With over 1.2 billion reported users and close to $200B in market capitalization, Facebook is undoubtedly the most ubiquitous social network today. For most users, the core value proposition of Facebook is simple – it is a means to stay connected with their friends (and acquaintances) and to share and learn about each others’ lives. And yet, over the years and over countless tweaks to Facebook’s NewsFeed algorithm (popularly known as EdgeRank), more and more users complain that they don’t get to see any updates from a majority of their friends. Indeed, the average user has over 300 ‘friends’ on Facebook, but thanks to Facebook’s determination of what’s relevant, they are likely seeing updates from only 20% (or less) of their network. What’s going on? Why is it that I have over 1200 ‘friends’ on Facebook, yet I never see anything from almost a 1000 of those? I used to believe they simply didn’t post as much, until I checked out several people’s profiles and saw major updates I would have liked to see, but never saw, despite logging in several times a day. Why is it that I see some stories over and over for days, and several never appear?

Keep it simple….

Several hours of tweaking Facebook settings, privacy controls and reading Facebook optimization controls told me one thing – it’s complicated by design. There is a lot on Facebook that’s simple and intuitive, but customizing your experience is definitely not. There is an option to sort your feed by ‘Most Recent’ but all it does is sort the pre-selected ‘Top Stories’ into reverse chronological order of any action taken by anyone, thus being not helpful at all as it doesn’t introduce new content and in fact increases repetition. You can unfollow or block users, you can tweak content settings for people and types of content individually, or you can organize your 1200 friends in lists you then follow (like really?). For the average user, it is too much to ask, but I’d venture to say that even for power users, it doesn’t really help much.

They have the edge

EdgeRank works in mysterious ways, and the best one can gather is that Facebook measures and ranks ‘edges’ connecting any one user to another user (or Page, Group, Brand etc) by the strength, time delay and frequency of their interaction. However, only active interactions count, i.e. liking, commenting, following or sharing. So if you passively enjoy reading someone’s updates but don’t actively ‘like’ them, chances are you’d stop seeing updates from them sooner than later. This is true for both your friends as well as pages you may have liked, unless of course they pay Facebook to promote the post. The problem arises when over time you see what you like becomes you like what you see, making your Newsfeed populated by the same subset of users and content types and effectively limiting the reach of content. And lest you figure it out, they tweak (and AB test) EdgeRank all the time. So you may not even realize that the reason some of your real world friends don’t comment on your exciting Facebook updates may be that they actually never got to see it, for no lack of intent whatsoever.

“Trust us, we know what you want to see”

Let’s face it, Facebook does know a lot more about us than we think. As long as you’re signed in, Facebook knows not just what you ‘like’ and who you stalk on their website, but also most likely what articles you’re reading and what websites you’re surfing for how long. Besides, information overload is a real problem. Between friends’ updates, activities, engagement content and brands, Facebook estimates they have thousands of news stories to show every user at any point. Surely some stories are better or more important than the other for every user. But by Facebook’s own estimate, only 0.2% of these stories are ever shown to the user. With no easy way to even access the remaining 99.8% and no straightforward explanation of how those 0.2% are determined, it is unsurprising that I see check-ins every time my dorm neighbour gets down to eat and I totally missed the news of wedding and first child of my high school best friend. And these were happy stories – considering Facebook doesn’t want users to not see many ‘negative’ emotion stories, I wonder what all I’ve missed that would have been relevant to know. Or not.

It’s all about the money, honey

All this brings me to the business of Facebook. It is not so hard to gather that the purpose of ‘optimizing’ your NewsFeed is as much to show you the most relevant updates from your friends as it is to show you ‘relevant’ sponsored stories by those that pay Facebook by creating real estate. Facebook marketing is, after all, a fast growing and rather effective (for now) channel for most brands’ marketing efforts these days. One can argue that, after all, it is a free service that Facebook is providing to the users and they deserve being compensated in some way for it by selling part of the user engagement it creates to the brands who want them. And these are brands the users want too, demonstrated if not explicitly by subscription then implicitly based on their behavior as Facebook understands. Perhaps the users shouldn’t complain so much, after all. Sure, they don’t get a perfect experience and sure, there are a few ethical questions because users don’t really understand how they are being manipulated. But what about the brands themselves?

