I have my doubts about investing in the online world.
That sounds counter intuitive as I am spending a heck of a lot of time investing in the growth of a business that requires the internet for its existence. But the key difference between Online Radio and something like FaceBook for example is that radio as a medium has strong proven track record – the way we consume it and the way interact with it however is changing at pace.
FaceBook should it cease to exist, would not have the bricks and mortar structure required for rescue should a savior want to come in save the day.
Essentially it only does one thing – connect people. It has brand value yes. But only so long as we are all connecting. The problem with connecting is that its not a new concept, and like radio, the way we do it is ever changing.
The problem for FaceBook is that instead of interacting with FaceBook in a different way we will just go onto the next new thing that connects us.
I raise this as Myspace.com has been sold for $35 MillionDollars. Sounds impressive? Well not when you consider that when it was last sold it fetched $580 Million Dollars. In the internet environment there will always be the next “big” thing and the big thing that was there before it will be eroded. It will become the poor cousin of the newer and better version.
While investing in companies that produce online product, apps and so forth, sounds like a reasonable proposition, given these companies will adapt continually to the latest fad and the company itself is not the product, FaceBook like Myspace.com is the sole product. And it doesn’t have a warehouse full of “like” buttons and “poke” links it can sell off in case of emergencies.
As much as FaceBook tries to become the sole interface we use on the net for interfacing with friends and family sadly we like variety. And again as much the clever boys and girls in the Zuckerberg offices create new things to play with, once we leave FaceBook these toys cease to become of use to us.
Its a ring-fenced environment that once you are no longer part of, ceases to exist.
We can have FB emails now. Don’t need it. I can message on Facebook already and i also have at least three emails under my name. I can “like” an article. Well I can also copy and paste that article and email to a friend. I can belong to a group. Well they are just annoying and generally we do it make friends on FaceBook happy and build up their numbers that look impressive but in reality we will probably ignore the group updates and end up selecting “do not mail” on the groups page.
As soon as a smaller more connected version of what FaceBook does comes up we will probably join that. It will probably have learnt from FB’s mistakes and we will like it because of that. Then when that tries to dominate our lives we will look to the next thing.
What will be left if Facebook starts going negative. A very large and expensive bunch of clever people in an office, along with very little of the cash you invested.
Google you might say may have the same problem. But I would counter that. We use Google primarily to find other things that interest us. They remain the middleman and have identified a revenue model from that, that works. They might come up with a few innovations here and there that make our lives easier, like Google Docs, Solar Farms and phones that someone once bought, but principally they help us find what is new on the net and they do it damn well.
Safe I think for now.
The bad thing here is that if you invested in FB now you would be investing in what it was a year ago. And they more than likely know it. The horse has bolted and there is more discourse around FaceBook than ever. Sure they are growing sill but we have to look at where they are growing. It’s not in the US and it’s not in the UK. You may say there is nothing wrong with that and as long as they have growth they will be sound.
But look where they are losing numbers, UK and US, and there is an underlying story. Something else is either coming or more likely the Western World has grown bored of the site and are either migrating elsewhere or simply tuning out.
The growth is coming from the late adopters which tells me there is a funeral on the way.
Were Facebook only a part of Facebook’s business there may be reason to invest.
Sadly Facebook is Facebook’s only product on the shelf.