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    Warning: Dependence on Facebook, Twitter Could Be Hazardous to Your Business

    by Mark Glaser
    January 29, 2009
    The pop-up warning that Andrea Rodgers received before having her profile shut on Facebook.

    You’ve probably heard how much the micro-blogging service Twitter can help your business, or that being on social networking site Facebook can boost your company’s profile. But what you might not have considered is the potential danger in over-relying on these startups that could go out of business, get bought out, or close your account if you aren’t familiar with their Terms of Service.

    In terms of growth, both Twitter and Facebook are booming, with Twitter growing by 600% and Facebook nearly tripling in users in the past year. Both companies rely on venture funding to survive. Facebook has been bringing in revenues from advertising; Twitter hasn’t yet clarified how it will bring in money.

    Depending on a third-party service for your livelihood is folly." -- Chris Pirillo, tech blogger

    The brand value of both companies is rising, as you could see on TV during the inauguration when stations such as CNN were touting Twitter feeds and Facebook pages. But as more newbies pour their time and attention into these online services, can they be certain that the services will survive in the long haul?

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    Larry Yu, a spokesman for Facebook, told me he was confident of the staying power of his company.

    “We’re private so don’t share those details [on profitability], but our performance, we’re pretty comfortable about our position right now,” he said. “If the question is about our long-term viability of the company, based on our performance, that’s not something we’re concerned about.”

    i-0cea4c071bcc87c2e6e35c1c7a933c59-Jeremy Liew.jpg
    Jeremy Liew

    Facebook has received more than $500 million in funding in its lifetime, with Microsoft alone putting in $240 million in 2007. Jeremy Liew, managing director at Lightspeed Venture Partners (a venture capital firm with no stake in Facebook or Twitter), told me there was zero chance that either company would go out of business. More likely, if they ran out of cash they would be sold at lower valuations.

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    “[Facebook and Twitter] are both verbs now, and that is a very strong indicator of how deeply they have penetrated consumer behavior,” Liew said via email. “If their current capital is not sufficient to last them, they will be able to raise money (at some valuation — perhaps not an ‘up’ round) because they are clearly generating value.”

    Yu noted that Facebook was still hiring engineers and sales staff, and that they weren’t seeking any more funding at the moment. Meanwhile, Twitter might be in a more vulnerable position, with no revenues yet nor even a public plan to make money. Twitter co-founder Biz Stone reassured me that the company’s health is robust and that a revenue plan would begin to bear fruit in the next few months.

    “Twitter has enough funding to continue working on the most important priorities without being distracted for a good while,” he said via email. “The exact time is longer or shorter depending on how aggressively we choose to move in various directions.”

    A Facebook-Twitter Combo?

    Facebook actually made an offer to buy out Twitter last fall for $500 million in stock and cash, but Twitter turned it down. According to AllThingsD’s Kara Swisher, Facebook execs that looked at Twitter’s internal finances were worried about possible SMS charges for running Twitter that could run up to $75 million annually. That kind of cost is something that should worry people who rely on Twitter to send out news or promote their site.

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    Biz Stone

    Twitter’s Stone told me why the deal didn’t happen from the Twitter point of view.

    “We’re big fans of Facebook and we believe in what they’re doing,” he said. “We also like Mark [Zuckerberg, Facebook CEO] and could see where a partnership made sense. However, Twitter is really just getting started and we’re strongly compelled to follow through with our plans. Ultimately, the timing was just not right. I can’t speak to Facebook’s finances.”

    So what kind of plan does Twitter have in place to bring in revenues? Stone told me that the main service would remain free, but they are considering a “commercial service.”

    “The broad view is to embrace the commercial activity that is building strong momentum already on Twitter,” Stone said. “We have companies, brands, and organizations using Twitter in a variety of ways and people are subscribing to these accounts — how can we deliver more value in this scenario? What can we provide to make this experience better? Those are the questions that will shape our first revenue products. We’re currently searching for a business product manager to add to our team of 27 employees and hope to begin iterating in the next few months.”

    I asked my Twitter followers whether they would pay for Twitter, and what kind of services they would like to see for a “pro version.” I was surprised to receive numerous responses by people who were willing to pay $5 per month or $50 per year for even the service they are already using for free. Others said that they would pay extra for various features such as:

    > A way to separate friends they follow into groups
    > Better analytics on who is reading their tweets
    > Built-in TinyURL support to shorten links to fit the 140-character limit
    > Video and image support
    > A way to add Google AdSense ads

    Surprisingly, Stone didn’t mention advertising as an option, though that would seem to be the simplest way to monetize the traffic that already is going to Twitter feeds and profile pages.