Thousands of advertisers have spent precious time and money over the years building up reach on Facebook pages, but sometime last year they realized that all of a sudden their messages weren’t being shown to all the users who had ‘Liked’ and previously engaged with their page, never mind to new users. So unless they pay for each posting, or the user is a dedicated follower who actively engages with every piece of content posted since the beginning of the change, Facebook’s reach for most brands is basically a myth and the promise of building an engaged community with two-way communication hollow. I wonder how sustainable this is, in the long run, especially as Wall Street maintains earnings pressure on Facebook and non-advertising revenue on the website continues to slip.

Bottomline, friends are not really friends on Facebook. Fans are not really fans. Don’t like the Likes too much.


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During the latest round of the long and seemingly never-ending conflict between Israel and Palestine, and after following closely the news, links, tweets, posts, etc. that one could find mainly in Facebook and Twitter, my old concern about the role that Social Media is playing beyond its social-fun aspect, in terms of affecting the way we inform ourselves, crawled back inevitably to my mind.

Since the irruption of social media in our lives, there has been ample talk about the democratization of the information, and the empowerment of all of us as civilians. I believe that the praise is well deserved in many aspects, and it is difficult to question the positive role it has played in connecting people and allowing for a free, fast, and high volume of information flow. Getting information has never been easier, but at the same time, in my opinion, never has been harder to differentiate between real versus fake, ill-intentioned posts, news, etc.

Also the fact that anyone of us can, legitimately, post in social media, has opened a new outlet for people to misinform, or to express potentially dangerous ideas, that can affect different groups in our society. Don’t get me wrong, I value and see as a key right the freedom of speech that we have in many countries, but that doesn’t mean it is not important to analyze the potential negative effects of these new technologies.

The News/Media industry has been heavily disrupted by the strong growth of social media and technology in general. Print media is suffering, and has had to make a difficult transition towards mobile platforms. TV news outlets have maybe suffered somewhat to a lesser extent, but still have had to rethink their business models, incorporating technology like online videos, Twitter accounts, and Facebook pages. Even though News/Media companies have always been subject to editorial lines that may come from the owners or the Editor in Chief, or from the own biases that the journalists bring with them, it was easier to trace back where the information was coming from, and from whom I was getting it. This is getting harder, considering the amount of content we receive, and from so many different outlets/sources/users.

Seeing the glass half-full, the fact that social media enabled people in countries like Iran in 2009 with the elections protests1, Egypt in 2011 with the social uprising against Mubarak2, and Venezuela in the 2012 presidential elections3 to express freely, was a significant event, that had bigger implications than everyone might have expected. Even though if it was for a short period of time (in Iran4 and Egypt5 they blocked the use of Twitter and social media in general), enabled people to express their opinions and share them with the rest of the world, generating awareness of their realities. It was one of the first times I can remember seeing relevant events “live” through the eyes of the population of a country, with no filters. Especially considering the low levels of freedom of the press in these particular countries (Egypt ranks 159/180, Iran 173/180, and Venezuela 116/180 in terms of freedom of the press worldwide6), the value generated by social media is even greater.

