With Paper, Facebook Continues Departure From Early Ideals

Jacob Harper |

In 2009 Mark Zuckerberg wrote an open letter he posted on his social media company Facebook Inc. (FB) that started “It has been a great year for making the world more open and connected.” The message reinforced what was the at-the-time private company’s ideal: to provide a single, simple platform for social interaction. This, of course, was the namesake service of his company, Facebook: a digital location where a person’s myriad friends, relatives, and co-workers were collected in one place.

AH, but in the social media world, 2009 might as well have been the Middle Ages. Since then, Facebook has grown literally fifteen times over, going from an estimated valuation of $10 billion to its current, market-verifiable capitalization of $150 billion. A market cap, of course, implying that the company is now trading shares on the open market – and thus indebted to their stockholders and not some relatively quaint ideology that rah-rahs their ability to make the world more open and connected.

"The Facebook must grow," sayeth the stockholders. Damn the connections. To grow then, Facebook must look at what’s holding them back. Turns out, it's that very openness, of course. The market craves specialization, and, with the release of their newest app Paper, they're satisfying that craving for places away from the open free-for-all of Facebook.

A Social Media Space of One’s Own

After Facebook went public in July 2012 and the stock's price famously tanked, Zuckerberg and his team took a cold, hard look at why people were fleeing the site. Specifically, why young people were fleeing the site.

Turns out, the problem was teens were leaving the site because everyone was there. In 2012, Jake Katz, the chief architect at market research firm YPulse, noted Facebook’s diminishing “cool factor” and that teens were looking to spread online identities across multiple sites. Facebook realized this, too. Their goal might have been to make online identities singular, but the young users social media craves wanted quite the opposite. They wanted to get away from their parents who just friended them. They wanted their own space. Or spaces.

Because it wasn’t as simple as teens fleeing Facebook for one alternative. They didn’t just want a separate space like Instagram that had so far resisted intrusion from the olds. They wanted the ability to streamline cliques within even their peer group. That is, to find online spaces even more niche.

The market was moving towards fractilization in social media, not inclusion. And so Facebook paid attention. And every major move they’ve made since has aimed to monetize this and keep users on any Facebook-owned property longer.

Paper: The Same, But Different

On the mother site, they adjusted the algorithm of the news feed to focus on the people they felt you would be most interested in seeing, while hiding those they felt users could not care less about (AKA the “friends” one had grown weary of). Facebook also picked up Instagram and WhatsApp, getting in on the trends that favored picture-sharing and messaging service apps.  

And now Facebook is launching Paper 1.1, a social media service that is like Facebook but ever-so-slightly different. It's like Facebook but less cluttered, with basically just a news feed, upcoming events/birthdays, and an opt-in people discovery feature called “Nearby Friends.” It’s a Facebook away from Facebook, allowing people a chance to get the advantages of the mother service while carefully selecting a tighter, less open “friends” group.

It's divide and conquer for Facebook, but, in this case, what they're dividing is their own product. They will retain Facebook itself, to be sure, but don’t be surprised to see its features spun off into more-select, more-private apps. Ones that gives the customers what they want: a less open and connected world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 118.43 0.48 0.41 14,526,285
ICHIF Ichigo Group Holdings Co. Ltd. n/a n/a n/a 0

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