Issue link: https://cp.revolio.com/i/457819
18 | THE DATA CENTER JOURNAL www.datacenterjournal.com t hat isn't to say no new social networks will arise, but the likelihood is that no one will go head to head with Face- book. Christopher Penn, VP of Marketing Technology at Shi Communi- cations noted in a blog, "Facebook seems likely to be the last of the mega-networks. It's a rare and unique accomplishment to build a brand that talks to over a billion people on a regular basis." So, "if a new market entrant offers no feature better than Facebook, chances are people will just stay with Facebook, since that's where all your friends are already." e result will be social-media companies that try to offer something that Facebook lacks, be it privacy, exclusiv- ity, a better user experience or whatever. But such premium features will almost necessarily only appeal to a much smaller segment of the Internet-going population, so these offerings will lack the relative uni- versality of Facebook. ey will be places where you go to find like-minded individu- als rather than just plain everyone. Some differentiating features, how- ever, are virtually dead on arrival. Privacy concerns, for instance, constantly swirl around the major social networks, but privacy is all but antithetical to this activ- ity. Facebook, which is in some ways "Blog 2.0," appeals to the narcissist in users. It's a platform that puts your thoughts, activities and relationships on a digital par with everyone else's in your circle of friends. Sure, a social network might offer certain features that limit who sees your con- tent, but no one tweets just for their own consumption: privacy and social media are like efficiency and government in that they mix in theory but actually tend to repel one another. Precisely which differentiating feature might make for a hit among users, how- ever, is difficult to predict. Twitter found something of a formula in its 140-character limit for "tweets"—dissertations on this or that topic need not apply. Whatever the case, social-networking providers are largely, for the time being, relegated to fighting over the scraps le by Facebook. foLLoW the money As wonderful as mass participation in a service might be, the provider has to make money in order to continue supply- ing it. For a company like Facebook that ostensibly offers its service for free, the real currency is data. And collecting, stor- ing and processing all that data requires servers—lots and lots of servers. Running a data center requires serious capital, so a social-networking provider must monetize the data it collects, which typically means some combination of targeted advertising and data brokerage (i.e., selling user data to advertisers or other organizations). Given that most social-media sites are free to users, the question thus becomes whether the value of the data balances the costs of providing the service. Facebook, in addition to being the king of social media in sheer size, may be the king in profitability as well, at least for now. In 2013, it earned roughly $1.5 billion (GAAP) on revenue of $7.9 billion, accord- ing to company press releases. ese num- bers corresponded to about a 55% increase in total revenue, as well as a huge increase in net income relative to a nearly break- even 2012. Diluted earnings per share went from $0.01 to $0.60. Although 2014 didn't replicate this huge increase, judging from the first three quarters of financial results, the company will still see growth. For the first three quarters, Facebook earned $2.2 billion (GAAP) on $8.6 billion in revenue, beating the numbers for all of 2013. e company's stock has seen relatively smooth growth despite a botched IPO. Not all social-media providers have done so well, however. Twitter, which according to data compiled by Statista is roughly on par with Google+, Linke- dIn and Instagram among Facebook's main competition, has struggled since its IPO. According to public company data, revenue for the first three quarters of 2014 roughly doubled that of the same period a year earlier, reaching just shy of $1 billion, but losses nearly tripled from about $130 million for the first three quarters of 2013 to $450 million a year later. e company's stock is checkered at best, starting at roughly $45 at the time of the IPO but re- cently falling under $40 despite an all-time high of over $70 in late 2013. Twitter shows one of the difficulties of playing second fiddle to Facebook. Lack- ing the sheer reach of its larger rival, which appeals to advertisers and data hogs alike, it must somehow turn its unsustainable losses into profitability. Simple growth in user numbers, however, isn't the answer if the accelerating losses in the company's financials are any indication. But Twitter isn't the only struggling social network: LinkedIn, which differentiates by focusing on a professional audience, is also strug- gling to turn much of a profit. is same challenge will likely face any provider: part of the draw of a social network is a large audience, but supporting that large audience with service costs money. If the service is free (monetarily) to users, the provider must get its money elsewhere, and that's the rub. What's the next Facebook? It's a favorite question about the future of social media. The company that was once isolated to a few college campuses took the world by storm, to the point where many businesses list it as their go-to location for more information. "Find us on Facebook" has all but replaced the dot-com. But given the size and reach of the social-media giant, the answer to this question might well be nothing.