However, the empty half of the glass shows a somewhat grimmer view. During the latest Israel-Palestine outburst I saw first hand how people from both sides where almost without even reviewing their sources, posting links to old, fake, or non-accurate pictures7, news, and videos that supported their opinions. Worst, I saw how two dear friends, one with Jewish roots and one with Palestinian roots, created a Facebook group trying to unite both communities back in Chile, only to get severe backlash from people with radical views from both sides. They received personal threats, which ultimately led to closing the group, even if this aggressiveness came from a very small group. Social media provided the perfect outlet for people to express discriminatory/racist/xenophobic views against people from Israel, Palestine, or even towards the local communities associated with both places. Comment boxes in news outlets were dominated by irrational, insulting comments. People from both communities suffered virtual and real life, physical attacks. The Arab School of Santiago, Chile suffered from graffiti’s on their walls, and Jewish families were attacked in the streets and at their homes. One is left wandering, especially comparing with previous outbursts of the conflict like in 2008 and 2012 did social media amplify the impact of this international conflict outside their borders? Did social media actually played a role of informing in an unbiased way, or did it only polarized and confronted communities that are thousands of miles away from the point of origin? What effect did social media play in the general population that is not part of these two communities in shaping their views? Is social media simply enabling people hiding behind a computer express views that they don’t dare to express publicly, sometimes hiding behind an alias? I believe the jury is still out on these questions, and I don’t have the answer either.

There are reports suggesting that social media in general, but particularly a YouTube video, played a relevant role in the deaths of the US personnel of the embassy in Libya8 in 2012. Even if the video wasn’t the main cause, the fact that it is in the discussion as a possible enabler of a tragic event, validates the idea of at least making these questions.

If social media is enabling democratization and empowerment, one could think that the shift in power about informing would also shift the sense of responsibility towards the now empowered civilian population. However this is not necessarily happening. Maybe it has to do with the fact that this may be an industry still in its infancy. Is it fair to put the blame on the people that are posting only? Or should the companies providing the outlets take more responsibility? I believe both parties have to be more responsible, however as an example Facebook9, Twitter10, and YouTube11 argue they are not liable for the potential defamatory content posted in their sites. Even though we as users can report content that seems inappropriate, it means putting the burden on the user base. Considering these are successful businesses, where for example Facebook in terms of members would be the 3rd largest country in the world, shouldn’t they approach this in a proactive way? Hiding behind the argument that they are mere platforms and not publishers12 might serve them well for now, but I strongly believe they should try to analyze the ramifications and impact their networks have worldwide, and take a more proactive approach as they keep on growing in relevance and in members.  This decision might impact their business models, and imply investments in different areas, but this doesn’t mean it is something they should or can ignore forever.

Referenced sources:

  1. http://www.washingtontimes.com/news/2009/jun/16/irans-twitter-revolution/
  2. http://www.nytimes.com/2012/02/19/books/review/how-an-egyptian-revolution-began-on-facebook.html?pagewanted=all
  3. http://www.academia.edu/6028772/GRINEVALD-The_Twitter_Effect_in_the_2012_Venezuelan_Presidential_Elections
  4. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anh.uW3gNZp
  5. http://techcrunch.com/2011/01/25/twitter-blocked-egypt/
  6. http://rsf.org/index2014/en-index2014.php
  7. http://www.bbc.com/news/blogs-trending-28198622
  8. http://www.bostonglobe.com/opinion/2012/09/12/how-could-chris-stevens-die-because-youtube-clip/Ex92OLF0qCwlXwa5nYV7fI/story.html & http://www.huffingtonpost.com/andrew-lam/social-media-middle-east-protests-_b_1881827.html
  9. https://www.facebook.com/legal/terms
  10. https://twitter.com/tos
  11. https://www.youtube.com/static?gl=CA&template=terms
  12. http://www.theguardian.com/technology/2013/jul/29/twitter-urged-responsible-online-abuse

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ONE

TWO

(Intel ad from the mid 90’s and an image of the recently announced Samsung Gear VR)

For those following trends in Silicon Valley, one might experience a sense of déjà vu recalling the mid-1990’s when Virtual Reality first captured the zeitgeist for its promise as an immersive portal into the nascent world of cyberspace. Twenty years later, the amorphous medium has transformed from a “not too distant future” captured in the low-resolution computer graphics and millenarianism of 90’s Sci-Fi films into a commercial reality. The the 2.4 billion dollar acquisition of the Kickstarter funded Oculus VR by Facebook and the recently announced $542 Million dollar Series B financing round for the VR/Augmented Reality start-up, Magic Leap (led by Google with Qualcomm, Legendary Entertainment, KKR, Vulcan Capital, Kleiner Perkins, Andreessen Horowitz and Obvious Ventures) suggests that large tech companies are committed to developing virtual reality platforms. The big question is how will companies like Oculus / Facebook and competitors like Google mobilize development of their virtual reality platforms?

