All Hail the Category-Kings

All Hail the Category-Kings

Two cases:

Snapchat’s latest big redesign is really, really unpopular. Remarkably, a million people have signed a petition calling on the company to roll back the change, which separates branded content—including that from celebrities and “influencers”—from regular people’s updates. Snapchat says the change was important in order to combat fake news, but users say the new app is difficult to use (Fortune/BBC)

Facebook said it would prioritize local news. In yet another announcement about its News Feed, the company said users will see more posts from local sources “so that you can see topics that have a direct impact on you and your community and discover what’s happening in your local area,” as part of its ongoing efforts to “prioritize high-quality news.” (Quartz/Fortune)

Discussions

Starting with Facebook, I am not really sure it is its decision to make when it comes to contents for users: local vs. nationwide vs international. There is no correlation, in my opinion, between local news and high quality contents. Also, there is no reason why everyone should care for local news. In America, it is more significant unlike Nigeria where we do not have local news. Guardian is not local news; local news would have been a newspaper from your village or local government.

Now SnapChat has got one million people asking it to revert to old design. Yet, the company is saying it has made up its mind on what it wants to do. It is like, there is nothing you can do about it: get used to our new design.

This is the fact: the web business is unique because of network effect which makes it harder for competitors to break in. Social media giants can experiment with users because there is a huge switching cost since most times, there are no alternatives or substitutes. It is either you are in Facebook, for what it offers, or you are not interested in that particular category of service. You have no alternative for Twitter. So, it goes. Even though, it costs nothing to open another service, the reality is that you have none as a substitute.

In economics, we talk of substitutes [good for the old industrial age business]. The web offers us so much in terms of unconstrained distribution, and the category-kings have built products which deliver value that finding substitutes means giving up on the specific categories. Yes, you do not really have substitutes at category levels. That explains why SnapChat could boldly ignore a petition signed by one million of its users. An industrial age business would have come out with an apology, but in the world of web, it is not necessary. If you are a teen and you do not want to use SnapChat, it means you are leaving the category since Facebook is not SnapChat.

These firms have found success and they know they are positioned to do whatever they want. A U.S. telecom company, T-Mobile, employs 300 people purely for its social media management, notes Fortune: “The company’s social media team has 300 people committed to marketing and responding to customer concerns”. You do not commit such resources when you do not see value in that ecosystem.

So SnapChat and Facebook can readily impose their understanding of the world, because they have used Inversibility Construct, and they got everyone hooked. When that happens, you have category-kings in the land. When subjects revolt, not all kings change hearts.


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