Mark Cuban: Facebook Is Driving Away Brands - Starting With Mine
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We're free-marketeers, right? Prices allow scarce resources (eyeballs, users are the product, remember?) to be rationed in an efficient manner. Would he prefer some nameless, faceless bureaucracy determine who gets to see his messages?
This is a commons problem on some level. Very similar to the issue with push notifications written about elsewhere. Too many companies used Facebook as a way to get around email spam filters, and now everyone (good actors included) is suffering.
Cry me a river.
What if Twitter implemented something like this where certain tweets from a person you are following do not appear? How would that feel?
This strikes me totally as a money play and not for the user.
But are you sure users actually wanted that information? I strongly believe this assumption is false.
If I "like" something, I want to express that I like it. I want my friends to know it. It's not a "subscribe" button, it's a "like" button, and contrary to what people in spam^H^H^H^Had business may believe, people actually attach meaning to what is written. It's not a #:G4202 button, it's a "like" button. If you call it "follow", you get a different meaning and different expectations.
> What if Twitter implemented something like this where certain tweets from a person you are following do not appear? How would that feel?
Twitter is not Facebook. Twitter is about following people. Facebook is about showing people (my friends) what I like (and not necessarily caring what it has to say).
I, for one, welcome these new changes and want to repeat by GP: good riddance!
Facebook has given too much power to the 'like' button. There should be a different 'follow' or 'subscribe' button. If you subscribe to a page, you would expect to always get updates from it.
I only subscribed to facebook to be able to watch some dev videos. As I slowly became more used to it, I wanted to know how to get updates from the company page I work for. When I asked how to do this and was told to 'like' the company, that made no sense to me. What if I don't actually "like" something, but I still want to watch its activity?
By this definition, brands won't tell people to "like" their pages anymore, they will just say "follow" them. FB blurred the links and now no one knows what "like" or "follow" will do.
I can follow a brand and still not get all the information from that brand. This is ridiculous.
Oh yes, please. I want to see the epic torrent of butthurt from "Brands" like Mark Cuban when that happens and they find that less than 10% of their "fans" are actually interested in their "messages" so their reach is far smaller than now.
BTW. it's my anecdote vs. your anecdote; I wonder if there are any studies on the topic of how people perceive likes.
For instance I sometimes see "sponsored links" of the form "<sister-in-law's-name> likes <retail-outlet>, here is an offer that they have on at the moment" - I've never liked <retail-outlet> on facebook let along done that and subscribed to see absolutely all posts from them.
As arron said, the relation between you and the brand can and should be moderated by you. Furthermore, just because a monetary transaction is involved doesn't mean it's a free market at all. Facebook is the faceless bureaucracy you rant against when it's trying to gate brand communications like this.
And no, it isn't a straw man. Users suck at moderating and curating. If curating a Facebook presence becomes a great deal of work, users won't do it and will just stop using the service.
Some of the comments above also make the point that "Like" is terrible UX, it doesn't communicate what it should.
The sense of entitlement is overwhelming.
This is simply a weak excuse given by Facebook to charge brands, which they have every right to do. But to say their motivation is to stop spam is simply dubious.
Facebook is following the same game plan Google has used: give away free traffic at incredible volume, then start charging for it.
I believe Facebook's mistake is that they should have some sort of transparency in regards to why they are charging what they are charging. In Google's case, what you are charged is based on what your competitors say its worth (ok, not really but that is Google's story and pretty much everyone believes it.) From what I see, Facebook is just throwing out a number which page owners see as extortion.
"I want to punch slow walking people in the back of the head" or "The skeffington 19 bluepoint appreciation society"
User content not brand content. The latest changes might push facebook back in that direction and I wouldn't be sorry. I don't see it making them a lot of money though.
Now he's having to pay extra to make sure I get updates? There are other systems out there that we can use to maintain the "interested party" connection, e.g., twitter, email, rss feeds, g+, $your_system_here.
> The right price is to charge an upfront fee for brands. In the current system there is complete uncertainty on the cost. And even worse, at least for our size brands, you have to deal with the pricing for each posting, which is a time waster."
> "I'm just suggesting that a single upfront fee or a monthly fee where there is certainty of cost would allow brands to focus on bringing in consumers to like the brands knowing that they can always reach everyone that likes them. I don't know what that number should be."
He's voting with his feet - like any of us would tell others to do - and saying without more sane pricing, he's looking elsewhere. Good riddance is a bad strategy for long term customer growth, methinks... but I'm not a business person.
One: http://i.imgur.com/0FXVv.png
Two: http://i.imgur.com/3Xfbj.png
We'll see them on the website soon enough.