The Oculus Platform

In his explanation of the acquisition of Oculus VR to investors and the public, Mark Zuckerberg characterized the virtual reality startup as pioneering a “new communication platform” that was part of “a long term bet on the future of computing”. In the same way that mobile phones have created a new form of ubiquitous computing, virtual reality may similarly add qualitatively higher levels of immersion in computing, enabling a new ecosystem of applications to develop. Whereas mobile applications make novel use technologies like embedded cameras, GPS and accelerometers, virtual reality apps can use technologies like positional head tracking and three-dimensional high-resolution, wide field view screens to create new online products and businesses.

THREE

Rather than building a business around selling hardware, Oculus VR and Facebook have focused on developing their “Oculus Platform” – a store for new virtual reality applications. Oculus VR / Facebook has partnered with Samsung to build virtual reality devices on top of existing mobile devices – which are rapidly increasing in screen resolution and processing power – and have expressly said that they will be pricing their virtual reality headsets at or below cost in order to grow the VR ecosystem. In other words, Oculus will subsidize virtual reality hardware in order to build a large developer and user base needed for a software ecosystem and app marketplace to develop.

To assist in the development of the virtual reality ecosystem Oculus is investing in developers subsidizing headsets as well as providing the tools to create new VR Apps. These include developer support forums, developer “best practice” manuals with clear guidance on the technical standards, and finally free software for updating apps as virtual reality hardware changes. Additionally, in its September “Connect” conference, Oculus announced an expanded strategic partnership with the game development platform Unity, providing free Oculus add ons for Unity Developers to further build a developer ecosystem. Although Oculus is assisting and subsidizing the development of third party apps, the company is also creating sponsored Oculus Apps that will raise the quality level of early consumer virtual reality experiences.

FOUR

In addition to building its developer base, Oculus VR / Facebook has decided to wait and let the virtual reality ecosystem to develop before releasing mass commercial products. The company has already released three different Developer Kit headsets (DK1, 2 & 3) with a consumer version yet to be officially announced. Oculus’ stated intention is to first develop a marketplace of high-quality virtual reality experiences before releasing mass consumer products, as they are concerned that the platform can be undermined by a lack of compelling content.

As the virtual reality app marketplace is growing, Oculus is also providing its own ratings of apps on its platform. Additionally, while the company is allowing the development of third party accessories, they are also building sponsored Oculus accessories. These moves allow Oculus to control the quality of the platform, creating a high quality experience for consumers that they describe as “good for everyone.” This discretion to control the platform can be a powerful tool for Oculus, allowing the company to define the parameters of its app marketplace leading to higher quality and potentially inreased market power.

In contrast to Facebook / Oculus, Google’s strategy for developing a virtual reality platform is less clear, and perhaps at an earlier stage of development. Although the company did launch Google Cardboard, a cheap cardboard adapter and mobile app turning all mobile phones into virtual reality devices, they have yet to be as public about their intentions in virtual reality. However, the company’s investment in exotic stealth technologies like Magic Leap’s digital lightfield displays, may signal broader ambitions in the virtual reality market. Currently, Google appears to be offering compatibility with Facebook, Oculus and Samsung products alongside its suite of products, suggesting that there is currently collaboration in virtual reality.

