'Better than Sex': Facebook, AOL & the Platform Play

Facebook's peak as a platform continues to have significant parallels with America On Line's rise and fade in the last dot com bubble era.As I wrote back in November 2009In 1994 America Online trailed Compuserve and Prodigy, a third subscription option in how you hooked your modem up to the internet to go cyber surfing.

Facebook's peak as a platform continues to have significant parallels with America On Line's rise and fade in the last dot com bubble era.

As I wrote back in November 2009

In 1994 America Online trailed Compuserve and Prodigy, a third subscription option in how you hooked your modem up to the internet to go cyber surfing. What propelled AOL to global dominance by the end of that decade was their proprietary ‘rainman’ platform, which enabled partners to build out their anchor stores in the massive online shopping and lifestyle mall AOL became. Time Warner ultimately bought them, with Ted Turner saying AOL was better than sex, and with great swathes of society believing that AOL was the internet, and that anything outside the walled garden was dangerous and disreputable.

At AOL's height they had achieved a critical mass attractive to financial speculators and marketers, and like the current attempts to bleed social media marketing efforts into business organization were starting to have pretensions to taking over enterprise organization.

In 1998 IDG were speculating about a matchup between America Online and Netscape which 'will mean a new generation of heavy duty enterprise software and services, some observers say...'

...AOL could conceivably marry its directory offerings with its existing global enterprise service as part of a new range of managed IP services.

(Remind you of the current cloud 'we'll take care of that for you' messaging?)

It's hard to avoid the dot-com-boom reminiscent media buzz around the large sums of money supposedly pouring into the social networking space, as large financial players start to load up the roulette table with bets on the Facebook platform's future.

Both AOL, which went on to participate in what was then the largest corporate merger in history with Time Warner, and the Netscape browser are now powerful names from the past.

Myspace, the most popular US social network in 2006, was overtaken by Facebook in April 2008 based on monthly unique visitors. Preceding these two Friendster, a victim of its own success with popularity slowing service to a crawl and causing defections to myspace.

What is consistent about the waxing and waning of all these online socializing spaces is the proposition to users. Here's the verbage about a sample AOL user from way back in 1996:

User: Paul Location: Northeast, New York. Occupation: Student.  Uses AOL: several times a day

Paul's your average teenager who uses AOL to make new online friends, have fun, and waste time. :-D "AOL is a big part of my daily day. I use it to keep in touch with friends and family. I order a lot of stuff on AOL. I use AOL's News Channel to get the latest news. It's a big part of my life."?

The concept of a 'home' on the internet is relatively timeless, as is the have fun and waste time attraction.

the '90's 'you've got mail' web training wheels - 10 free hours! - is similar to the way web neophytes have congregated around Facebook. Like an endless wedding reception that mixes and matches all your social circles, Facebook has enabled millions to find and reconnect with their distributed acquaintances. The novel new experience has helped millions share baby pictures and common experiences, and once again the marketers are salivating about gatecrashing the party for 'conversations' with you.

CNN money back in January 2000:

In a stunning development, America Online Inc. announced plans to acquire Time Warner Inc. for roughly $182 billion in stock and debt Monday, creating a digital media powerhouse with the potential to reach every American in one form or another. With dominating positions in the music, publishing, news, entertainment, cable and Internet industries, the combined company, called AOL Time Warner, will boast unrivaled assets among other media and online companies. The merger, the largest deal in history, combines the nation’s top internet service provider with the world’s top media conglomerate. The deal also validates the Internet’s role as a leader in the new world economy, while redefining what the next generation of digital-based leaders will look like. "Together, they represent an unprecedented powerhouse,” said Scott Ehrens, a media analyst with Bear Stearns. "If their mantra is content, this alliance is unbeatable. Now they have this great platform they can cross-fertilize with content and redistribute.”

January 2011 and Goldman Sachs and wealthy Russian oligarch Alisher Usmanov's Digital Sky Technologies raise Facebook's valuation to $50 billion after investing $450 & $50 million respectively.

This time around the AOL Time Warner marriage seems unlikely to be replicated, but the $ocial financial bubble is definitely getting bigger. Facebook's numbers are hard to comment on given their private status, but the Wall Street Journal had a go.

Facebook's revenue is far behind Amazon and Google (although ahead of Ebay early investor and Facebook board member Peter Thiel's  PayPal goldmine). 'Reach' - the ability for marketers to communicate with vast numbers of users - is highly attractive but still in its infancy.

My limited personal experience with Facebook is that the targeted advertising on my account, or with anyone else I have asked, is not consistent with a $50 billion media vehicle. I've heard anecdotal evidence internationally that small business gets better rates and success than Google Ad words, but this is for very low budget campaigns.

Meanwhile Myspace - now rebranded 'My______' - is predicted to downsize its workforce by 50% as their time in the spotlight wanes.

Goldman Sachs, like many other businesses,  blocks access to social networks for its employees through the connectivity it controls at the workplace (no doubt there is much smart phone use in restrooms and smoking breaks).

Like America On Line and the TV show 'America's Next Top Model' Facebook is essentially an American cultural construct - no one is very interested in America's Last Top Model or reconnecting with friends on 'My______' once the buzz is gone.

AOL made a huge branding error in its name which limited success internationally - Facebook has less of this problem but it's worth noting that Digital Sky is the largest Internet company in the Russian-speaking and Eastern European markets, accounting for 70 percent of all hits on the Russian-speaking Internet.

Its investments include the large social networks Vkontakte, Russian web portal Mail.ru and social networking company Forticom, and some of its income is from pay-per-click and selling virtual goods to users.

They also bought ICQ, the dot com era instant messaging service, for $187.5 million last April...From AOL....