though the idea behind the service showed promise, its actual execution was marred by a privacy blunder that seemed to upset more people than anything done by Facebook, and that's really saying something. Even Microsoft and Yahoo, the tech companies usually considered out of touch, took jabs at Google. Now, nearly a year later, Google is reportedly readying a completely new social service called Google Me, which is supposedly aiming to compete with Facebook. Compete with Facebook? See below, then rethink your strategy, Google.
9. Can My_____ save Myspace?
Growing an incredible 76 percent from the year before, Twitter saw 96 million unique visitors in August, according to comScore, meaning that the not-so-fledgling microblogging startup had flown past, for the first time, Myspace's 95 million unique visitors. The one-time king of social had actually dropped 17 percent from the year before in what tech evangelist Robert Scoble has recently described as "like a plane in a death spiral." Now, Mike Jones, named Myspace CEO in October, is trying to restore the site to it's great heights of early days through a complete rebranding and mission. The new logo, displayed above, is supposed to represent the idea that Myspace is a social entertainment hub that is tailored to exactly what the user wants. You fill in the blank. Along with a total site redesign and vocal acquiesence to Facebook's dominance, Myspace is trying its hardest to stay alive. In 2005, News Corp. acquired Myspace for $580 million and is reportedly considering cutting its losses. Kind of like AOL...
10. AOL sells Bebo for $10 million
Like the Google Buzz flop and Myspace's resignation, AOL's sale of social network Bebo confirmed once and for all that smalller social networks, unless they inhabit a specific niche, cannot really compete with the dominant social network (right now, Facebook). The bigger social network wil have more of your friends and, by default, be a more useful service, unless the smaller service fulfills a different need somehow. Twitter is, by anyone's definition, a social network; however, it rocketed to popularity in 2009 by being first and foremost an information network where users flock not to hear about their friends' vacations and weddings, but to see the news most relevant to them in real-time. Unfortunately for AOL, the Bebo deal was a bitter one. AOL paid $850 million for the company in 2008 and sold it this year to Criterion Capital Partners for $10 million (and a "meaningful tax deduction"). Ouch.