Short History of Social Media

Amidst the sudden ascent of LinkedIn, Twitter, Groupon, and of course, Facebook, it’s easy to forget that social media actually has a bit of a history going back more than 30 years. Really?

Law firm Morrison & Foerster has put together just such a timeline graphic of online communities in its latest issue of Socially Aware, the only newsletter focusing on legal and business issues surrounding social media. (see page 4).

A Short History of Social Media” goes back to February 1978 – date of the first dial-up CBBS, as in computerized bulletin board service. Other SM milestones you may have forgotten or slept through:

  • 1995: launch of personal home-page server Geocities, later purchased by Yahoo! for whopping $3.6 billion. Geocities was ultimately shut down in 2009.
  • 1997: launch of Kevin Bacon-inspired, which soon claims a breakthrough one MILLION users.
  • August 1999: introduction of first web plain vanilla blog service, Blogger, which went on to be acquired by Google.
  • March 2002: debut of warm-and-fuzzy Friendster, which peaks a few years later before fading out like the Winkelvoss twins at the end of a regatta.
  • July 2003: birth of MySpace, which sets new standard for personalized networking and branding; company acquired by News Corp. in 2005 for euphoric $580 million, only to be unloaded this past June to a digital media buyer (one of whose investors is Justin Timberlake) for $35 million.
  • December 2006: Facebook rejects bid to be acquired by Yahoo! for measly price of….$1 billion.

Now, of course, the mileposts are coming in nanoseconds – from LinkedIn’s rocket-launch IPO this past May to Twitter’s jaw-dropping marker of delivering 350 BILLION Tweets per day upon reaching just its fifth anniversary in July.

Socially Aware is to social media legal/business news what TMZ is to gossip: breezy, short bites and all over the map. A tight-knit group of nearly two dozen Morrison & Foerster tech, IP, privacy, litigation, venture capital and other lawyers closely monitors social media news sites, blogs, online publications and Twitter feeds to grab the freshest industry topics and provide a knowing spin. Socially Aware was good enough to earn a coveted Burton Award for excellence in legal writing and analysis in just its first year of publication.

“We’re reaching well beyond other lawyers – including marketing professionals, business development specialists, digital strategists, brand managers, investors, start-up owners and others” said Morrison & Foerster technology transactions partner John Delaney, one of several top editors of Socially Aware who also created the social media timeline. The newsletter has more than 15,000 regular subscribers and is drawing more than 100 new readers a month – hot numbers for a law firm bulletin without a single footnote or case citation.

More importantly, Socially Aware is generating billable work. Delaney notes that the newsletter has helped bring in new client matters on behalf of a large bank, a global manufacturer and multinational insurer, a leading media company and an international technology company, among other businesses grappling with a wide range of social media agendas. Example: the firm is advising one financial services firm in structuring an innovative contest on Facebook.

Socially Aware is in keeping with Morrison & Foerster’s high technology IQ — the firm was the first major law firm to develop an iPhone App. Morrison Foerster also publishes MoFo Tech, a quarterly magazine featuring longer news features on all aspects of tech business – from patent valuations to IPOs, venture capital and data privacy.

Other news notes from the new Socially Aware:

• An organization called Medical Justice joins the growing online reputation-management industry by recommending that doctors – precluded by patient confidentiality from responding to negative online reviews – require patients to sign away their rights to complain, but also assign doctors copyrights to any such reviews. The issue makes DMCA experts squirm, while medical ethicists say it might violate doctors’ oaths to place patients’ medical interests before their own financial needs.

• What’s the problem with using social media to raise money? If the amount is, say, $300 million to buy a beer company, with a promise of part ownership, the SEC just might respond with a cease and desist order. “Crowdfunding” – fundraising through social media sites – is currently subject to state and federal securities laws, though crowdfunding advocates are pushing for an exemption. Socially Aware addresses the potential for fraud and other abuse that might come with an SEC exemption.

Additional topics include a concise overview of the Kerry-McCain privacy bill now before Congress; limitations to safe harbor rules protecting web-site operators from liability for user-generated content; reaction to the latest revisions to Facebook’s user guidelines; and the decision by Twitter’s co-founders to step away and create a new venture that will be a global force for good.

Socially Aware will shortly become an actively updated blog. Until then, here’s the link again to a PDF of the current issue.


MXit for BlackBerry and iPhone being rolled out, instant messaging synchronization on its way

MXit instant messaging growsInstant messaging platform MXit announced that it has exceeding 11 million users and became the number one method of communicating with youth.

“Being able to connect to the internet from a mobile phone is critical in a world that is relying more-and-more on not merely existing online, but also engaging actively. MXit transcends international borders, race and financial barriers and allows users to relate to one another in a manner that is based on friendship, networking and even learning,” says Juan du Toit, marketing manager for MXit.

According to the company, the global market for mobile internet will increase from 578 million users in 2008 to over 1,712 million in 2013. This is a whopping growth of 196%. Of the eight global regions, Africa and the Middle East will see the second largest increase in mobile internet users (414%).

“We are happy with our growth, but our target is firmly set on becoming one of the biggest instant messaging mobile networks in the world and the preferred mobile social network for communicating with young people in Africa and globally,” says Du Toit.

The company has its sights set on increasing its footprint in Africa and Asia and has already attracted more than 1.2 million Indonesian users.

“It isn’t rocket science, for us it’s simply understanding the mobile environment and the opportunity and providing something that will excite our users,” explains Du Toit.