There might be a huge opening here for a "companies only" facebook clone, where you can only get updates from your favorite brands and service providers, not socialize with friends.
Isn't this just Twitter?
And while valuable in it's own right has no where near the engagement numbers of Facebook.
Twitter doesn't quite fit nsns's description as a 'Companies Only' social network, as much of it is social. I don't necessarily know that anyone would willingly sign up for a companies only social network, despite what companies may dream and pray for :-)
LinkedIn is mostly about connecting professionals to each other and companies
Facebook (in a business context), is mostly about connecting brands with consumers.
Consumers are not professionals, although the underlying people that participate in those roles may largely overlap (if you think about it as a Venn diagram)
But now, FB has strated breaking that model, differntiating between human friends and the other (paying) kind.
The more a particular company or service (or musician for that matter) deviates from the original product that attracted its user base in the first place, the greater its susceptibility to clones becomes.
I think all people want is simple and private social networking among their friends.
Facebook no longer offers this. Google+ certainly never did. There is a strong case that Myspace fell because at the time, Facebook offered more simplicity and more privacy.
Myspace was being deluged by spam during the summer of 2008 and that marked the beginning of the end for them ( http://www.google.com/trends/explore#q=facebook%2C%20myspace... ) Facebook is becoming equally noisy, except they are getting paid for the "spam."
As Facebook continues to aggressively attempt to increase its monetization, both on desktop and mobile, I think its going to get worse.
There is clearly an opening for a competitor coming along. I'd like to think of them as the Dropbox of social networking.
Every time someone says this in a HN thread, dozens of people respond with cute anecdotes about how great their experience is, but this place is like an echo chamber. If you actually go out and get the public _perception_ of G+ it's quite negative.
I mean Vic got his big G+ talk at I/O completely cut off for the sake of another product. That should show you the shift in Larry and Sergey's priorities
Think of when you go to an NBA game and they give out some sort of "freebie". I would imagine those game "freebies" cost much more than $3000, and regardless of that, with Facebook you are potentially reaching the 1M+ fans where as those game "freebies" might only be handed out to a measly 5K. It seems like a no-brainer to use Facebook to reach 1M+ fans at that price, vs what they traditionally pay for other forms of marketing.
Also, you could easily be selective on what sort of post validates for a $3K (post) promotion. Not all posts are worth promoting to every one of your fans, doing so would just weaken the brand image (in my eyes).
People feel betrayed by a company desperate for new revenue.
[1] http://www.socialsyntax.net/2012/02/facebook-trumped-super-b...
I guess any kind of prepaid arrangement (with some reasonable quotas, or upfront costs + small price per post) would be more manageable.
Speaking of business model that drives away customers. Did you know you give up 5% of your business to appear on shark tank because of the exposure? With or without the deal. That is why they do the follow-ups on companies that did or did not accept a deal. It's good for the shows owners.
Why are people clamoring to get accepted by YC? I'd be doing everything I could to make it a last resort, not a means to succeed.
(this is sarcasm btw.)
More seriously: you're giving up 6-7% of your company in return for a whole swathe of things that are very likely to increase your chances of succeeding significantly. Most people don't have ready access to the kind of personal networks that YC offers: the combination of that access, plus the social proof of having the YC imprinteur massively increases the likelihood of success for many, many startups.
And I'm saying this as someone who's very unlikely to ever apply to YC, but even I can see the benefits in applying, as do many others who choose to go to YC even if they don't in fact need the money: the fringe benefits are worth far, far more than the cash.
The owners are well aware of both situations, and it's their right to make the choice. For some businesses, that 5% is well worth the prime time informercial. And I imagine everyone who's received a YC offer has accepted as well.
I just stated that they do it.
Have you seen Dragon's Den (UK)? I saw Shark Tank first and thought it was great but the more hardline Dragon's Den grew on me and I believe I learned much more from it.
I think this process skews the risk/reward relationship found in typical investments because the companies they invest in get 3-10 minutes of advertising. I'm sometimes surprised they don't do more deals at lower valuations on that alone.
Also, slightly more off-topic, but is anyone else annoyed with the recent emotional break-downs on the show that, in a few cases, led to getting investments over the person awkwardly crying and/or having a break-down? It was also more obvious it was only cause of the break-down (it seemed) because on one of the instances everyone was "Out", but then a "Shark" came back in after the break-down. It's starting to feel too much like a reality show to me, as of this season. Which disappoints me, because the show used to be one of my favorites.