As virtual reality ecosystems develop, there are questions about whether this initial collaboration across will be replaced by competition once the market becomes lucrative enough. For example, although the Oculus Platform is compatible with multiple mobile phone based operating systems, it is not yet clear whether the Apple store will allow the Oculus Platform app to run on iOS phones. Additionally, it is unclear exactly how Facebook / Oculus will monetize their virtual reality platforms once they attract a large enough user base to make it economically viable for developers to continue committing large resources towards developing virtual reality applications. Finally, it is unclear whether formal standards will emerge for developing virtual reality applications or whether there will be competition between different standards.

We may be seeing the rise of new computing and entertainment platforms that will create remarkable new collaborative possibilities as well as competitive challenges for the largest media and technology companies – stay tuned!

Links:

On Mark Zuckerberg’s statements regarding the acquisition of Oculus VR:

https://www.facebook.com/zuck/posts/10101319050523971

http://www.technologyreview.com/news/525881/what-zuckerberg-sees-in-oculus-rift/

http://arstechnica.com/gaming/2014/08/why-oculus-sees-virtual-reality-as-the-final-compute-platform/

Articles on the Oculus Platform and Developer Support

http://techcrunch.com/2014/09/20/oculus-platform/

http://www.roadtovr.com/oculus-rift-best-practices-guide-virtual-reality-recommended-age/

http://unity3d.com/company/public-relations/news/unity-technologies-and-oculus-expand-strategic-partnership

Links about Magic Leap:

http://www.technologyreview.com/news/532001/how-magic-leaps-augmented-reality-works/#

http://recode.net/2014/10/20/look-who-else-is-joining-google-to-back-magic-leap-the-secret-augmented-reality-startup

Recommended Virtual Reality 90’s Movies: eXistenZ and Strange Days


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LINE may not be well-known in the US, but it has been exploding in Asia, Middle East and Europe since its launch in 2011. LINE is a messenger app with 300 million users worldwide and its growth is accelerating. The last 100 million users were added in mere 4 months. Some argue that LINE may replace Facebook or Twitter as the most popular social platform. LINE is expected to go public next year with an estimated valuation of over $10bn.

What is LINE?

LINE is somewhat similar to other messaging applications, including WhatsApp, KakaoTalk, or Facebook messenger. LINE allows users to send text, share photos/videos, and make phone calls/video calls to another LINE account(s) for absolutely free.

What’s different is that LINE also has a huge library of “stamps” – a small picture of a character that describes emotion, thoughts, actions, and objects. Stamps act as a way to mimic real human interaction by communicating very subtle points. Some of these stamps are sold for a price (usually $1 for a set of 30 stamps) and LINE shares revenue with its media partners. This has been the major source of revenue ($132M for 2013 Q2) since its launch.

Another difference is that LINE is quickly moving towards platform strategy. The initial version of LINE was only able to handle messaging, but now that LINE is installed in virtually everybody’s smartphone, LINE started to expand its offerings. LINE Mall offers online shopping, LINE Game is consistently topping ITunes rankings, LINE Camera competes against Instagram, and LINE Card is a dominant e-card service in Japan. All these services that be accessed thru LINE application and more and more people are using them.

Birth of LINE and its mobilization strategy

The birth of LINE is somewhat interesting. NAVER Japan, a subsidiary of Korean internet company, was in the midst of developing a photo sharing application when a big earthquake hit Japan in March 11th, 2011. As mobile network was disrupted, people formed lines in front of public phone booth (public phone act as emergency line in Japan and never gets interrupted).  Realizing there is a strong need for efficient and easy communication; the development team switched their focus and started developing messaging application. LINE was launched 3 months after the earthquake.

LINE faced a classic chicken-and-egg problem and tackled to solve the problem in two ways; technical and marketing. LINE has an auto-sync function that allows user’s existing phone book to automatically sync to LINE contact list. Even if I was the only one using LINE, I could still text my friends using LINE (my text would appear as a regular text on their screen). As I don’t have to bother importing phone book to my LINE account, once I started using LINE I had no reason to switch back. Because LINE texting was absolutely free, people quickly switched.

