Payments Innovation

Facebook’s MySpace Problem

Could fake news and horrific videos in the Facebook news feed create Facebook’s MySpace moment? It’s the question that Karen Webster ponders this week, saying it’s not as far-fetched as it may sound. It’s also a case study that Facebook CEO Mark Zuckerberg knows all too well, since he was there to pick up the pieces when MySpace cratered in 2009. See what you think.

Social media giant Facebook has a problem — and it’s a lot bigger than whether it can “adapt to the world it created” in the face of the fake news that’s run rampant on its platform and the series of deranged individuals who now use Facebook Live to broadcast hideous acts of violence.

It’s whether it can avoid having those issues jeopardize its viability as a platform that advertisers want to pay Facebook to be a part of.

All it would take is enough advertisers deciding they don’t want to risk having their brand associated with bad stuff — or enough consumers that advertisers value deciding they don’t want to come anymore — to send Facebook slowly, but surely, into the downward spiral that has sent many platforms into oblivion.

It’s not as far-fetched as it sounds, even for a behemoth as large and as powerful as Facebook. Brands have lots of other platforms at their disposal to help sell their wares and convert eyeballs with an intent to buy into paying customers.

Like Google and Amazon — the two platforms Facebook is competing head-to-head against for share of eyeballs and, therefore, share of those brand’s wallets.

Perception That Becomes Reality

The fragility of platforms — and, in particular, those that started life as social networks — is a story that MySpace knows all too well. It’s also a story that Facebook’s founder, Mark Zuckerberg, knows pretty well, too, since he was both a witness and a benefactor of MySpace’s virtual demise.

Founded in 2003, MySpace was the most popular social network of all time, from 2005 to 2008 – and the highest trafficked site on the web – even higher than Google was in 2006. MySpace kick-started Zynga and Farmville, while carving out a niche as a place for users to discover music and new artists while they were making new friends. Even Kim Kardashian had a MySpace profile (kimsaprincess) — and still does.

The beginning of the end for social media pioneer MySpace can be traced back to 2006 when Connecticut State AG, Richard Blumenthal, began an investigation into the degree to which minors were exposed to pornography on Myspace, and reports of sexual predators using it to solicit innocent teenagers for sex began to emerge. That started the avalanche of investigations — and over the ensuing two years, more than 40 State’s Attorneys Generals launched similar investigations. In 2008, MySpace agreed to clamp down on the elimination of sexual predators from its network and in 2009 said it shut down 90,000 such profiles on its site.

But it was too little, too late.

By then, MySpace had developed a reputation as the site where perverts hung out. Parents were warned to keep their kids off it. Advertisers began to pull back. Management’s attention was consumed by the crisis and battling the regulatory and legal issues that arose. The apparent inability of MySpace to filter out such unseemly people and content was said to only reinforce its public perception as the skanky place on the web that was unsafe to visit.

And, since MySpace attracted a lot of seedy people, it also attracted seedy advertisers who wanted to reach those people. That became too much for brands that had invested millions in cultivating a more wholesome image.

Hold that thought for later.

In December of 2008, comScore reported that Myspace had nearly 76 million monthly uniques and put $800 million of ad revenue to the bottom line. One year later, in 2009, ad revenue dropped to $470 million, as users fled that platform at the rate of a million a month. Two and a half years later, in 2011, monthly uniques had plummeted by more than half to 34.8 million, and ad revenue was south of $184 million — driven in large part by what founder Chris DeWolfe described as “gross-out ads,” showing people with bad teeth and egregious belly fat that drove clicks and revenue at a time when the platform needed it the most.

Those ads, and the overall platform reputation, also drove away the more valuable targets that advertisers had hoped to reach. The demographic of the MySpace user had devolved to males with annual incomes of less than $25,000.

The CEO of one of the country’s largest advertisers at the time summed it up well: “Advertisers, in general, have some difficulty with content and environments that they perceive to be edgy, especially when the audiences that they value are available in environments that are less edgy.”

Like Facebook.

Mark Zuckerberg was happy at the time to swoop in and move up as MySpace slid down. Facebook burnished its reputation as the “safe place” to hang out with real friends that users had to confirm to become part of their network. Facebook overtook MySpace as the most popular global social network in April of 2008, as measured by unique visitors, and in May 2009 in the U.S.

And much of its advertising and gaming revenue along with it.

Faking It Until You Can’t Make It

Pew published a study in June of 2016 about where U.S. consumers get their news. And it made news when it did.

Of the more than 3,000 consumers surveyed, 42 percent said they get some of their news from Facebook; 18 percent reported Facebook as their only source of news.

Given the concentration of eyeballs on the Facebook news feed and the trust upon which the social network was built, 75 percent of those reading fake news on Facebook thought it real. Headlines like those reporting that then-President Obama had signed an executive order banning the Pledge of Allegiance from schools and Pope Francis endorsing Donald Trump for President were shared millions of times. And they were left on the platform for long stretches of time before being taken down, only to be replaced with more of the same.

Fake news flourishes because it pays well.

Fake news publishers say they can collect a cool $10,000 a month. They also say it’s pretty easy to do, including spoofing public-facing domain names so that they look like legitimate news organizations, such as CNN.com or ABCNEWS.com. Said one publisher focused on pushing the limits of fake news as far as he could, ads he created using his real URL that sounded like something “his ten-year-old” wrote were approved in 13 minutes, at which point he promptly went back into edit mode to change the public-facing URL to CNN.com. He also said that he’d never attempt anything close to that with Google AdWords, who’d “laugh you right out of your account.”

Once fake news ads are posted and fake URLs in place, Facebook’s platform does all the heavy lifting to push that content viral, as it gets liked and shared and reposted across millions and millions of news feeds.