Quotes from the first-hand account of a Shark Tank contestant:
> "I was strictly forbidden to have any contact with the Sharks before taping. I had never even seen any of them in the flesh until I walked out onto the soundstage and the cameras were rolling. "
> "The Sharks also have absolutely no idea what is going happen with each company that comes on, they haven't even seen the pre-roll that the audience sees (where the camera follows the contestant around their home town, etc)."
> "The decisions are made before the person ever gives their first on-camera pitch."
The contestant with firsthand knowledge said:
> "The Sharks also have absolutely no idea what is going happen with each company that comes on, they haven't even seen the pre-roll that the audience sees (where the camera follows the contestant around their home town, etc)..."
He invalidates your statement because how could they make decisions before the camera pitch, if they have never seen anything before the camera pitch? Unless someone from the set of the show could say something to help your statements, he is a much more reliable source than your intuition. Unless you have more evidence to validate your statement that you have not yet posted.
There are a lot of Producers and EPs who have a narrative to fulfill.
Let's deconstruct: > "The Sharks also have absolutely no idea what is going happen with each company that comes on"
Right. They don't know what's going to happen when they talk to the company. That doesn't mean they don't know anything about the company beforehand.
> "They haven't even seen the pre-roll that the audience sees"
Maybe so, but that doesn't mean they haven't looked over business plans, executive summaries, founder resumes, etc. first. Audience pre-roll would be useless to these judges. Pre-roll is probably created after the judge interview, anyway.
I remember that situation only with the fitness-dancer dude, actually the only one I was really sorry for (the FuBu dude chaced him because he just didn't understand the concept of distribution and was missing a deal that could change his life). but most of those 'my story is so sad and life is so hard' people are pathetic, you're right.
Watching the YouTube video you linked it doesn't look like he seems to enjoy the T-Mobile product placement. Have I been brainwashed into liking him because of my earlier experience?
Except that's exactly what they've done for years now. The real problem is that Facebook didn't limit this from the beginning, because now companies are going to complain. I removed all my "likes" several years ago for that reason.
Facebook likes to push out extreme changes and then walk them back to what people actually want. This is the opposite of the right way to do it.
Facebook originally allowed this because it enticed both user and content engagement. Now, Facebook needs to reel it back in to preserve whatever value is left of it's activity feed - before it becomes the next useless myspace.
Let's play worst case scenario here - Cuban convinces all companies to leave Facebook. Then what? Do you honestly think there would be a mass diaspora of users because all the companies left? Hell no. Sure, Facebook's stock would plummet, but they'd still have options, because as long as Facebook has users, it has a future.
Now, let's reverse the scenario. All your friends leave Facebook. Then what? You leave too and so do all the companies, because after all, Pepsi doesn't hang out on Facebook to advertise to Coke. If the people leave, Facebook dies.
Facebook isn't a charity, nor a utopia, it's a company that is required by law to maximize value for shareholders. Facebook is already a master of providing value, they've built an empire by doing so. Now they have to learn how to extract value, and it's very smart of them to begin by extracting value from companies in a way that doesn't significantly impact user experience.
But this is just the beginning. Soon, Facebook will begin extracting value from people in more obvious ways. And I'd bet the #1 question on Zuckerberg's mind right now is, "How much shit will people take?" How many ads until everyone leaves?
I don't know the answer to that, but judging by how much shit is forced down the throat of an average American during a 30-minute episode of MTV cribs, I'd bet we'll take a lot more than we realize.
Did they all think this was free advertising, forever? FB is (at least now) a publicly traded, 'walled garden' after all, and Twitter isn't much different.
Looks like the social media revenue model is becoming clear: All your customer are belong to us, pay up.
You can run around in circles moaning about how it isn't "fair", but it isn't the Mark Cuban who built the infrastructure or attracted the users with a core product on Facebook. Secondly, Facebook never guaranteed 100% reach, I'm not sure why Mark Cuban expects it (and for free!).
Now, honestly, what I want as a user and as an advertiser is the ability for the user to turn up and down the volume of another entity, be it a person or brand. I may want medium on George Takei, high on King's X and low on Hormel's Spam (yes, I like Spam.) Do you think it'd be valuable to send things to different demographics as a brand? I know I think so, especially if I can get some cost certainty.
The problem is that the amount of likes and the value of the brand are unrelated. Takei is not going to pay as much as Quizno's, even if he has three times the fans.
This is a hedge against the unlimited patent exposure all the companies I have investments in face. Patent risk is impossible to quantify. It's unrealistic for most small to medium businesses to have any clue which patents they are at risk over. Vringo's IP from the merger is the flip side of that risk and offers an imperfect hedge. So, I made the investment.
http://www.forbes.com/sites/ericsavitz/2012/04/17/cuban-says...