On the marketing front, LINE initially focused on high school girls because they are the ones who often start new trends in Japan. LINE created cute “stamps” that high school girls would love and solicit user feedback very frequently. Once high school girls adopted LINE, it spread to college girls, junior high school girls, boys, 20s, and the rest of the population.  LINE dominated Japanese market in less than a year.

 LINE’s future and competition

 LINE deliberately focused on expansion of its user base and not on monetization strategy. LINE is believed to be already making profit with its stamp and game sales, but the real monetization is expected to come after its IPO. LINE may start selling advertising space like Facebook or open its platform and charge a fee to whoever wants to access its user base.

LINE’s biggest competitors are WeChat (over 1 billion users, mostly in China) and WhatsApp (mostly in the US and Europe). As there is a strong network effect, messaging app is likely to follow the same path of SNS and one or two players will take the dominant positions. Demographic and social trends are in favor of LINE because LINE has a dominant share in Asian markets, where smartphone penetration is expected to skyrocket in the next few years. Whoever comes out as winner will enjoy the similar power as Facebook today.

References:

http://linecorp.com/en/

http://thenextweb.com/apps/2013/08/08/line-corp-brings-in-132m-of-revenue-in-q2-2013-as-its-messaging-app-contributes-76/

http://www.digitaltrends.com/mobile/messaging-appline-and-its-us-efforts/

http://www.cubrid.org/blog/dev-platform/the-story-behind-line-app-development/


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When I heard the news that Snapchat rejected Facebook’s all-cash $3-billion dollar takeover, I had a lot of questions. First of all, why did Snapchat reject such an offer given its non-existent business model? Secondly, what does Facebook see in Snapchat? How can Snapchat add value to Facebook’s business?

On first glance, it could seem like Snapchat is merely a fad. Users can send pictures or videos to their friends and decide the time frame within which their friends could view the sent message. Following this logic, it seems as if Snapchat should be able to learn a lot about their users based on the pictures that users have uploaded. However, is this really scalable? Unlike words, it is a lot more difficult to categorize and collect user information based on pictures in Snapchat’s current format. Also, Snapchat allegedly deletes messages that have already been viewed by the recipient, which makes information gathering even more challenging.

I think Snapchat has three main value propositions to its users:

  • Users can select their audience – Unlike Instagram or Facebook where an uploaded photo is visible to all your friends or friend categories, Snapchat allows its users to select who the picture goes to. This allows users to communicate in a more focused manner.
  • Users can communicate in the medium that most accurately depicts their message – Every message is a story and stories can be told differently depending on the content. Snapchat allows its users to express their story through art, text and media.
  • Time commitment required is minimal – Snapchat is accessible through a mobile device and each message lasts 10 seconds at most. Time to access messages is limited to 10 seconds, and time to craft a message is also shortened because users know that this is short-lived.

Although these are all valid propositions, it is still difficult to justify why it should be worth $3 billion because none of these value propositions are revenue generating. A closer look into Facebook’s user base shows that 78% of them are mobile users, which means that they directly compete with Snapchat for attention. Furthermore, Snapchat surpasses Facebook’s photo uploads by 50 million images on a daily basis. As Snapchat takes user time away from Facebook more and more, Facebook’s value proposition to its advertisers is starting to erode. Is this worth $3 billion dollars? To Facebook, it probably does – especially so since Facebook’s IPO has faced a lot of investor scrutiny with regards to whether they can provide a reasonable shareholder return.

Whether Snapchat is eternal or ephemeral really depends on how well it can sustain its user base. From a features stand point, there is definitely a lot that Snapchat can do to constantly keep its users hooked.

In the meantime, Snapchat could benefit from cashing in on its large user base. One way to do so is by requiring users to login using their Facebook account. That way, Snapchat could access more detailed user information and target users more accurately. This would be a good value proposition to companies who are looking to advertise. On the other hand, user disruption could be limited by only showing ads after receiving 10-15 Snapchats.


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