“Initially, there was a need to establish a fun and fresh platform where MXit users could communicate cheaply. Africa, and especially South Africa, has some of the most expensive mobile rates in the world, but with MXit there is just about no charge for sending messages.”

There are in excess of 3 billion mobile users globally, and according to Nielsen/NetRating, the next billion are expected to use their mobile phones to access the internet for the first time.

Social networking platforms grew by 47% in the year ending April 2008. According to Juniper Research, the value of the user generated content market will grow from USD$1.1 billion in 2007 to USD$7.3 billion in 2013.

The company is rolling out a series of products that will enhance its usability and increase its penetration into the global market. This includes MXit for BlackBerry and iPhone, as well as the ability to synchronise its network by adding other popular instant messaging contacts such as ICQ, MSN and Yahoo messenger to the MXit profile.


Q&A about the Future of Social Networking

Future of Social NetworkingUsing Microsoft’s recent acquisition of a $240 million stake in Facebook as the point of departure:

1. What does Microsoft’s stake in Facebook practically translate into for the company? And for the site’s users?

Facebook now has a partner who can fund further expansion and growth as the need arises. Microsoft gains a very strong foothold into the Social Networking industry, which it has been lacking for a long time. Most user activity is now taking place online and not on the PC Desktop so this was crucial for Microsoft. For Facebook users it does not mean much because its only an advertising relationship which has been confirmed and solidified by the investment from Microsoft. Most people, and especially Facebook users, have become very savy in avoiding online advertising.

2. Why the interest in social networking sites like Facebook and MySpace by internet giants like Microsoft and Google? What is the motivation behind buying/attempting to buy stakes in these sites? Is it straight access to a demographically-specific marketing database?

Yes, part of the reason is the detailed demographics available so advertising can be customised in a very specific way. The bigger reason is that next to search engines, social networking is where the majority of Internet users are starting there online journey. Google already owns Orkut, which is very popular social networking website in Asian countries like India. And that also explains why its not well known in South Africa.

3. One of the views I’ve come across suggests that the social networking space will tend to move towards a monopoly because people need to communicate with each other in the same “language”. Basically, if most of your friends are on Facebook, then it makes sense for you to join that as opposed to MySpace to communicate with them. Others argue that users of social networking sites are non-specific. If you have a Facebook profile, you probably have a MySpace profile and you use both. What do you make of the debate?

Social networking sites can either be specialised on generalised. The roots are always in a niche community. For example MySpace started out among independent music scene in San Fransisco to allow their fans to connect with the bands, sample music and get a full gig guide. So MySpace has and will continue to have a strong foothold in the music and entertainment industry. Most of my MySpace friends in South Africa have moved to Facebook. Facebook started among university students and has spread from there. MySpace is a behemoth with over 207 million registered profiles while Facebook only has about 45 million users. LinkedIn on the other hand is the #1 social networking website for business people with over 15 million users worldwide and almost 40,000 users in South Africa.

There is a trend towards websites that allow you to tap into all your social networking profiles from one place.

4. Do you think fears of a monopoly within the social networking space drive the market price?

Yes, there is a vicious competition between Microsoft, Google and Yahoo for control of the Web. They are the biggest online publishers by a far margin because they control 3 biggest search engines. Microsoft in particular is paranoid as more and more user activities takes place online and not on the Desktop.

5. Why has Facebook taken off in a way that MySpace never did? What are the key differences?

As I said before it’s a myth in South Africa that MySpace is not important. You may consider that MySpace has been around since August 2003 and Facebook launched in February 2004. And until late last year Facebook was limited to university students only. It does seem like MySpace’s growth is slowing down.

6. What is the future of social networking? A Datamonitor report estimates social networking sites will enlist 230 million active users by the end of the year, continue attracting new users until 2009 and then plateau in 2012. What do you make of this?

That Datamonitor report is wrong because MySpace is over 207 million and Facebook is over 45 million alone. That is excluding Orkut with about 67 million users and LinkedIn with over 15 million users. Even with some overlap of users the is at least 300 million active users worldwide. We currently have 1.1 billion Internet users and almost 3 billion cellphones users. My view is that by 2010 the grow in the Web will come from people using cellphones to access search engines and social networking websites. Most social networking sites already support access via a customised mobile interface.

7. The same report suggests social networking services revenues will reach $965 million this year and $2.4 billion by 2012. Is this income generated purely through targeted advertising on these sites?

Yes, most of the revenue is from advertising. Some websites like LinkedIn is generating 1/3rd of its revenue from paid members. Most of the rest do not have any paid subscription options – just yet. Google struck a deal in 2006 that guarantees MySpace $900 million over the next 3 years for exclusive search and online advertising rights. Remember Rupert Murdoch’s Newscorp bought MySpace in 2005 for $580 million and everyone thought he was crazy.

8. Google’s own social networking site, Orkut, hasn’t gained as much popularity as MySpace or Facebook. Do you think Google’s launch of OpenSocial is aimed to popularise it so it can join the big social networking players?

OpenSocial is a application programming interface (API). What that means its an easy way for programmers to develop applications on social networking websites. Google wants to be the interface to all the social networking websites. Most users still do not know how to get directly to websites. What they typically do is Google words like “Facebook” or even “Yahoo” to find these websites. So Google will remain influential. They are appealing to the technorati, the early adopters, to built loyalty to Google, not necessarily to Orkut.