I think this mindset is the poisons venom in Facebook's revenue strategy. Facebook is seen as just a social network and not a legitimate communication or advertising platform like TV, radio, or mobile phones. Cuban has no problem paying for Ad's on Radio and TV, but is appalled when Facebook charges for a similar (And arguably more accurate) service. Facebook's response also makes little logical sense--On one hand they say the fees are to fight spam, but the screen clearly shows that the fees are to communicate with more people.
The key point, as Cuban says in this article, is that companies spend real resources in trying to acquire "Likes" on FB. People build entire FB tabs. Curate what content gets posted. Build deep integrations on their websites. I've built a lot of this type of FB integration for clients...and I charge a lot, so I know this isn't cheap.
People do this with the expectation that they can reach the people who like their brand. When FB changes the game, it breaks this assumption and makes it doubly expensive to curate and communicate with your FB following. This is pretty much the gist what Cuban is arguing in the article.
On TV/Radio/Google Adwords/etc, there isn't a first step where a brand spends a lot of time and money sending users to said 3rd party advertising platform. You don't first spend development resources on integrating with the radio station's website, ultimately advertising their website for free and sending them tons of free traffic. You just give the radio or TV station your money, they play your ad, and that's it. That is the extent of your advertising investment. It's very concrete and simple to implement.
This is not the extent of the investments people have made in building up FB pages and followers. Brands have spent and continue to spend a ton of time and money on this and like Cuban, they are justified in being ticked off when FB changes the rules in an effort to squeeze revenue from them.
I have no doubt that money is the reason behind charging to communicate with your followers on FB. The altruistic motives like "fighting spam" would best be done with an algorithm. It surely wouldn't be something you could "opt out of" just by having a fat wallet. By FB allowing brands to pay them to spam people just means FB is fine with spam as long as they get paid. That doesn't seem like a stance that has the well being on their users foremost in mind.
FB has a massive supply of impressions which has bottomed-out remnant/auction CPM rates industry wide.
I see this as a move to try and introduce a (somewhat) premium ad product. Users have already indicated interest in the brand -- now they will have to pay to reach these intenders.
When I subscribe to a page, I expect to get updates on new postings.
Because Facebook is using their EdgeRank to filter out those postings, I'm no longer get updates on all the postings. As such I've to go to the subscribed page manually.
No wonder I'm getting so few updates lately. Because Facebook is filtering out everything. How backwards is that?
https://www.facebook.com/[user ID or name]/favorites
Tell me, do you want to receive updates on all of 0.5k things you liked? Because if each of them writes even one post a week, you can forget about ever reading things from your family and friends. And the latter is what Facebook was designed for.
Ownership of your following is really important and at the end of the day the only way to do that is to have a proper standalone website.
Will Twitter do something like this? I don't think so. But it's also a crapshoot whether your tweet will actually be seen or too far down your tweet stream for someone to actually see it. I still believe that email marketing is The. Best. place to build an audience because you have permission to send a message to someone that is almost guaranteed to at least have its headline read.
Of course the rules of the road apply wherever you build an audience, meaning you can't spam or abuse the privilege to talk to them. But all things being equal, owning the channel has some HUGE advantages.
As an infrequent and naive Facebook user, I would not expect that "Liking" a company page meant "Subscribe me to whatever they want to send me."
Look at Twitter locking down their API or Apple inconsistently enforcing arcane app store rules. When someone else owns the platform, they effectively own anything you create with it.
That is not true. I have a Facebook and no where have I ever been required to give my mobile number. I think you only need an email (and I think, it doesn't even necessarily have to be valid) to create an account.
> "...spend a questionable amount of time"
I created a test account for an app I'm working on (the other month) in less than 5 minutes, give or take. For an app you are building with their API, 5 minutes of time and getting to use it for free is the same as "($50/year)" as you mentioned? That seems a bit exaggerated to me.
No easy way around this maybe, since fans have to be able to easily unsubscribe, but it's another big reason why collecting a ton of likes for your Facebook page may be largely wasted energy.
Odd. I distinctly remember Cuban saying how he bought FB stock as a trade, and exited the position at a loss when he saw that the initial rally wasn't going to materialize.
A lot of analysts like Facebook at the $18-$20 price point, something reflected in the stocks relative stability since August.
He did buy into the IPO expecting a quick bump which didn't materialize. And he doesn't blame Facebook for it.
http://blogmaverick.com/2012/09/04/facebook-handled-their-ip...