    Don’t Give It Away

    While many people spend days and weeks building their profiles and their network of friends and follower lists on Facebook and Twitter, power users recommend that you don’t put all your eggs in one basket. It’s better, instead, to make sure you have a presence on various popular networks and make sure most of your effort still goes into your own site.

    i-659881162c1f47d50a62cd8ea193ed87-Cali Lewis.jpg
    Cali Lewis

    Cali Lewis, who runs the video blog GeekBrief.tv, says that she would rather put energy into her own site rather than the various social networks.

    “While I have a Facebook account, I’m not active there,” Lewis said via email. “Facebook and MySpace are great, easy ways to blog and build, or participate in, a community, but by participating, people are giving their content away. I believe in building your own community and keeping control of the content you work hard to create.”

    As for Twitter, Lewis was reluctant to use the micro-blogging service because she didn’t want to constantly answer the question, “What are you doing?” Eventually, she found the value in using it to communicate to her fans in a more efficient way than email. Plus, she can mine her audience for information via Twitter.

    “If we don’t know how to do something, we no longer have to vaguely wonder about it,” she said. “Ask a question, and you can get answers from a crowd full of people, very quickly…If Twitter closed down tomorrow, it would be a sad, sad day, but Twitter isn’t in danger of disappearing overnight. I would, however, pay to use Twitter.”

    Tech blogger and entrepreneur Chris Pirillo, who runs the Gnomedex conference, is adamant about keeping his focus on his own page and not the various social networks.

    “Twitter and Facebook may enable me to connect with friends (and meet new ones), but I refuse to establish ‘permanent’ residence on any site other than my own or one that I control,” he told me via email. “Depending on a third-party service for your livelihood is folly. If they change one component or policy, you could be out of business (or forced to change your business model, which may prove expensive). You can and should use the services for what they provide, but never invest too much time and attention into one platform or another. You never know what’s going to happen tomorrow.”

    Pirillo uses the social networks to promote and point people to his main site, and says that not promoting your site through social networks is a “colossal mistake.” He says the biggest test of your success is if your own site comes up first on a Google search for your name — rather than a Facebook or LinkedIn page. “Which would you rather see on top: their site or yours?” he asked.

    People aren’t the only ones who should be careful of dependence on one social network; developers who create applications based on other platforms need to make sure those platforms don’t pull out the rug and hurt their business.

    Lance Tokuda, CEO of app maker RockYou (which makes the SuperWall and HugMe apps on Facebook), says that his company has apps on MySpace, Facebook, Hi5, Bebo, Orkut and even on Chinese social networks. But the Facebook platform drives more than half of RockYou’s total traffic. Tokuda says there’s always been a risk for his company in relying on these platforms that could go out of business or change their terms for app developers.

    “There’s always been that risk, even from when we first founded RockYou [on MySpace],” Tokuda said. “It’s part of our day-to-day risk. The Facebook platform is really the best one, so I would definitely put a disproportionate amount of energy there.”

    The recent redesign of Facebook profile pages definitely affected the success of various applications, which are now hidden behind tabs such as “Boxes” rather than highlighted on each profile’s main page. Tokuda said that Facebook’s various design changes have hurt some RockYou apps and actually helped others.

    “The platform is still changing, in some cases for the better and in some cases for the worse,” he said. “You have to be aware that the platform is evolving and keep some level of maintenance to maintain good integration with the platform. In the end, it’s worth it.”

    Venture capitalist Jeremy Liew says that reliance on specific social networks by developers can be detrimental to them.

    “If the mothership [platform] loses popularity that would impact app developers who are on that platform,” Liew said. “RockYou, Slide and many of the other app developers are across multiple platforms….so they would have a temporary setback but would follow the users to whatever platform they moved to. [Twitter app] Tweetdeck I believe is single platform and may be more impacted.”

    Getting Shut Out

    Another possible downside to relying on one particular network is that the service might shut down your profile without warning. On Facebook, there’s a rule that you have to use your real name, so people using nicknames, pseudonyms or handles have had their profiles shuttered. In one case, Facebook relented and allowed the pseudonymous blogger Jon Swift back on the network after many bloggers complained about his ban.

    There’s also the problem of too much “friending.” Blogger Andrea Rodgers, who writes the relationship-advice blog Ask Miss A, had her profile shut down earlier this month. She complained about it, and started a new account, only to have that one shut as well. In a post titled Facebook: The New Guantanamo, Rodgers wrote:

    They can take you away from your virtual life online, impede your ability to communicate with friends and family, throw away the key, never explain what you did, and give you no chance to appeal…I feel sure that at some point in the future this will be addressed by the legal system, the government, or this will open up a niche for another company to create a better method for us all to stay in touch and communicate.

