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The Recession Web

There’s a tremendous shift occurring in the web today. The buzzwords thriving include social, mobile, local, check-ins, daily deals, and cloud… It’s a great time for buzz! But I think it’s important that we all take a moment to remember that we’re living in an environment of extraordinary circumstances. I like to think of this period that we’re existing in as the Recession Web. It’s under these unique economic conditions that we’re seeing many substantial changes to the web that we’re using today.

Jeff Turner posted an interesting article that sparked my desire to write this post:

Jeff TurnerJeff Turner – @respres
Some interesting data here: The Shrinking of the Non-Social Web http://bit.ly/lzqW7G

The article (written by Ben Elowitz, CEO of Wetpaint; mentioned several times throughout) brings up some interesting implications from the data that he’s looking at. Most notably, that we (as web users) are spending a helluva lot more time on Facebook and increasingly less time on individual non-Facebook web properties. Web traffic is steering increasingly away from standalone websites, and is being funneled heavily in to the current “social” king – Facebook.

But one of the lines in Ben’s article struck me as being extremely important:

The connected, social Web is alive, moving, proactive, and personal, while the document Web is just an artifact — suited as a universal reference, but hardly a personal experience.

What stood out to me in this line is the simple omission of a vastly important word: Useful.

A web experience that’s alive, moving, proactive, and personal sounds just fine… Except it’s not really that productive. Sure, video is sapping tons of web traffic and Facebook is sapping tons of general attention (as per Ben’s article). But in terms of productivity, neither of them are really that necessary. As a media outlet, yes, Facebook (and at hyper-speed, Twitter) is a powerful source for traffic and attention. But as a tool for increasing business performance, Facebook is merely an advertising channel.

That’s why I consider many of the changes that are occurring on the web (and resulting in dramatic shifts in attention and usage methods) to be based on recessionary conditions. Facebook (and the social web in general) thrives because it’s free, it’s personal, and it’s often very entertaining. But I’m not convinced that if the unemployment figure were 5% rather than the current 9.1% that we’d be seeing these sorts of traffic numbers. Facebook benefits from unemployed people. So does Groupon (who’s in the business of providing cashflow infusions to struggling small businesses). So does Netflix…

Kevin SablanKevin Sablan – @ksablan
How is “mere redistributor” Netflix (not a content creator) succeeding in a world where some say content is king? http://j.mp/lhKY5v

The article Kevin snagged (By Jonathan Knee of The Columbia Business School) makes the case that Netflix is the superior aggregator. And there’s a lot of truth to that. But, Netflix is primarily succeeding precisely because people want to be entertained extremely cost-effectively during recessionary periods. Netflix IS a recessionary play; just like discount retailers, budget airlines, and small cars (further amplified by high volatility in the price of fuel). But even Netflix realizes that with the nature of Long Tail economies, the competitive advantages that a firm can seek aren’t in merely offering it. You can rent Family Guy episodes in a dozen different places. Netflix has created some neat technology and paired it with an excellent customer experience. But they’ve seen the writing on the wall: Outside of a pure recession environment (when discretionary income will rise for virtually all consumers) what will sustain their share of market? Original programming.

There is no doubt in my mind that the web is experiencing an extraordinary tidal shift in usage and behavior. All the hot buzzwords are hot not just because we’re in a recession but because there is some very cool tech that’s coming together. Apple’s introduction of the iPhone – and Google’s response with the Android – has led to a fantastic revolution on the mobile / local front. We are connecting together in amazing new ways.

But this is all occurring in the bath of a complete economic meltdown. What happens when the market really does improve? Facebook usage will decline – because people will be at work. Netflix subscribers will be interested in finding other forms of entertainment. Local / mobile marketing will make huge gains as people take more vacations and do more traveling. But at the end of the day, I think we’re also going to see an emergence of a new – productive & useful – web that incorporates the existing models (blogging, article creation, search, context, content) and pairs it with these other social & personal experiences.

2 thoughts on The Recession Web

  1. Hi Dave,

    If I’m understanding this correctly, the main thrust of this theme is that much of the dynamics we’ve observed on the web in recent years is owed to a huge unemployment rate.

    While I can see the logic of it, I’m compelled to point to other factors like those below as more influential in the web’s growth dynamics:

    o increased competition,
    o radically changing demographics (both in the U.S. and via increased opportunities for intercultural exchanges globally)
    o lower cost of entry owing to technology innovations,

    I think we agree at least on the third point above. In any case, I love the points you’ve raised and see them as great fodder for further discussion. Thanks for sharing them.

    • Mel, thanks for your feedback!

      Basically, the gist of my argument isn’t so much to blame the current economic woes on the internet (though if you want to read a compelling case for that, I highly recommend the book “Overconnected” by Bill Davidow).

      My argument is more that – fundamentally – social networking technology isn’t exceptionally productive. I mean, I know Jeff Hester made the argument on Twitter that social networking is more than just a hobby, but I really do see Facebook (and in turn, other common social channels like Google+ and Twitter) as merely a substitute good for any other type of entertainment.

      I do agree with your points that we’re seeing a dramatic shift from a social standpoint – especially with the dramatic shifts in demographics, cost bases for entrepreneurship and business management, and the global competitive landscape. But I do definitely think another aspect of the “hype” related to sites like Facebook or other social media products is that they don’t generate revenue for the participants.

      Even on the web – I could choose to place my own ads on my site here, and potentially earn revenue. But Facebook has convinced people to trade their data, their time, and their resources, and in return they get… Advertising.