Yahoo’s recent $1.1 billion deal to buy social-blogging service Tumblr wasn’t just a high-priced bid for a bigger audience. It’s another sign of a recurring cycle in the world of social media, where big sites struggle to stay hip as they get older and more mainstream, while newer ones emerge to grab the spotlight.
Younger Internet users, in particular, are “just super finicky,” said Gene Munster, a veteran tech analyst at Piper Jaffray. “They get a little bit tired, and they start looking around for what’s new.”
Users who grow tired of the biggest social platforms, like Facebook or Twitter, don’t have to look far for alternatives such as Pinterest, Path or Foursquare — newer social networks that now draw millions of regular visitors. There are also upstart mobile applications that have caught on with teens, from messaging programs like WhatsApp to video-sharing services Vine, Tout and Keek.
None of them is likely to become a giant overnight. But their popularity is a constant reminder of the topsy-turvy nature of the Internet industry, where today’s leaders could be tomorrow’s MySpace, a once-reigning social network that has slipped into obscurity, eclipsed by newer rivals. It also makes them targets for bigger companies eager to avoid that fate.
Most Read Business Stories
- More WA renters are overcharged for damages, advocates say, and there’s little tenants can do
- Redoing Pacific Place as offices is only the start to a downtown comeback
- This company was just sold for $3 billion, and hundreds of employees are getting a cut. Some will get $800,000
- A man walked down a street with 99 phones in a wagon. Google Maps thought it was a traffic jam.
- How to reduce taxes when you sell your home
Some newer services offer a more visual and creative experience than Facebook or Twitter, analysts say: Tumblr and Instagram, the mobile photo-sharing app that Facebook bought last year for about $750 million, allow users to tinker with images and share them with friends.
Others offer a specific, unique experience: Pinterest users “pin” photos and Web links on a visually-striking home page. Reddit lets users post stories and videos that are then ranked by other users. Path, meanwhile, positions itself as a private network for people who want to share only with close friends.
And some new social apps are a threat to bigger companies partly because they’re so easy to adopt: It’s a simple matter for teenagers to download a new smartphone app that provides an entertaining way to share a short video clip with friends, or send a text message that’s punctuated with cartoon images, said analyst Richard Greenfield of BTIG Research.
With so many free apps available, Greenfield added in an email interview, it’s difficult for one or two companies to dominate the social-media business.
Tumblr and some other services are beginning to sell advertising or other products, but most are still concentrating on building features and adding users, rather than worrying about making any money. By contrast, the larger, publicly traded Internet companies are under pressure to do both.
Yahoo, in particular, has struggled with shareholder concerns about declining revenue as online advertisers have shifted to newer Internet platforms such as Google and Facebook. Yahoo’s deal to buy Tumblr is widely viewed as a move to attract younger, hipper Internet users who like to create and share content on the blogging site.
Google’s business is strong, thanks to its dominance of the Internet search business. But its Google+ network has gained little traction against Facebook. And while Facebook is the world’s biggest social network, with 1.1 billion active members, there are signs it’s losing appeal for some younger users.
“It’s boring. I don’t really enjoy checking it anymore,” said Bo Field, a 15-year-old Palo Alto (Calif.) High School student, who complained that his account is cluttered with too many posts and updates.
“Facebook is kind of a big drama pool,” added his friend, Kevin Bowers, also 15, although he said, “It’s something we use just to make sure you don’t miss anything.”
A survey of 5,200 teens conducted by Piper Jaffray this spring found 33 percent listed Facebook as their “most important” social network, down from 42 percent in the fall. Twitter, Instagram and Tumblr all showed gains in that period. Other services mentioned by teens included Kik for messaging, Snapchat for sharing photos and Vine for sharing videos.
Another study released last month, by the Pew Research Center, found teens complaining about the increased presence of adults on Facebook, including teachers and relatives, as well as unwanted social pressure to keep up with cliques and gossip online.
Teens said they had more fun using photo-sharing apps such as Instagram and Snapchat, according to Pew researcher Mary Madden. Facebook has let Instagram continue operating as a stand-alone service, since buying it last year, while promoting its use to Facebook members.
Researchers on both studies emphasized that the results don’t mean Facebook is losing its audience overnight. But Munster added that for Facebook, “it’s a danger sign, longer term. Eventually, the youths become adults. That’s why Facebook bought Instagram. They saw this trend.”
More than one site
Many adults already use multiple services for different purposes, such as Facebook for friends, Twitter to follow celebrities and LinkedIn for professional contacts, said Brian Solis, principal analyst at Altimeter Group. But when there are so many alternatives, he added, “Facebook is going to have to compete every day for our attention.”
Twitter recently sought to expand its appeal by developing its own music service and buying Vine for a reported $30 million in the fall. The Vine app lets users upload and share six-second video clips in a format that caught on quickly with Hollywood celebrities and Internet hipsters alike.
After Facebook and Twitter, which claims about 200 million monthly active users, one of the fastest-growing social networks has been Pinterest. With nearly 50 million monthly users — including many higher-income women, who are a desired target for advertisers — San Francisco-based Pinterest said its most recent round of venture funding valued the company at $2.5 billion.
At that price, some experts say, Pinterest is more likely to go public than be acquired, although the company has not signaled any plans.
But others are likely targets. “We will constantly see larger businesses attempt to gain relevance by acquiring up-and-coming social networks,” Solis said.