    Rodgers told me that Facebook did listen to her appeal and eventually allowed her back into her original profile. She was upset not only with the chain of events and being cut off from her network, but also because they were vague about why they took the action in the first place.

    i-7599c3395326efd062e735c29a01ef42-andrea rodgers.jpg
    Andrea Rodgers

    “I think that they need to implement less harsh ways of ‘punishing’ people…If someone ‘friends’ too much, perhaps they could find a way to prevent the person from friending,” she said via email. “Cutting someone completely off is basically like killing a person’s virtual self…They said that they have certain metrics in place and that my friending triggered a red flag. Not sure if it’s that I friended too many in one day, or too many within a month. They aren’t that clear about their limits.”

    Facebook spokesman Barry Schnitt told me that Facebook’s automated system gives out “points” based on suspicious behavior, from too much friending to promoting a business on a personal profile rather than on a Page (a Facebook site set up for businesses). When a user accumulates too many points, the system generates a pop-up warning before it disables accounts. Rodgers confirmed that she did receive the pop-up (as seen in the image at top right). But she told me she wished that Facebook was more specific about its limits, rather than simply warning and then allowing her to go over the limit until the account was disabled.

    Schnitt admitted that Facebook could do a better job of educating users about limits in friending and commercial activity on personal profiles. He said that people who have accounts disabled can send their complaints to [email protected], and that everyone should read the Warnings page in Facebook’s Help Center to understand various rule violations.

    While Facebook hasn’t been very clear about its rules, Twitter has done a better job with its straightforward Twitter Rules, and Stone told me that most people are booted from Twitter for spamming or over-following people in order to spam (a.k.a. follower spam).

    If you are planning on using either Twitter or Facebook as a marketing platform for yourself or your business, be sure to read the Terms of Service carefully. That’s what Facebook’s Larry Yu advised when I talked to him.

    “The important thing for people to do is to review the Terms of Service,” he said. “A lot of people don’t do that. They don’t have experience with it, and we encourage people to do it…There are also terms for application developers. As people decide to develop on the platform, they have to be comfortable with those terms.”

    Whether you’re a developer, marketer or power user of Facebook or Twitter — or any other social network — be sure to follow the rules and consider the temporary nature of each service. They might not go out of business in the near term, but chances are that everyone will move along to the next big social gathering online, leaving your well honed profile in the dust.

    What do you think? How would it affect your business or your life if Facebook or Twitter shut down your account? Share your thoughts in the comments below.

    Tagged: advertising facebook terms of service twitter venture funding
    • Facebook is all about data collection. Everything you upload to your Facebook account is their property and you lose the rights to the content. Facebook customer service is terrible. Facebook does not care about any of us, we are all numbers to them. Try emailing their customer service and see for yourself.

      Also, good advice about spending more time on your own sites, we all need to do a little more in that area.

      All the best in 2009!

    • I agree that these services can revolutionize certain businesses (my online marketing firm uses these daily, and to great results), but over-reliance on any platform can lead to problems many ways. I think the ideal solution is a balance between forward-leaning experimentation and time-tested standard procedures. Understand what technologies are available and how they may add to your model, but realize they could disappear or greatly alter their platform, and you can’t let that become a major obstacle in doing business.

      Of course this doesn’t apply to technology developers that build on top of these platforms, they are the mercy of the service…

    • Mark,

      Some great points that should definitely be considered when approaching social media sites. I agree that you never know what could happen to these companies and if they were to shut down, you’d be in a tough spot. At the same time, if twitter went down, there would undoubtedly be a similar company, or multiple companies that would take it’s place. The twitter population would then just shift to a new platform.

      It is definitely smart to diversify your social media attention to be present on more than just one platform. You must also be careful not to spread yourself too thin across multiple platforms. There has to be a balance, which differs in each individual situation, where you aren’t spreading yourself out too thin, but you’re not putting “all your eggs in one basket.”

      Dave

    • Intersting blog post. So what would you suggest; that businesses just don’t use these tools? You obviously don’t want to put all of your eggs in one basket and social media tools are just that: Tools.

      The should be part of your marketing mix and centered on business/branding objectives.

      ya… everyone (220 million people) is just gonna leave facebook tomorrow and all your hard work in the dust. ummm. Not likely.

      The world is evolving and smart businesses will find a way to leverage each eco-system. Simply not participating is not smart on many levels.

