Is Web 2.0 Collapsing?
Facebook, Netflix and Twitter are stuttering - is this the beginning of the end for Web2?
Web2 (aka Web 2.0) is starting to look a little tired. Generation Z gender-careful hipsters think that anyone who uses Facebook or Twitter should be parked on the highway of yesteryear. And they believe that TV and film should be freely available on YouTube and that anyone who does not TikTok, multi-player game or crypto-shop is, well, a bit weird.
There had to be a point where this disdain for Web2 platforms translated into lower ratings. Apparently it has just begun.
Facebook’s recent fall of about one million users doesn’t sound like much given their daily user base is near two billion, but it represents the first major drop for the company in 18 years. Monthly active users, another key metric for Facebook, also remain flat.
Facebook has battled with new rival, TikTok, a new kind of social giant that is highly popular with Gen Z audiences and content creators. The competition has hit Facebook hard. Despite attempts to clone TikTok’s core features (eg ‘stories’), Facebook seems unable to match TikTok’s engagement levels. Perhaps Facebook forgot that Asian markets are the go to place for knock off products. (As any old timer from New York city would attest).
Facebook, and Instagram, are stuck in an old model of social media, made popular a decade ago and driven by ‘connection’, where relevant content is surfaced based on the people you know and accounts you follow. TikTok is changing user behaviour, taking social media from a connection to a content-driven economy. You know, less social and more media.
Facebook’s parent company, Meta, has seen its share price collapse in the last few months. Meanwhile TikTok now has 1 billion monthly active users and growing. Their users spend more than 850 minutes per month on the app - mostly watching our teenagers tWitching - not the bird kind. A growing number of us spend as little time as possible on Facebook.
At the same time Web2 streaming giant, Netflix, lost 200,000 subscribers in its latest quarter, falling well short of its forecast of adding 2.5 million subscribers. Suspending service in Russia after the Ukraine invasion took a toll, resulting in the loss of 700,000 members. And thanks to Russia, it seems that the Ukrainian subscriber numbers are not exactly climbing either.
Since Netflix warned in January of weak subscriber growth, the company has lost nearly half of its value.
As if this was not bad enough, the company offered a gloomy prediction for the next quarter, forecasting it would lose a further 2 million subscribers.
What’s going on?
And right when it seemed like things could not get much worse for the Web2 old timers, along comes Elon Musk. Always one for busting up a good party and spitting a pithy tweet, the uber Tesla driver has gone after Twitter. And it seems that he has won.
Twitter announced that Elon Musk will buy the social media darling for around $44 billion, which is quite a discount to where it was trading just last year. Apparently Musk wants to add a town square to his real estate portfolio - or metaverse widget. We’re not quite sure which.
The deal forced founder and ex-CEO Jack Dorsey to come out of a deep meditation and admit that Twitter has been far from a success of late.
"Twitter as a company has always been my sole issue and my biggest regret. It has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step," Dorsey exclaimed. Hardly a ringing endorsement of its recent performance.
Once Twitter’s most vocal spin-operative, Donald Trump, says he won’t be returning any time soon. “I hope Elon buys Twitter because he’ll make improvements to it and he is a good man, but I am going to be staying on Truth,” which, while sounding like a bit of an oxymoron, is apparently just a reference to his own startup that according to MarketWatch has 513,000 somewhat plummeting daily active users. And this was before the Twitter/Musk thing.
Apparently the White House is not impressed either.
"Our concerns are not new," said White House spokesperson Jen Psaki, adding that the platforms need to be held accountable. (Presumably more so than certain politicians). "The president has long talked about his concerns about the power of social media platforms, including Twitter and others, to spread misinformation."
Jeff Bezos chimed in by questioning whether China might start leaning on Elon Musk’s Tesla business to quell criticism of the country on Twitter given how important China is for Tesla. Since Bezos owns the Washington Post his comment might come over as a bit rich. Mind you, he is.
But it is other countries that are taking action.
The European Union is in the midst of finalising the Digital Services Act (DSA), an ambitious legislative attempt to create a “global gold standard” on platform regulation and probably the world’s most turgid tome, but which pushes more responsibility on content moderation to social media platforms - ‘pushing them to be more like a media company’.
It seems that right now, it is not the government that is taking down these Web2 giants - it is their users.
They like the idea of creator friendly platforms such as TikTok and they are a little fed up with subscription inflation from the likes of Netflix. Didn’t it used to cost $5 per month to use the thing - or am I just dreaming? Their users also remain suspicious of data-dubious, privacy challenged players controlling too much of the ad space and public debate. Will Elon Musk prove to be any better?
The future seems likely to be driven by ‘content’ more than 'old style ‘connection’. Perhaps the old adage that success is not about what you know but who you know, you know, like knowing Vladimir Putin, is about to get flipped on its head. Volodymyr Zelenskyy certainly hopes so.
The challenge in a content-driven economy lies in retaining users who do not gravitate toward a platform because their best buddies are using it, but because it curates the best content. TikTok behaves more like a personalised TV channel. Like GB News does for Mussolini.
This approach returns the power to creators, revealing where TikTok and YouTube have an edge. TikTok has created global stars with growing audiences at record speed, in a way that is difficult to achieve on Instagram or Facebook. YouTube has over a decade's experience and a culture that supports creators with a highly inclusive revenue-sharing model. Just ask Ellen.
And Patreon, Substack and 1LettsArt have been developed purely to help creators further accelerate their commercial success by directly monetising their content/art - with subscriptions or creative commerce.
It looks like the pendulum might swing to the point where social media companies drop the word ‘social’ - like Apple, a few years back, switched from being a technology company to a media company. Maybe the new hip will be to follow them again. Mind you, who doesn’t follow Apple in the end?
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