The Web 2.0 Bubble

Why the social-media revolution will go out with a whimper

By Michael Hirschorn

My broadband connection went down earlier this year, and I was briefly forced to use a dial-up Internet service provider. I considered which of the icons to click on my desktop: “Free 6 Month AOL Membership,” or “EarthLink,” or “NetZero First Month Free!” I went for the 30-day free trial on EarthLink, and up popped a headline-news crawl. This provoked something of a flashback to 1997, when this innovation—basically, information you’ve requested being automatically delivered to your computer—was called “push technology” and was going to transform the experience of cruising the information superhighway. Wired magazine, at the very apex of its hyperbolic frenzy, infamously pronounced: “Push!” “The Web browser … is about to croak. And good riddance.”

In the Web hype-o-sphere, things matter hugely until, very suddenly, they don’t matter at all. Thanks to the unprecedented growth of MySpace and Facebook, “social media” matters hugely right now, but it is likely only another in a long string of putatively disruptive, massively hyped technologies that prove just one more step in the long march. Like “push,” “social media” is a functional advance pimped out as a revolution. Web 2.0, a term used somewhat interchangeably with social media, carries the not-so-veiled suggestion that everything else is merely 1.0—that is to say, Cro-Magnon. Really cool people now like to talk about Web 3.0. The pedant might note that the Internet, axiomatically, is all social media, but for the purposes of this discussion, let’s say that social media includes any digital environment built on the contributions of and interactions among people—or in the case of dogster.com, their dogs. Or hamsters. That would be hamsterster.com, where you can learn that an Oswego, New York–based hamster named Pistachio, member since January 8, 2005, likes jumping, climbing, and eating broccoli.

Social media has been around since the dawn of the Web. Remember GeoCities? The key innovation that launched the current vogue was a simple one: networking users and allowing them to interact the way we do in real life—or wish we could in real life. People have been able to blog for years. More recently, they have been able to upload photos, video, music, and so forth. Sites like MySpace connect these users through an ingenious networking system, allowing them to select whom they want as “friends” and creating a virtual experience that enables members to ping through hundreds of profiles in a matter of minutes. You can sort, rank, drop, and “poke” these friends, just like in high school, only virtually—though MySpace has clearly yenta’d more than its share of real-world hookups. Networked sites like the photo-sharing and -tagging Flickr have exploded onto the scene, boasting growth rates comparable to those in the Web’s early days. As a result, you can see “user pages,” complete with provocative personal snaps, blogs, lists of favorite books, music, movies, whatever, and banks of friend photos, popping up pretty much everywhere you go on the Internet these days.

On VampireFreaks.com, goths can start their own “cult,” or join the “Poetic Death” cult or, barring that, the “Tim Burton” cult. Real-estate agents have the evocatively titled ActiveRain.com, where Merrick, Long Island–based Geri Sonkin, thanks to her enthusiastic participation in the network, has amassed 36,284 points and placed 63rd in the rankings. Snapvine.com prompts teens to socialize using prerecorded phone messages instead of typed comments. “Can I pimp out my voice players?” the FAQ page asks. “Yes!” OMG!

The wave, inevitably, has reached the more hipsterish suburbs of Corporateville. Doc Martens’s new social-networking site, Freedm2.com, encourages you to “make art, make fun of art, shock, express yourself, entertain.” A semiliterate, dissociative, generationally correct vagueness permeates everything. “Do whatever it is you do,” the site urges, “and the people who are already out there doing it, will make the best stuff happen.” I counted a few dozen users during my most recent visit.

The USA Network’s very expensive-looking ShowUsYourCharacter site is designed to deepen the experience of viewers of the top-ranked cable channel, recently rebranded with the tagline “Characters Welcome.” The year-old site, an apparent effort to transmute the brand across the reality divide, allows fans to present themselves as “characters,” just like the people they see on TV. When I last looked, the top-ranked woman, a cheery-looking blonde named Captain Lolo from Tulsa, Oklahoma, had 4.45 stars out of 5—thanks to 12 votes. Those 4.45 stars allowed her to narrowly beat out the fourth-place female, a mixed-breed dog from Cornelius, Oregon, named Tagger67, who scored 3.4 stars with 303 votes.

According to VentureOne, a research firm, nearly $500 million in venture- capital money was pumped into social-media companies in the first nine months of 2006. “There are some similarities between the current ‘bubble’ and the last one that burst in 2000,” Todd Dagres, co-founder of venture-capital firm Spark Capital, told The Wall StreetJournal. “Lots of incomplete and underexperienced teams, business models based more on eyeballs than cash flow, and a rash of incremental and ‘me too’ deals.” As in the last bubble, sites blossom out of nowhere and quickly fade. The average user of Xanga, the buzzy social-networking site of the early Aughts, spent 15 minutes on the site in December, down from around an hour and a half in October 2002. Friendster, the massively VC-funded social-networking service whose demise is being hurried along by the more free-wheeling MySpace, topped three hours per user last February, only to drop to a quarter hour in December. Right now, the cool kids, especially those who like emo music, are flocking to Buzznet.

Category leaders MySpace and Facebook, meanwhile, continue to thrive. The average Facebook usage is holding at roughly an hour a month, while MySpace is at about twice that—a pretty remarkable achievement, given both its mass and its rapid and ongoing growth. No wonder. MySpace is the kind of sui generis phenomenon that keeps social scientists busy for decades: a virtual expression of “new urbanism” that has allowed millions to make connections where once we bowled alone. Truly, on MySpace, no one knows you’re a dog.

