Social slowdown hitting Piczo hard
CNET News.com reporter Caroline McCarthy co-wrote this report. — Life is getting more difficult for social-networking sites. — At the same time Facebook's traffic appears to have reached a plateau, News.com has learned that Piczo …
Context & Ripple Effects
Piczo's difficulty arrives after reports that MySpace and Facebook both slowed in January and arguments that users were showing fatigue with social-networking services. The pattern matters most for smaller networks: slower category growth leaves less room to offset user churn with new sign-ups.
Facebook remained the UK's most popular social-networking site in January, but its reported UK decline was disputed by the company. Its plan to pull third-party social activity into News Feed shows large platforms responding by making their service a more central destination.
First-order effects
- Piczo faces a harsher operating environment as the social-networking slowdown directly reduces the growth momentum available to a smaller, named service.
- Facebook must defend engagement as well as audience scale: it denied declining UK traffic while adding third-party activity to News Feed and tackling application-invitation spam.
Second-order effects
- MySpace, Facebook and Piczo compete more directly for existing users when category growth slows, increasing the value of retention features and cleaner user experiences over raw sign-up totals.
- Third-party social-network developers gain a stronger reason to distribute activity through Facebook's News Feed, concentrating attention around the platform with the broadest UK reach.
Third-order effects
- If social-network fatigue persists, the market shifts from an acquisition race toward engagement and aggregation, favoring platforms that can make outside activity useful inside their own feed.
- A slower-growth market raises the disadvantage for narrower networks such as Piczo, because network effects become harder to build when users are less willing to join additional services.
The trend: Social networking is entering a maturation phase in which retention, feed integration and network effects matter more than rapid user acquisition.