Trumblog

Last week Steve Rubel wrote about how Facebook was taking over the web and the following description of Facebook’s position in the social networking landscape caught my eye:

I believe Facebook is unstoppable. They aren’t just the next Google. They’re the next web….

Now history says I will be wrong. AOL tried this and lost. But AOL did not have the algorithms and social connections that Facebook has in place, so I think we’re in a different era.

Maybe I have been listening to Planet Money too much lately, but I think that what Steve Rubel is describing is a social media bubble that we have on our hands.  In economic terms a bubble is the trade in products or assets with inflated values.  To translate this into social media terms we are investing more and more time and energy into Facebook with an inflated estimation of the value of the payoff for this effort.   Social networks by definition are also subject to the same positive feedback loop that bubbles do but instead of believing that an investment must be good because other are investing in something we project greater value in a social network because more people are investing more time into that social network.

But what really tipped me off was Rubel’s comment that we are in a different era than AOL was and therefore Facebook will not suffer the same fall that AOL did.  If ever there was a delusional statement that echoes rationalizing that takes place during an economic bubble that is it.  The dot com bubble wasn’t supposed to crash because it was a new and different economy.  Remember that?  Remember similar things being said about the housing bubble a couple years ago before it nearly ruined the economy?  The same will be true of Facebook and Steve Rubel is absolutely right that history will prove him wrong.

So, diversify your social media holdings.  Yes Facebook is undoubtedly working on location checkins, but maintain your Foursquare account.  Gmail may be adding Twitter-like status updates, but I suggest you hold onto your account with that little blue bird.  Like in economics a diversified investment strategy insulates you from the highs and lows of individual stocks for steady gains in the long term.  I believe that spreading your social networking assets should work the same way.  Want to post your photos to Facebook?  I think that you should, but consider also posting them to Flickr too.  Spread out your attention on social networks so that the daily vicissitudes of the social network ecosystem, not to mention the stock market, don’t kill your favorite social network and leave you without any assets. And when something new comes along, an emerging network, give it a try.  The attention that you invest there will give you a leg up should it be the Facebook or Google killer that eventually comes along.

Photo credit: Double Bubbles by Jeff Kubina

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