More recently, fake news has been tragically one-upped by the use of Facebook Live as a medium for sick people to broadcast heinous and despicable acts of violence to the world. When Facebook Live was introduced in 2016, Zuckerberg touted it as a way to give people the ability to “be themselves,” using “a great medium for sharing raw and visceral content.”

It certainly doesn’t get more raw and visceral than beheadings, suicides, gang rapes and gang violence and the murders of grandfathers sitting in their cars and babies by their fathers. The world doesn’t want or need to see any of those people being themselves.

Not surprisingly, Facebook’s been criticized heavily for leaving fake news to find its way throughout its network of billions of users without interceding in a timely fashion, and for leaving horrific videos on the site for hours before taking them down. Facebook currently relies heavily on user complaints, which it then says it investigates with 24 hours, to make a call for whether content should be removed.

But when 75 percent of the people who see fake news posts believe them, it obviously takes a very long time for someone to flag such a dispute and for the post to be removed. In the case of the videos, it was reported that the murder of the Thai baby by its father was shared 371,000 times and took more than a day to take down.

All of this comes at a time when advertisers have been told by Facebook that their metrics for the last two years have been overstated and the deletion of fake user accounts by Facebook has caused many brands to see their (once obviously inflated) number of fans diminish dramatically.

And where questions have arisen over the incongruity of Facebook’s ability to suppress nudity, ads for guns and a number of other things that it deems inappropriate for its platform — and does very well — but not the fake news that even its publishers say is easy to flag or the “visceral” content that no one should be forced to see.

Where Trust Matters

As I wrote two weeks ago, Facebook is no more a social network today than Macy’s is a thriving department store, even though each held those labels at one point in their histories. Facebook is a massive advertising platform that became massive because it created a trusted network of friends who brought their trusted social networks with them into the network.

Today, everything Facebook does and every decision it makes is about how many eyeballs it can drive to advertiser content so that they can monetize those eyeballs. It’s why I wrote that Facebook could give a lick about being a payments network — and why it cares a lot more about being a channel that drives eyeballs who click through to a brand’s website where that consumer can then buy. Facebook pockets gobs more money that way then it could ever do processing the payments that happen once a consumer decides to buy from that click.

It’s what also makes Facebook incredibly vulnerable now.

MySpace lost its ground to Facebook when its users and influencers lost faith and confidence in its platform as a safe and trusted place to be and turned elsewhere.

Facebook was that safe place.

The question facing Facebook now is whether it’s a platform that users can continue to trust to deliver good content and advertisers feel supports their brand image. Is Facebook at risk of having an ad overload in the news feed — including the onslaught of fake news that continues to perpetuate there — and the general unease over whether a video of a mass shooting is one scroll away of keeping its most valuable users from checking Facebook less often than they used to? Or are concerns over the volume of fake and/or unsavory and/or violent content at risk of having advertisers more actively consider alternatives?

The answers to these questions seems to be no so far, but all of this is relatively new still to Facebook. Its management team is still sorting out how it will respond. We’ll hear more when they report earnings this week. Perhaps that is one of the things that Mark Zuckerberg asked the good people of Ohio when he joined them for dinner at their home over the weekend.

What’s Next?

This is all coming at the same time that a few other things are swirling in advertising and commerce platform-land.

There’s a growing cacophony of news now over the addictive nature of technology and how our general obsession with it is damaging to our well-being. There are endless calls from authors and academics and even technologists to “detox” by minimizing the time spent trolling the web, playing games, liking posts and clicking on mindless videos. Adam Alter’s new book, Irresistible, dedicates 340 pages to the topic. And while I think everyone agrees that unplugging completely is unrealistic and not even something people want to do, weaning oneself from channels that no longer provide valuable information or feel safe to visit is not much to ask or hard to do.

People don’t really need to check the latest Dodo video of the baby elephant climbing out of the river sandwiched in between fake news about the Queen of England dying, but they do need to buy things, they do like to comparison shop and find it very valuable to locate stores that have the things in stock that they want to buy.

Enter Google and Amazon.

Google last week crushed earnings, reporting that its 20 percent increase in advertising revenue was driven by mobile search. Consumers are turning to it as they are on-the-go to find places to eat and shop, compare prices and locate the products they want to buy. That’s good news for Google, who is working hard to remain relevant in a world in which people more than ever — nearly 60 percent of the time — start their search for what they want to buy on Amazon.

Speaking of Amazon, they had a pretty good day at the earnings parade too, reporting a 23 percent increase in its core eCommerce business, with some sources independently reporting that it now has 80 million Prime members, at the same time Alexa is becoming the most popular belle at the Virtual Assistant Ball.

Brands, as they contemplate how to reach buyers with a mobile device and an intent to buy, have some very powerful players to which they can turn to scratch that itch.

It took MySpace less than three years to go from being the top dog to runt of the litter. Rupert Murdoch bought Myspace in 2005 for $580 million; in 2011, it was sold to a consortia that included Justin Timberlake for $35 million.

A perceived loss of trust in Facebook as that “safe place” on the web for users and advertisers is the most serious issue that it has confronted in its 13 years of existence. It’s also one that the regulators are watching carefully too. Facebook is clearly a much different platform than MySpace, with orders of magnitude bigger and stronger and many more assets — such as Messenger, WhatsApp and Instagram — that are all growing users and advertisers. And has clearly done a tremendous job of screening out the kind of content that contributed to MySpace’s demise.

But fake news and live violence, including murders, is unsavory, particularly when Facebook has put so much emphasis on its news feed as the trusted repository of content from its trusted social network.

MySpace is a cautionary tale of what happens when users lose their trust, and the advertisers who want to reach them follow them, taking their checkbooks with them.

And of how much less time it takes to slide down the mountain than it takes to climb, step-by-step, to the top of it.

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