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Facebook isn’t dying anytime soon, Princeton

A man is silhouetted against a video screen with a Facebook logo as he poses with a Samsung S4 smartphone in this photo illustration taken in the central Bosnian town of Zenica, August 14, 2013. REUTERS/Dado Ruvic/Files

Is Facebook headed for the scrap heap?

A study conducted by a team at Princeton University’s Department of Mechanical and Aerospace Engineering suggests the social media giant could lose up to 80 per cent of its users by 2017. The provocative report, released earlier this month, compared social media platform use to epidemiological models – normally used to track the spread of infectious diseases – to explain how users first sign on to and eventually abandon online social networks. Researchers used MySpace, the once-leading social media service that topped out at 75.9 million unique monthly visits in 2008 before eventually fading into irrelevance, to validate their theory.

Not so fast

Please forgive me for not jumping on the Facebook-will-flame-out-like-a-pandemic bandwagon. Although the company faces a litany of challenges consistent with being the dominant player in a fast-evolving space – including waning teen interest, mobile ad conversion and growing competition – a near-total collapse within three years is a bit of a stretch.

The MySpace comparison is particularly laughable. MySpace faded because it didn't change. Its owners at the time, Rupert Murdoch’s News Corporation, invested virtually nothing in the platform after purchasing it for US$580 million in 2005, and allowed it to be eaten alive by more agile competitors. In a market driven by change, it didn’t take long for once-loyal users to jump from the cobweb-bound MySpace to more modern, adaptive platforms. News Corp. unloaded MySpace for $35 million in 2012, and sorry Justin Timberlake, but there’s nothing you can do to save it.

While it’s a virtual certainty that Facebook, which at last count had 1.2 billion monthly active users, will be irrelevant in three years if it fails to keep current, it’s just as true that no social media provider or tech company with any sense of sanity would ever take its foot off the innovation pedal.

Since going public in 2012, Facebook has continued to evolve its offerings to keep pace with emerging competitors like Twitter, Snapchat and Pinterest. It’s updated its web interfaces and mobile apps, beefed up its advertising offerings, and even managed to crack the industry’s longstanding inability monetize mobile usage. The company, which reports its earnings on Wednesday, has been consistently profitable, and has beaten analyst consensus for the past two quarters.

Challenges remain

Looking ahead, however, there's no guarantee Facebook will remain dominant, as teens, the industry’s traditional early adopters and, later, the canaries in the coal mine of eventual decline, are already drifting away. Subscriber growth faces growing headwinds thanks to nearly tapped out mature markets and greater competition for end-user attention in emerging ones. It isn’t a lock that Facebook will own the market in 2017, or any year for that matter.

But drawing a direct line between a statistical analysis of how diseases spread among a population and predicted subscriber levels is preposterous. The study fails to take into account continued investment in the product that drives ongoing demand and growth, and it assumes, wrongly, that Facebook will be just as passive as MySpace was. The study is too simple for its own good, and rightfully earned a snarky response from Facebook’s data science unit.

Ultimately, Princeton deserves credit for turning an obscure, non-peer-reviewed research side project into a near-viral and controversial global story. It generated more than its fair share of eye-opening headlines, and poked the social media bear into responding in kind. Although 2014 is still young, we already have a frontrunner for the tech sector’s PR stunt of the year.

Princeton’s prediction notwithstanding, I’m betting Facebook will still be top of mind in 2017. Whether it’ll be top of the social media heap depends more on its in-market performance than on semi-formed academic research masquerading as fact.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own.

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