      Cheers!
      Rodney Rumford

    • Rodney,
      I didn’t say you shouldn’t participate in these networks, nor did I imply that everyone will leave Facebook tomorrow. This story was meant to be a warning that you should beware that these networks are not permanent, people tend to move from one network to another, and there’s a chance they could close down, be bought out, or close your account for bad behavior.

      If you’re using Facebook and Twitter for business, be sure to spread your capital around to more than one place, focus on your own site, and read the Terms of Use carefully.

    • I agree to some extent to your hypothesis of these start-ups closing down. But isn’t that the same case for big behemoths who are on the verge of near extinction.

      How about Banks which more or less brought the world to the brink of recession? E.g. Lehman…

      What I feel is needed is some degree of discipline in accepting such changes both from consumer as well as company aspect!


      Sampad

    • Mark,

      I agree with your response.
      It is just that your headline is a bit misleading/sensationalistic. ;)

      “They might not go out of business in the near term, but chances are that everyone will move along to the next big social gathering online, leaving your well honed profile in the dust”… that sounds like creating fear for people and inferring that their effort will be for nothing. If people never used web services because they might go out of business; Google would never have taken off in it’s early days of revenue.

      If you look at the percentage of businesses that were ever shut off on Facebook for whatever reason; you would find the percentage to be mind numblingly tiny. Users should always be familiar with the social networks terms of service and follow them.

      In regards to a Twitter Reveneue Model. Look at these mockups that I did a week ago.
      http://www.twitterbusinessbook.com/2009/01/twitter-advertising-invasion-has-begun

      I have been blogging about facebook and social network sites since the week facebook launched the platform. The upside far outweighs the risk for businesses.
      http://www.facereviews.com

      The take away should be: what is the right communication channel/eco-system to align with business/branding goals, what is the cost of engagement, what is the potential ROI, associated downside risk, design strategy and integration into business. Execution Time.

      By and large it is an informative post. Thanks for listening. Cheers!

      Rodney Rumford

    • Facebook and Twitter are merely technology platforms and a method of communication.

      If they disappear other channels of communication will pop up to replace them.

      It is definitely true that you shouldn’t put all your eggs in 1 basket. There are so many fantastic and creative different ways to get the word out online. The more creative the better.

      I learnt from Seth Godin that if a business is worth talking about, it will end up being disseminated both online and offline via word of mouth.

      So hypothetically, if Twitter and Facebook were to vanish if you are engaging your customer correctly you should already have attracted them directly to your website and then you can use them as brand advocates on whatever communication channel you like.

      Pull people in, in whatever way you can and then energise and excite them to go and push out the message for you.

    • Mark, some great points made here, particularly about the terms of service. If you choose to use social networking platforms for marketing you better be sure you know what your obligations are. While I would be disappointed to lose both of these services, they would not impact my business significantly, as I still focus on delivering quality service to my customers to ensure repeat business and personal referrals that don’t necessarily come through Twitter or Facebook. I enjoy connecting with like people and learning through these sources but dependence on them is not in my plan.

    • Another thing to consider is the time spent on these tools. If I spend an hour a day “marketing” on Twitter instead of creating more jewelry, it could be detrimental to my business. There could be a lot of other marketing efforts (including face to face marketing) that would yield better results! So far, I can’t track one sale back to Twitter.

    • Excellent post. There are still people out there who don’t have a clue about branding and socialing. The key is to be an early adopter and trust your gut.

    • I agree with Matt. These are merely the technology platforms. And if one closes down, another will show up. We’ve seen the power of social networks over the last couple of years and with data portability coming I wouldn’t worry too much about this.

      I’ve often thought Facebook and Twitter should charge businesses to be apart of these platforms. Currently these are free conversations and customers. And if a brand builds a solid conversation and community. It won’t matter where they go because typically followers will umm follow. It would be silly if they didn’t monetize this channel.

    • Totally agree on the over-reliance of these kinds of programs. Even if they never go bankrupt, businesses need to have their own turf where they can engage their customers like this. Be it a blog or whatever, they need a place to talk to them, for the voice of the company to really come through and avoid coming off as a big, bad corporation.

      Even if they really are.

    • Mark, thanks for the excellent reminders. It’s all about balance, isn’t it?

    • Totally unsurprising that people with long-standing established web audiences would not want to invest time in other sites. But that isn’t the point.

      Facebook is where the users are today. That may change a few years down the road, but let’s cross that bridge when we come to it.

