Mediaboss Marketing

Summary: The emergence of new social networking services such as Pinterest and a growing base of disgruntled 3rd party developers for the leading services shows that changes in the social networking industry are far from over. It's also causing a rethinking of the business models and partner ecosystems of what's become the old guard, Facebook and Twitter.

Social networks have long relied on the kindness of what are essentially strangers in order to thrive. You might be thinking I'm talking about the people that use them, and I am. But I'm also referring to two other constituencies of social networks that are nearly as important and which happen to be vital for their long term growth and health: Developers and advertisers.

That's not all either. As a social networks get larger in size and longer in the tooth, they must add employees and venture capital firms to the mix as well, who want good returns on their time, effort, and investments. These groups end up pulling the business in different, competing directions. However, the tension resulting from the cross-purposes between all of these constituencies isn't really surprising. After all, social networks -- like businesses -- are themselves made of people. Differing agendas, objectives, and priorities are part of the mix, like any community of individuals.

But of all these, it's developers and advertisers that are coming into focus recently as moves by popular social networking services such as Twitter have begun alienating the former as they appear to proactively cater to the latter. In particular, this week's scrubbing of 3rd party app source names from tweets means that Twitter is essentially white-washing its developers' app presence from its feeds. What does this mean exactly? Going forward, when one posts to Twitter from Hootsuite or Tweetdeck or Instagram, no one will be able to tell which app was used.

While the source of the app that posted a tweet may not seem very important to users, it's critical for a developer that has spent their time and money creating a new type of Twitter client and relies on its visibility to succeed. And this where the rub is, because developers were arguably instrumental in building Twitter into what it is today. When I talked with Alex Payne, Twitter's API lead, back in 2009, he reported nine out of 10 users of the entire service were already using 3rd party clients to post and consume tweets. Developers had literally became the public face of the service for most users. What's more, they helped provide the myriad user experiences and features that no single company could provide by itself.

Related: Twitter edges out third party clients with tighter API rules

Now that the service is enormously popular, with over 500 million registered users as of this year, Twitter apparently wants to deal itself back into being the primary intermediary with the user. Increasingly restrictive rules for what developers can do continue to be announced. For its part, Facebook has also lowered the boom several times on those that helped build it out in its early days, when they needed every 3rd party app they could get back in 2007 to propel them past MySpace, the market leader at the time.

Of course, as I observed as Facebook prepared to go public, the dual opposing pressures of protecting customer privacy while endlessly inventing ever more sophisticated ways to monetize their data was going to be a tall order indeed. For the most successful social networks today, both of these issues will ultimately end up penalizing 3rd party developers that have invested in the platform. At the same time the host social networks will end up trying to preserve the most valuable aspects of the data only for themselves.

Those who've following my writing over the years knows that I'm quite bullish on strategically using open APIs as a way to scale partnership and harness innovation as cost-effectively as possible. It's a brilliant strategy for startups, and the smart use of open APIs directly led to the success of Internet giants such as Amazon, Twitter, and Facebook who've all used them to rapidly create marketshare, network effects, and vibrant partner ecosystems. Today, few startups launch without an API coming a short while later. But the end game for 3rd party developers seems increasingly bleak for social networks, at least how the services are designed as businesses today.

Then there's the issue that the current social networking monoculture, where the vast majority of people are using a few large services, hasn't changed much recently. Because of this, I think a strong argument can be made that they have inherently begun to limit innovation and create stagnation in the marketplace as they attempt to consolidate control. But with the recent provocations to developers (API restrictions) and users (privacy concerns) and the rise of a some compelling competing services, it may not be situation that lasts very long.

See the article here:
Is the social networking monoculture ready to crumble?