Careful With That Axe, Eugene, You'll Pop the Social Media Bubble

Like the dot-com bubble years prior, there is a social media bubble that is on the precipice of popping, except we all may be in denial about its existence.

Recently I attended the social media–centered event BlogWorld in New York city. During a speaker luncheon the 'entertainment' was a company called You Say Too who spoke about their services. I really wasn't paying attention. I was trying to eat. What I did gather from what I did hear is that they were a scraper service, asking your permission to index your content along with other similar content. This got me thinking about the entire industry of social media: specifically, when the bubble is going to pop.

While my presentation was probably the smartest, yet worst presented (I'm a terrible solo presenter), there were a ton of presentations that flooded attendees with the same information about working in the world of social media. This also got me thinking: If there is a social media bubble, how willing are we going to be to see it? We're all inundated in social media and the surrounding support system. Maybe you only use Twitter, but I use a litany of services for whatever reason and many people are invested strongly in many other services. Unlike the dot-com bubble, we all are playing with all the toys.

It's clear at this point who the major players are in the game. Where there was Google coming out of the dot-com bubble unscathed, we have Twitter, Foursquare and Facebook, although even before the train-wreck of an IPO I still cast my doubts on the longevity of Facebook. Consider the social network app Path, which is conceptually the same as Facebook just with an emphasis on privacy and being a self contained mobile app, rather than having any web presence.

Though, according to comedian Jordan Cooper Facebook is here to stay: "new broad-based social platforms are dead," he told me via Twitter. "People are narcissists and go where people already are. Facebook won. Get over it."

Foursquare has undergone a major redesign and now enables users to apply a lot more branding capabilities to the usability of the program. Their evolution should effectively shut out every other location-based check-in service. The trick is beating back Facebook and their check-in service. However, when the bubble pops I think Foursquare will be on the winning side when it comes to the one location-based service left.

Clearly Facebook has the financial backing and the venture capital (and now billions of investor dollars) to be a lasting social media tool. It will evolve, but I'm not worried about that right now. What I am worried about is Path and companies on a similar, er, path. These companies on the fringe have something to offer, but more from a niche point of view. I posed this scenario to Dave Binkowski, Partner at Large Media, a branding agency on the constant edge of social media.

"There is so much money floating around the space right now that it's hard to say when the ride's going to end," says Binkowski. He goes on: "When you look at the number of acquisitions in the monitoring world and Facebook/dashboard/app world there's clearly a consolidation trend. However as tech keeps changing and new platforms take center stage -- mobile being the biggie -- it's hard to say it'll end anytime soon."

So I asked Binkowski what would be the catalyst for the "end of the world as we know it." What would be the perfect storm to bring about the bursting of the bubble as a whole? Binkowski believes nothing short of a stock market crash would crack the social media bubble.

"Social media as we know it continues to evolve and entrepreneurship is alive and well in the tech space so the number of failures is going to be high. It's really a question of when will the money run out. A big stock market crash, regardless of Facebook's recent stock woes, would certainly bring the space back to reality."

I disagree. While I'm no expert on pretty much anything, I do think that I do a good job from time to time on speculating whether or not bubbles are going to burst. Of course, I have neither proof nor history to back this statement up, so I'll just explain myself and you can decide if you agree or not. I'll look for your comments below.

A couple weeks ago I reviewed a site called Flattr, a micro payment processing website. Then I was last week called an influencer by a site called Traackr, a site that tracks influence. Klout thinks I'm influential in sharks and lucky charms. I post pictures on a site called Staree run by a company called Izea. Staree is pretty much Instagram, just, not. Instagram got bought by Facebook, Zynga makes games and so does everyone else (that's not going to change.) Digg came and went, while Reddit just gets bigger and weirder. The market is overflowing. It's been raining non-stop and the levee is about to break.

While Binkowski believes that it can continue like this as long as the money is there, I believe that the social media marketplace will be faced with another issue: consumer ambivalence. The next photo-sharing tool that comes out, I won't care about. Sure, someone else might, but eventually they'll notice a new photo-sharing tool that they won't care about. I think that outside of the business plan of "get bought out by Google, Facebook or Microsoft" many of these social media companies don't have one.

I've talked about the fear of social media before, and there is a fear of it all coming to an eventual end and only the strongest surviving. That's inevitable; you can't deny that. But maybe I don't know what I'm talking about. Maybe because the venture capital is there all these companies will survive, or they'll get sucked up by the corporate vacuum and added to the app store.

The signs are there, the influx of venture capital, the stocks being issued basically on toilet paper, the overflow of similar companies coming out of the woodwork just like the dot-com bubble. Here's the difference though, and why we may not notice the build-up this time around - it's not happening in a central location. The dot-com bubble was based around companies generally in the Silicon Valley circles. We knew about it, read about it, but didn't live it. We're living it now. The social media bubble encompasses every corner of the world, but chances are, the pop will be less impactful than I've probably implied.

You see, instead of a large centralized pop it's going to be all these tiny little pops. Companies will be scooped up or shut down and suddenly, they'll be gone but we won't care. Because the services we care about and use, the most popular ones are the ones most likely to get scooped up and integrated with current tools. Such as Instagram and Facebook. Outside of Facebook's history with privacy we didn't seem to care much. Good for Instagram, we said. So every other photo-sharing site started rubbing their hands together, looking for that payday. Except Instagram already got it.

So then what about the New Media Expo (which is now the ongoing name for BlogWorld, as they've changed it)? The social media companies represented there were all selling some service that was either terribly niche or like some other service. Good on them that they found the money to build their whatever-with-a-twist, but the futility of the exercise is going to catch up to them.

Then, as I wandered from session to session, soaking up all the blathering boilerplate how-to about navigating the sea of social media interaction I thought again how when the bubble pops, this will pop too. When there is less to navigate, less to learn and the winners are clearly identified, will we need three days to talk about it twice a year? Probably not.

I'm guessing, since many people I know have their hands in something related to social media (as in investors or working for) my opinion that it's all going to swell and die is probably not a popular one.

The truth is, before the lynch mob shows up, all this is hyperbole and just social media theory. I'd like to think that every single little happy company providing some niche social media service will survive and we'll all have a unique selection of social media tools at our disposal. While that scenario has a chance at coming true, the most likely scenario is that someday, we'll have one major player in each different specialization and the rest will be like Doritos Loco Taco dust on your cargo shorts.

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