    • Great points, folks. One addendum: When I talked to Barry Schnitt at Facebook he did note that you cannot “port” your friend list or data from Facebook to another service at this time. He said that it didn’t make sense because people were on different services so porting friends from Facebook wouldn’t translate to another network where your friends didn’t exist.

      I’m not sure if that’s a rationale for keeping people on the service or not, but if data portability does come, it would be a big help for people who eventually do want to move on.

      I also want to stress that I wasn’t trying to fear-monger or attack Facebook or Twitter — I use both services a lot, and appreciate all they’ve done in helping me reach readers and old high school friends. I just want to make sure that in our rush to glorify them as platforms that we consider the temporary nature of technology services.

    • I’ve been saying this for a long time. Facebook, Myspace et al are a huge waste of time. If you really want to stand out from the crowd then this may be of use to you…

      http://www.upstartblogger.com/stand-out-from-the-crowd-on-facebook-with-this-killer-punch

    • Interesting conversation. I think that being cut off from any of the social networking sites I use now would have a huge impact on my podcast. Many, many of my hits come from not just my promotion on these sites but also from users linking my facebook, myspace or twitter page.

    • Of coarse the social media’s like facebook and twitter have given the little blogers a change to get out there and make a big name for them selves, many would be devastated to hear of a shut down, but when these social monsters get to big for them selves the revenue intake is not enough to keep them alive.
      Lets hope not, at least for twitter, what would we do with out a “tweet”

    • Hello Mark:

      Thanks for an excellent round-up and analysis of Facebook and Twitter. As always everything is in that fine print as you correctly point out. Guess, we are either under peer pressure, have no time or are distracted to read the terms of service.

      I have been doing a series of interviews with folks like Ram Shriram and Guy Kawasaki and asked them about this new trend where websites have strong traffic, and yet don’t make revenue. It was interesting to hear what they had to say.

      Thanks,

      Kamla

    • I think it’s important to consider what value each service has for you (or your brand) personally. Myspace was the buzz yet I refused to get involved because it was too teen-angst-ridden for me – – and now they have fallen into a youth/entertainment niche/stigma. (which is fine if that is your market/interest)
      Create a platform that’s diverse by utilizing industry specific forums, personal blogs, bookmarking sites and ‘big dogs’ that work for you. And cut the strings on things that have little value or if you can’t commit to actively participate.

    • If your business is product related as opposed to service related Myspace and Facebook simply can’t compare to your own site. As a filmmaker my goal is to show my films and sell DVD’s. I now believe that Facebook and Myspace should be used as Funnels only–to direct people to your personal or business web. I’ve committed the crime that Cali Lewis mention; I blogged on Myspace for 2 1/2 years instead of on my personal page. I gave away my content for free. I now funnel people to my web from Blogger.com, WordPress.com, Myspace and Facebook — even Twitter.

    • Hey Mark, Great post. You are right about Facebook and Twitter. I used them both to drive traffic to my blog and website. I believe it’s a matter of finding your true balance yet never taking your eye off the goal, which is to generate business. Finding good/great contacts and information in the process is just the icing on the cake.
      Make mine chocolate, please.

    • Woww ! I didn’t know Facebook could shut up an account, I thought it was just like a spam mal I usually received when I was active on Friendster (have been non active for months…).
      But we could live without Facebook and Tweeter.
      Thank you for this informative & great post,Mark. Greetings from Bali,Indonesia

    • Your article gave me new inspiration
      Thanks!

    • Great post Mark. I recently authored a paper on challenges in virtual ethnography that raised similar concerns over uninformed reliance on third party containers.

      These communities hold rich opportunities for business and study, but their commerciality and special interests aren’t always transparent when we’re publishing content or participating in conversations within them. There are boundaries and gatekeepers who often have sweeping claim to ‘common’wealth.

      Like academics and individuals, businesses simply need to approach with caution, read all fine print, and make their forays tactical, never all-encompassing.

    • nicely done. an interesting read attractively presented.

    • Facebook and Twitter are great content platforms but as noted by others here the content on Facebook is not yours any more once you put it there. Twitter works well if you work it well. Don’t expect miracles from it.

    • There are over 250 million people on Facebook and at least two donkeys as far as I know. I would say that within that many it should be possible to actually find a couple of customers shouldn’t it?
      You need to adapt to the platform because if you just go into there and sell sell sell you haven’t got much hope of doing anything

    • Phoebe

      If I’m looking for a business online I will go straight to their website if available and not the Facebook or Twitter site.

    • Totally agree. It would be stupid to rely entirely on Facebook or Twitter but as part of a marketing mix they make sense

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