This thought-provoking Fast Company post calls into question something that I think most of us hadn’t even bothered to question – and that is whether in fact social media sites compete with one another. Google’s Eric Schmidt has argued for some time that this is not a zero-sum competition and that Google does not actively compete with other social networks, saying that everyone benefits when people spend more time online.
As the article observes: “Social networks often confine user data to their websites, forcing users to stay within their ecosystem … Google, on the other hand, seems intent on exploiting its newfound popularity to force rivals into more open data policies.” The article goes on to reference Google’s Chief Economist admitting that their products want to push Google’s open standards on competitors.
My sense is though that you always need to approach the concept of competition with an open mind. And that’s because while brands may not wish to, or expect to, compete in some ways with one another, the element of competition, and therefore the search for advantage, is always there with commercial endeavours.
For example, in this particular set of circumstances, it may not be in Google’s interests to compete for access because, as I’ve said before, closing systems to search actually compromises Google’s scale model. Google’s revenue model is built on traffic – so the more traffic they can encourage directly and through third party interactions the better. And the more that they can make searchable, the more important they are for users. They have a lot to gain from a more open social universe.
But I very much doubt whether Google would be quite so generous about sharing or ceding revenue. In that arena, they will absolutely compete head-on with others (including more traditional channels of course) for market spend priority.
The same applies to many brands. There are times when being seen alongside one another is useful – it works to the benefit of all – but that doesn’t mean brands are necessarily going out of their way to help one another. At some point, the commercial realities must apply. Coke still want other drinks to be available at the outlets they’re sold at, because otherwise consumers would feel they had no choice and the integrity of the outlet as a convenience channel could be compromised. At the same time though, they want to access as much of the beverage buy as they can get at that outlet and to make the maximum amount from the space allocated to them.
Markets are full of dichotomies and this is just another one of them.
Collective mass makes companies, particularly in emergent channels, credible and therefore viable. Google, Facebook et al carry weight because they carry numbers. Schmidt’s right when he says that everyone benefits when people spend more time online, and to do that users need to be able to move freely and easily online. Sharing, liking, linking etc have done a huge amount to foster that. And in that sense the competition is not zero-sum amongst the participants. They need to demonstrate that they are a collective force to be reckoned with. They need to continue to expand and to progress. That’s what makes them a sector.
And yes, I think we will continue to see co-operations, such as the Skype/Facebook alliance, where parties stand to mutually gain from an association, again based around access to services/experiences that the other is renowned for.
But beyond that? No. And the reason is that you always need to distinguish in situations of co-opetition between what’s not at stake and what is. Ultimately open systems and open searching carry few sacrifices, but they have the potential to deliver convenience, speed and goodwill to all who participate. There’s actually very little at stake from the parties working together. But elsewhere, where there is actually earnings to be lost, or even put at risk, the stakes are very real and competition will continue to thrive. In fact, it would be illegal if it didn’t.