Maybe it’s just me, but it seems like long before the site had a #1 box office movie featuring its story and grossed a respectable $23 million in its opening weekend, Facebook and the rest of the sites that make up the social media phenomenon were already ubiquitous. in our society.

In fact, I think Facebook and Twitter have become so popular that you could create a wildly successful frat party drinking game out of how often logos hit us in the face, which happens almost 24 hours a day. of the day, 7 days a week on these days:

1. Take a pack of 18 and three friends.

2. Everyone crowds around the TV and, using the remote, scans the commercials.

3. Whenever players see or hear a request from the company or spokesperson in a commercial asking viewers to “follow” them on Facebook, Twitter or any other social networking site, or display the logos on the screen, each player must drink.

4. The last person to drink loses and has to follow Lindsey Lohan on Twitter for the next 6 months.

Granted, my penalties are a bit too harsh, but the point is that individuals, organizations, companies, and, well, the whole world is hoarding onto social media and networking sites online by the (probably) thousands. millions every day: the classic “crazy” signature of a bubble, and that kind of inflation and obsession can’t go on forever.

However, the social media bubble is not your typical bubble, because the sites we belong to are not really an asset with any monetary value to us. But I don’t think that means it can’t show up, and when it does, which social media companies will survive, and which ones will be stuck naked and worthless, unimportant, and relevant?

Are social networks in a perennial bubble? Here are three insightful points for you to decide for yourself.

“So where is the money going to come from?”

If there’s one thing we should have taken out of the dotcom bubble in 2000, it should be that creating and investing money in a company should happen after the company’s founder has decided on (or at least chosen) a revenue model. . The epic failures of larger than life sites in those days, with names like,, and hundreds more, plunged into a mad gold rush to get a website up and running and traffic without any consideration. real. about how the business was going to generate revenue. People publicly invested in the companies anyway and lost billions when it blew up.

Haven’t we progressed in ten years? Today’s social networking sites look almost perfectly like, from an economic and business perspective, those silly and useless dot-com bubble companies. The flight to launch is the same: some entrepreneur comes up with the idea, a friend or a small team of programmers launches the site, and traffic pours in because it’s free. There’s a formula in play: create something that’s free, launch it, find VC investors, and grow the website, but don’t necessarily worry about revenue because you can always turn to advertisers.

“How do we make money?” said the VC, while writing a check for half a million dollars. “Oh, don’t worry about that. We’ll figure it out later. Right now, we need traffic.” 20-something flip flop cheering on her partner. Do you still need more proof? Just read the story of Twitter, a website with more than 100 million users and still no clear plans on how to generate revenue.

there is no real value

Readers who are devoted to social networking sites are likely to balk at this statement, and everyone is entitled to their opinion. But the truth is, there really is no sustainable economic value in social media websites. While Foursquare is an interesting GPS-enabled platform that allows small businesses to advertise with virtually unlimited limits, I believe that, in the end, social media as a whole brings nothing to the world’s table except advertisers and Internet entrepreneurs. to get rich quick they want your disposable money.

Facebook’s mission statement is “to help people communicate more efficiently with their friends, family, and coworkers.” Since when did humans, the world’s most socially advanced creatures, begin to suffer from the need to communicate more efficiently with our friends, family, and co-workers? And how valuable are those relationships anyway? When I look at my Facebook profile and see 565 friends, I think wow, I either have a lot of acquaintances or I’m a pretty popular guy (knowing in the back of my head, the latter is probably not the case).

There was a time, and not too long ago, when Silicon Valley was teeming with brilliant scientists who created and continue to develop incredibly powerful inventions and innovations, like semiconductors, microchips, and the Internet. Companies universally credited with dramatic, life-changing innovations, such as Microsoft, Sun Microsystems, and Google, have had a measurable economic impact on the world’s societies. Today, I wonder if it’s full of app developers bent on dreaming of making a few million overnight selling virtual farms to anyone who’s actually willing to buy them.


As with other famous and historic asset bubbles, in the course of the evolution of social networking websites, there will be rampant consolidation and spectacular companies imploding upon themselves under the influence of a fatal cocktail of overwhelming debt and influence. that I mentioned above. . However, there is no need to worry; Even after the dot-com bubble, many Internet companies not only survived, but thrived in the years that followed, including Amazon, eBay, and more, and the same fate befell social media and networking sites.

While doing research for this article, I came across a small flurry of press releases from obscure social media related companies merging with each other, including an advertising company and Europe’s largest blogging platform, both in separate instances and in agreements.

And the rumors continue this morning since Facebook broke the news that they would be making a big announcement today shortly after a publicized partnership with Skype was announced last week. Maybe it’s the anticipated integration of voice and video chat for the Facebook platform, but whatever it is, rest assured, consolidation between the strongest and weakest social networking sites is coming, and probably in a much bigger way than these two are exhibiting.

At least one social networking site has failed this year, and one reasonably important site. 12 Seconds was a user-generated website that allowed users to share videos with each other. As a member of the site, I received an email three days ago from the company that basically said 12 Seconds was closing the doors, thanked a few select key people in the company, thanked the users, and that was it. The site will close on October 22.

Could this be the beginning of the end for rampant and infectious social networking websites, or are we just getting hot? Let me just say that I am a prolific user of Facebook, Twitter, LinkedIn, and YouTube, and I will continue to join and use social networking sites because I enjoy what burgeoning technology has to offer me. Unfortunately, I’m also an economics major, and with that comes speculation about all things bubbly.