As a fairly regular user of MySpace— an unbeatable tool for tapping into youth culture—I can vouch for both the intoxicating appeal of the experience and the strung-out, crispy, crawling-home-from-a-nightclub comedown that quickly follows. After a brief rush of “friend”-gathering—I know maybe half of them in real life—I now spend most of my time fending off the same type of spam that used to litter my dial-up AOL account, while ignoring endless ads for the True singles service. The random, out-of-the-blue friend request, one can bet, will soon reveal itself to be a proposition for lesbian Web-cam sex or a mortgage refi.

Facebook, on the other hand, maintains the mien of an endless college reunion, in part because that is largely what it is. Famously started by a Harvard student as a way to dynamize the freshman facebook, the site is built to serve preexisting networks of high schools and colleges (though anyone can now join). More chaste and less cluttered than MySpace, it encourages users to consort with people they already know, or have reason (by geographic or affiliate proximity) to know, while making it harder to schmooze randomly. This gives Facebook a shape and coherence that MySpace lacks, but it also limits the experience for those outside the hothouse environment of school. A recently launched feature that encourages adults to join using their work e-mail accounts seems, from my recent perusal, not to be rocking the cubicles.

Where Facebook has made a virtue of these limits, MySpace has made a virtue of its lack of them. It now is so large—100 million-plus registered accounts—that it has almost come to be a proxy for the Internet itself. This is the problem with the social-media phenomenon. MySpace once enabled a remarkable social renaissance: Because of the site’s indefinable halo effect, you would answer e-mails you would normally never open, meet people you’d never suffer otherwise (“Bill O’Reilly” is one of my MySpace friends). It was, in fact, not unlike freshman year at college. But what’s remarkable soon becomes ordinary. MySpace remains cool—thanks to surprisingly deft stewardship by its new owner, News Corp.—but nothing is cool forever. And once the tantalizing pull of millions of people you could possibly be best friends with wears off, you’re left with some by now pretty ordinary functionality: blogging; instant messaging; photo, video, and audio uploads; networking tools. Thanks to the inexorable process of Web innovation, such stuff goes from “OMG” to “Whatever” in no time flat.

AOL followed a roughly analogous “walled garden” strategy until recently. The strategy died, in part because the limited offerings within the garden could not compete with the near-infinite wilderness beyond the picket fence. The social-media sites are touting their expertly tended, notably fecund, but still fenced-in offerings. And to be fair, they are free, unlike the old subscription-based AOL. But, as with the dial-ups, the distinctions in and among these offerings will become less interesting. Instant messaging, in yet another example of the Web’s buzz-to-blah dynamic, was once a unique and compelling reason to subscribe to AOL, not to mention hyped as a revolutionary application that would render e-mail fogeyish and vestigial. It is now a commodity function.

Few of the social networks have yet proved adept at truly linking people of like-minded interests, and many of the networks being started now, especially by entrepreneurs and corporations looking to grab their slice of 2.0 glory, tend to miss the reason the best sites work: They facilitate behavior that people already engage in. Networks that make intuitive linkages or networks that are built around more-organic associations (like the excellent new Saatchi Gallery social network for artists) may soon draw away users with more-sophisticated social-media palates.

But that’s just the start. The features associated with social networks are increasingly being tacked on to existing sites, and new ones are announced almost daily. Procter & Gamble has a social network now. So does Barack Obama. And someone will figure out how to network the networks, linking social-media sites and thus allowing iron-man social networkers to commingle their friends, blogs, images, and video feeds all in one place. (MiNGGL, Socialgrapes, and Wink are three new sites already trying to do this.) Individual sites could theoretically block out these epi-networks, but at their peril. Or a new craze could emerge that cannot (for technological reasons) or does not (for corporate reasons) sync with sites like MySpace, forcing users to divide their online selves in ways that become unsatisfying.

Already, the most popular users, like the legendarily pneumatic Tila Tequila—friend to more than 1.5 million MySpacers—are realizing that their future is in guiding people off MySpace to their own, more robust, fully customizable personal pages. Indeed, the third rail of social media may ultimately come down to that most old-media of issues: ownership. MySpace may sell the idea of itself as being without boundaries, but in fact the digital mayhem lives within a tightly controlled environment. MySpace does not let users network meaningfully with people outside its walls, and it does not let them import some functionality that promotes or drives revenue to other corporations; for example, those newly popular “widgets” that contain text or video feeds, or games. MySpace has legitimate security reasons for prohibiting the Flash-based widgets, but the effect is also to eliminate a way for corporate competitors to lure users out of the MySpace environment. And MySpace recently announced it will no longer allow users to post videos that contain copyrighted material—hello, YouTube—much as it was already filtering out some major-label music.

Most important, users like Tila Tequila do not profit directly from the traffic they generate for the site. Indeed, the value of MySpace and the other 2.0 sites is built on their ability to monetize—through ad sales and marketing, among other streams—the traffic generated by their users. The tacit trade-off is free Web hosting, tools, and distribution. This trade-off is not in itself unfair. But, as with IM, the value proposition does not remain constant. The walled-garden attributes of MySpace and Facebook, like those of the subscriber-era AOL, can quickly become liabilities. And as the value of social-media tools becomes inevitably unsexy and commoditized, it may be only a matter of time before the Tila Tequilas of the world, inspiration for millions of page views, decide they might as well go elsewhere. And, just as in high school, where the cool kids go, the rest of us will follow.

This article available online at:

http://www.theatlantic.com/magazine/archive/2007/04/the-web-20-bubble/305687/