The Future of Social Media

A step by step plan of how things will turn out

Much is being written about the current state of social media, but I don’t see a lot being written on the future of social media. Here’s how I see things playing out… spoiler: it’s not great for big social media companies, their shareholders, or entrepreneurs currently paying a hefty premium to take them private ;)

First, let’s break down a social media product to its main components:

• Skin - this is the user interface presented to the users of the product. It shows the underlying data in an enjoyable format to the user.

• Data - this is a combination of all the data the social media product has access to: social graphs (who you follow, are friends with, etc), posts, comments, pictures, videos.

• Algorithm - the heart of any social media is the algorithm it uses to determine what data (of the near infinite data it has access to) it presents to a specific user.

Combine those three things and you have a social media product. Here’s how those three things are going to evolve, in my opinion at least.

Current Stage: Fragmentation, the end of network effects

Network effects, the fact that a new user to a product makes the product more valuable to potential new users, was the storyline from the mid aughts until recently. Network effects are the reason social media has been a “winner takes all” industry and it’s why Facebook isn’t competing with MySpace and Friendster, why Instagram isn’t competing with Flickr and why Tiktok isn’t competing with Vine. With network effects, there’s only room for one product in each category.

That’s changing as users begin to realize there’s no value (or, in fact negative value) in having a platform that every person users. There’s no value in communicating with the world’s population when users only want to communicate with specific populations or persons. We are already starting to see fragmentation of social media platforms, as users realize they would prefer to interact with other people who are aligned with their own beliefs, preferences or connected in other ways. At a political scale you see it with new platforms that cater to specific political views. At the personal level, you see it with platforms that cater to specific activities (for example, I use an app called TeamSnap for my kids’ sports schedules, which at its core replaces much of the coordination efforts that used to be conducted on Facebook).

The fact is, fragmentation makes the social media industry ripe for disruption.

Stage 1: The Algos

Algorithms are the heart of any social media platform and they are also the root cause of almost all of the controversy in social media now. The social media platforms have an incentive to create algorithms that keep users using their sites, which has led to algorithms preferring content that generates eyeballs, which all too often means highly controversial, anger-inducing or sexually explicit content. Algos are the root cause of why my wife and I won’t get my 12 year old a smart phone or a Tiktok account… we can’t trust the content that the algorithms will present to my daughters.

In a “winner take all” social media world, there’s no incentive for companies to provide options in algorithms. The incentive is to provide one algorithm that creates the most engagement and activity. However, as discussed above, the “winner take all” dynamic is currently crumbling. I believe social media companies will begin to differentiate themselves by offering algorithm options to their customers. For example, perhaps my account has an algorithm designed to show more content that is long prose, but my daughter’s account is setup to show content that is funny and clean.

This will be a bitter pill for big social media, because it marks the end of their monopolies and their value proposition. Therefore algorithm-choice will be a feature in smaller social media products, which will grow due to the more user-enjoyable experience. As those small social media products grow, bigger social media companies will have no choice but to compete with similar functionality.

However, it doesn’t stop there. Trust is already lost between social media platforms and their users and as stated above, social media platforms will still have an incentive to create their algorithms that favor engagement, even if their users have a choice between algorithms. I believe third-party algorithms will rise to fill in the trust gap and social media companies that allow a marketplace for algorithms will flourish. In the near future, I believe, social media users will be able to pay monthly fees to use algorithms written by third party developers.

And that will make a big difference.

Stage 2: Data

Dominic Williams and Jan Camenisch, CEO and CTO at DFINITY, love to describe the evolution of the internet as “Web 1: Read, Web 2: Write, Web 3: Own”. That’s a great way to summarize the revolution that is taking shape on the internet today. New products, backed by blockchain technology, are being deployed daily that put ownership back in the hands of the users. It’s going to take time and it’s hard to understand today, but the future of the internet is one in which users own the data they create.

This has a profound impact on how we will all use the internet in the future. I recently wrote about how bizarre it is that Kim Kardashian and other influencers cannot monetize all the content they have created on social media platforms, but instead need to seek ways to monetize their brands. Now that the technology exists, content creators like Kim Kardashian will prefer platforms that allow them more control over the content they create. They will prefer platforms in which they have rights to their content.

At first, I believe this model will be experimented at newer platforms and these rights will be limited to just enough to convince a few influencers to move to the new platform. However, influencers tend to bring their followers and massive moves to newer platforms will raise alarms at existing platforms (who are already feeling the squeeze by the fact that their algorithms aren’t generating the attention they used to) and the net result will be a competitive marketplace for content creators and an arms race in providing those content creators more ownership and methods to monetize their data.

The net result of this stage is a hodgepodge of social media platform approaches to algorithms and data ownership. The marketplace will be competitive and users (particularly content creators) will be in a position of leverage that they have never seen before.

But the fact is, once users have the ability to own their data, all social media platforms basically have no product to offer except their skins.

Stage 3: The Rise of Skins

By this stage, social media companies have lost their ability to leverage the algorithms they have created and have lost control of their users data. The final shoe to fall is the rise of “skins” products. Skin products will recognize that the industry is moving towards users have full control over their data and algorithms and instead of trying to fit a platform into that model (which will be redundant to say the least!) but will instead see a market for creating a user experience. These skins will simply be a user interface that connects to user data (but only data in which its owner has allowed it to) and presents that data to the user in a form that is optimized for the particular user.

From the user’s perspective, they will interact with three different products: one that helps them manage their data, one that is the algorithm of choice and one that provides the user experience (the skin). In short, the end game is an industry with no social media platforms, but rather marketplaces of data management tools, skins and algorithms. In this world there will certainly be packages of products to make purchase decisions easier for the end user, but users will have the option to plug and play various products.

Winners and Losers

The main winners of the above prediction will be content creators. They will have leverage they’ve never had in order to monetize and control the content they creator.

Users of social media will also win because they will have a vast assortment of product options from which to choose.

Smaller companies and individual developers will be winners because they will have an ability to compete with larger companies in the marketplace for algorithms, data management and skins.

The biggest losers is obviously big social media companies, who I predict won’t exist in a decades time. The existence of only a few platforms in which almost all social media occurred will seem as strange and antiquated as the idea that TVs only had three or four channels seems today.

Another loser will be advertising in general. In the above scenario, users will have the ability to control the level of advertisements they see (perhaps paying a monthly fee for products that don’t advertise) and will have the ability to control what data for which advertisers have access.