Now interestingly enough both of these services have recently, and surprisingly, reported that they are near or at profitability well ahead of schedule. While many have talked about the surprising success of Facebook ads, especially the ad budgets of games like Farmville, I think it is more than coincidence that these performance issues are happening now.
The funniest commercial I have seen on TV lately has been the Verizon Wireless commercial "there's a map for that." Poking fun at AT&T's network is a little too easy. But it's too easy to take your natural lead in a market and cut costs to maximize profitability. You still have your features. Your bells and whistles. Your network value (Metcalfs Law). Your brand equity. But you have undercut your users for the sake of cost.
Would cell phone carriers have taken off if they were this spotty to begin with? Would Facebook be as popular if it were regularly frustrating? There's a natural cycle to businesses where you spend less time innovating and more time profiting from the existing market position. This tends to happen in a waning market, where long term iterative innovation just won't have an effective ROI. Disruptive innovation and creative destruction then rules, and new ventures open up new markets.
But it's way too early. This market has just begun. Premium video is being flanked by Hulu and other popular and accepted premium VOD services. It's easier than ever to discover content with video search engines. Netflix is poised to supplant cable. Now is not the time to alienate users.
And Facebook. You've got analysts saying that the future of digital advertising is about leveraging social network data to provide more effective ads. Facebook is now the leading photo sharing site on the Internet. And it's the biggest video game platform. It's the largest event planning site. But you have threats from Open Social, micro communities like Ning and yes, Weplay.
And so I find myself using Facebook a little less. Maybe it is become I am busy, but also because it is slow and clunky. And I am reading ACLU reports on how Facebook apps give away your friends info without their permission. And I am thinking to myself, is a backlash really possible? Is something that is so much a staple to many, really so vulnerable? Well, I have had a couple friends leave Facebook in the last week. Maybe it's too early to milk the business. Maybe the cookie is crumbling.