User-Created Digital Monopolies on the Social Web

For non-web based businesses, monopolies are often created by successful, global companies who buy out competitors and offer prices so low that local or regional entrepreneurs cannot compete. On the web, monopolies can be created similarly; but on social websites, monopolies are created in a way that is rare outside this world: by the user.

It is undeniable that our friends can help dictate which products we choose to purchase or which clubs we frequent. However, I have yet to see a business other than a social network that is rendered absolutely useless without our friends’ approval. If your friends dislike your favorite restaurant, it does not make your meal any less tasty. If your friends all wear Nike shoes, their preference certainly doesn’t make you run any slower in your Adidas sneakers. But if your friends are all Facebook devotees and you want to make the switch to Google+? It makes all the difference in the world.

How many social networks is too many?

The population of a social network makes or breaks your experience using the product. There are only so many networks that one can actively maintain, and sometimes the population of a mediocre website’s network wins out over the higher quality of a website with a smaller community. Sometimes if two products are different enough, people will use both. I believe Twitter and Facebook are an excellent example of this. Sure, they’re both intended for letting the world know what’s going on in your life, but they do it in way that is different enough to allow for both to not only survive, but flourish.

Google+ was–for all intents and purposes–supposed to be ‘The Facebook Slayer.’  It still hasn’t happened, though. The interface is intuitive and user-friendly, but it doesn’t offer enough that Facebook lacks, and Facebook has 10% of the world’s population on its side.

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Grooveshark and Spotify are also examples of very similar social networks in the same space. I began my journey into the world of social music as a Grooveshark user. My girlfriend is an avid fan of the product (I’m actually not allowed to use the word “Spotify” around her) and she was the one who introduced me to the concept of virutally sharing what I was listening to with others. I occasionally use Grooveshark for sharing music with her, but most of the time you will find me on Spotify. Why? My co-workers, my high school friends, and most of my current classmates use it. Instead of sharing music with the handful of people I know that use Grooveshark and privately listening to that one N*Sync song that has been stuck in my head since 2001, I now share my life’s current soundtrack with a giant community of friends. It’s so convenient to know what all of my friends that are Pitchfork-loving indie enthusiasts are listening to, I don’t even care if they know that I played “It’s Gonna Be Me” six times yesterday.

It should be noted that Grooveshark currently has more users than Spotify, but Spotify is growing quickly and it may eclipse Grooveshark in the near future. If not due to Spotify’s excellent integration with Facebook and live stream of friend activity, then very possibly due to Grooveshark’s current legal troubles.

What does it take to be the “chosen product?”

What is it that makes a crowd flock to one product over another? In the story of Facebook vs. Google+, I believe it’s who got there first. Grooveshark vs. Spotify nullifies that argument, though, because in the United States, Spotify was born much later than Grooveshark. I have to admit that although it was aggravating initially, seeing what my friends were listening to in my Facebook feed was what made me begin to use Spotify. I liked its UI and I enjoyed having a desktop client as opposed to Grooveshark’s browser-based client.

So, is excellent integration with a big name what it takes to gain a large user base? I’ve begun to believe so. Who gets there first is important, but allying yourself with a platform that is already large and influential is equally vital. Grooveshark was widely known around the tech community, but not a household name when Spotify launched in the US. Spotify’s ability to get its name out there via Facebook is what catapulted it to 18 million users.

Zynga is another example of a company that has launched itself into success by utilizing Facebook. Zynga’s CEO knew that Facebook could be huge, so he invested in the company and received access to millions of future gamers as his prize. Gmail became such a popular email service in part because it offered advanced features that its competitors did not, but mainly because of its affiliation with Google. “It’s all about who you know” is a common phrase that is heard throughout the entertainment industry and in corporate America. When it comes to the expansion of social web, this phrase has never been more true.

What do you think makes a company rise above similar competitors? A better product? A stellar marketing strategy? Tweet @SamiiRuddy or comment below to continue the conversation.

Samii Ruddy

Samii Ruddy is an undergraduate student at the Syracuse University School of Information Studies. When not obsessing over technology, she can be found reading about politics, collecting comics, or attempting to longboard around campus. You can reach her at @samiiruddy on Twitter.

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  • Great article, Samii! 

  • Ken

    FB rises above its competitors because having higher population is intrinsically better for this product. That acts a huge barrier to entry because few people are going to join a new social network that has only a few of their friends on, not to mention none of the thousands of photos they’ve already uploaded to FB. 

    • Completely agreed. That’s a big part of why I wrote the post. I think it’s really interesting how what is popular is being almost completely driven by users now.

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