e-marketing: e-monopoly

 

e-Monopoly vs e-Competition

 

e-Monopoly

Is Facebook monopoly?

A good way to make a judgment on monopoly is to see if the power is in the users’ hand or in the seller’s hand.

If you don’t buy ice cream from one shop, you can buy one from another one. Does the same apply to social network website service. Not really. Say if you have been using facebook to socialise with your friends and associates.

One day, you account is not there. Can you say, “oh well I can always use myspace”? Obviously not, there is no option for you to migrate you social network from facebook to myspace, meaning you lose everything valuable in facebook. So clearly, they have the monopoly power although this new e-monopoly is presented in a different way form monopoly in traditional business environment.

If there is a anti-trust case against e-monopoly, what would be the solution?

1. Porting. There is not yet any protocol to connect Facebook with other social network websites, so if you leave one you lose all your social networks in that service. You should have the option to migrate your social network from one service to another without interruption. This should be legally guaranteed regardless if the service providers like it or not.
2. Open source. Some may have mistaken Facebook as an open environment. It’s not. There are part of it open only for third party company to develop plugins. Social network service should be required to open at least part of its source codes to ensure porting. In addiction to this minimum requirement, service providers should be encouraged to have a bigger part or the entire source code open, so they can focus on providing better service rather than taking advantage users’ fear that they have to rebuild their social network if they leave one service provider for another.
3. Legal protection for users. The only reason that “The end justifies the means” policy works for Facebook is that there is no effective regulation to prevent its use.

The first two can lead to e-competition instead of e-monopoly. If the social networks in facebook are interconnected with myspace and other social network sites, or competing sites are allowed to develop to share the same social network in facebook (with the users’ permission), then users would have the choice to pick a service they like without losing their social network. In other words, the power is returned to users’ hand.That’s the future of the network society.

As long as e-monopoly exists, online social network is still in its infancy regardless how popular one or two particular services providers may seem.

The third one is only a temporary solution. It merely limit the impact of e-monopoly power on users, not a real solution. The solution is to build an open environment to encourage e-competition.

e-Monopoly vs e-Competition

e-marketing: ebay

ebay has also adopted a counter marketing strategy similar to facebook

see also e-monopoly

e-marketing: facebook

I did a comprehensive study on facebook and wrote a thesis on it last year, so I collected quite of a lot of primary data from a group of facebook users. It’s interesting to look at the study again from an e-marketing prospective.

Facebook was initially marketed to students before opening up to the public and it’s also been marketed to businesses and investors. So there are currently three segments in their target market.

1. End users
2. Investors
3. Advertisers

Word of Mouth is the main way that facebook is marketed. This is mainly done online, like you can enter your friend’s email and invite them to join.

Facebook got a lot of free publicity due to it’s popularity. This applies to all groups.

A seldom known aspect of facebook’s marketing is its counter marketing practice, which I think is the most interesting one of all.

Counter Marketing

We all know that in marketing we must get the product, price, place and promotion (4p) right.

Facebook doesn’t charge users, so the price is right for most people, but not all. Some people would only use facebook if they are paid to do so, some others won’t even use it for money. So the price is not right for everybody.

Put the price issue aside, does Facebook want everybody? Interestingly, no, or at least that’s what appears to be the case.

Facebook has an surprisingly aggressive approach to retrieve its service with no meaningful explanation. That means, after getting everything right in marketing, facebook is happy to allow everything to drop dead just like that.

Imaging applying this to a real estate agent. After doing all the marketing to sell a house, you suddenly give up the sale and refund the customer with no meaningful reason. You also take one step further and decide this customer can never buy from you again.

A bit odd? That’s just what facebook does online. Facebook has a high rate of discontinued accounts, not because users left, but because the company has been systematically closing accounts as a way of manipulating the portfolio of their target users.

When you see a friend turned into a question mark, it’s often not because your friend removed his/her profile photos. The most likely scenario is facebook suddenly removed the account without even telling your friend. There are a large number of people I interviewed have question mark friends in their facebook. It’s reported that facebook did not give explanation to users affected. If there were any explanation at all, it would be the “The end justifies the means” policy that facebook has. What the company did was basically saying, look, your account is closed, so you much have done something wrong, just go to check our TOS (Terms of Services) to find out yourself. Occasionally, an affected user may not buy this, then facebook would make an effort to send out a copy of the TOS. But that’s about it.

When this were translated into real estate business, it would be like saying, well, since we are not selling you the house, you must have done something wrong, just go check the real estate journal and all the law and regulations, to find out what you did wrong. If the customer were foolish enough to do that, it’s very likely he/she would lose interests half way doing it.

This “The end justifies the means” policy offers the service provider or seller more flexibility in modifying their user portfolio with less possibility to be accused for being unfair. It’s reported that facebook has successfully used the policy to filter out some older folks and people with special interests, so they can create what they think is the ideal environment for facebook without being protested by users affected. Anyone read Facebook’s TOS would notice the company is making extraordinary efforts to internalise their ideology to their users: if we close your account, you must have done something wrong, end of the story.

This way of modifying user portfolio has a strong e-business imprint, partly because taking back service is a lot easier in the e-business environment than in the off-line environment. Take real estate business as an example again, it’s not always easy to take the product back as if you leave it too late, the buyer would have signed a bunch of legal documents and possibly already moved into the house. But on facebook, the service can be retrieved any time not matter how long you have been using the service. There is no law suggesting that you are more protected for being a loyal user.

So why companies do counter marketing?

1. Some companies are running on certain ideology which may at time override their financial objective.
2. Modifying customer portfolio is a way of maximizing market reach although there are fairness concerns.
3. A company in monopoly position can use it as a way to modify customer behaviours to better serve the company’s needs rather than the reverse way commonly seen in traditional business environment.

see also e-monopoly