Reports of Facebook’s Impending Demise Are Greatly Exaggerated

Like a lot of people, I was bit stunned to see headlines early this week proclaiming Facebook is losing members. In many cases, those reporting this story also were asking whether it means Facebook is heading toward a decline.

My take is that Facebook is in no more danger of going under today than it was yesterday, which is to say that it’s still the social media juggernaut that it has been for the past several years.

The speculation about Facebook’s demise was sparked by Inside Facebook, a website devoted to tracking, analyzing and reporting on every move Facebook makes.

What the Inside Facebook analysts actually were saying was that overall, Facebook membership is still growing, though the pace of that growth has slowed a bit this year. Second, the membership losses — if there were any — were said to be in developed countries like the U.S., Canada, the UK, Norway and Russia.

You Can’t Always Believe the Numbers

Even Inside Facebook cautioned against using its report as hard evidence that Facebook is in decline. It compiled the numbers via a tracking service that extracts information from Facebook’s advertising tool. It then compared those numbers with those from several other measurement services — some of which reported Facebook still gaining users in the U.S.

After making those comparisons, Inside Facebook gave this cautionary advice: “It’s important to look for trends that emerge from multiple sources over the months, not just what a given source says on a given month.”

Even if Facebook is losing members in developed countries like the U.S., it’s merely because the network has reached a saturation point in those countries.

There were 149.9 million Facebook users in the U.S. at the beginning of June, according to Inside Facebook. The country’s total population is 300 million. That means half the people living in the entire country are on Facebook. How many more can be expected to sign up?

A few weeks ago, I wrote about the trend of people defecting from Facebook in favor of smaller, more private networks like Path and Shizzlr, but that movement is not yet strong enough to put a real dent in Facebook’s overall user base.

The fact is, Facebook is still the top dog in social media — and social media is only in its infancy.

Social Media Still Attracts Investment

There are many things not to like about social media, starting with its potential for completely invading our privacy, but none of that seems to bother the average user, and that fact alone will keep this sector flourishing for the foreseeable future.

The only question surrounding Facebook is whether it can remain the top dog as the industry evolves, or if some upstart will come along to present a real challenge.

Some of the biggest names in high-tech, starting with Google, have tried to make inroads in social media with little success so far. Now, we have big telecom firms circling the space. T-Mobile has signed on to start aggregating offers from daily deal sites like Groupon.

Skype, which is being acquired by Microsoft, is working a deal with Comcast to offer video calling via cable TV. How long will it be before they work a social media component into that offering?

Then there’s the usual wave of startups coming on with varied and interesting twists on the social media phenomenon.

Among the most interesting is SceneTap, which is set to launch an application that will give users an inside look at bars via social media. The platform offering this information will use facial detection software loaded in cameras inside the bars to collect information on the crowd.

Through their smartphones, users will be able see how big a bar’s crowd is, assess its makeup — age, male-to-female ratio and other statistics — before deciding whether that’s where they want to spend their evening.

The company claims people in the crowd will remain anonymous and thus there are no privacy issues.

Weird Bordering on Creepy

Upon hearing about this, I had to contact the people behind this application to see how they were going to protect the bar patrons’ anonymity.

“We use facial detection (not recognition) software, which is currently designed to only track gender and age based on specific algorithms,” Cole Harper, SceneTap cofounder and CEO, said in an email response. “It’s a closed loop system and the feed is not recorded. Neither bar owners nor users have access to the video feed.”

While I find the idea of a service like this a bit weird — and bordering on creepy — it’s exactly the type of thing that appeals to hardcore social media users. They happily display personal information about themselves for the rest of the world to see, so why wouldn’t they want an app of this type — and why would they object to being on the video feed coming from the bars they visit?

In fact, when Harper explained the rationale for developing the service, it made perfectly good business sense.

“For the bar-goer, there’s never been a good way to know what’s going on before you get there,” he said. “We surveyed hundreds of people to find out what drives their decisions to choose their hangout spots. It’s important to know what they care about most, and SceneTap incorporates as many of those things as possible.”

Those things include other information besides crowd demographics — and possibly coupons about discounts on food and drinks at the various bars the apps will track. We know much social media users love a good deal.

Long-Term Growth Opportunity

SceneTap is set to launch with an inventory of 50 bars in the Chicago area in July. It then expects to debut in other cities, including New York, Boston, Las Vegas and numerous college town soon after, Harper said.

If this app succeeds, it would confirm my belief that many members of the general populace have no qualms about revealing personal information if they think there’s something in it for them. For some people, the chance to play online games is enough.

SceneTap is betting people can be placated with a guarantee of a live party scene, and maybe a free drink or two.

I don’t know what line needs to be crossed for people to shy away from social media, but I do know we haven’t come close to reaching it.

That’s why I don’t think the folks at Facebook are fretting over what may or may not be a small decline in users, particularly when that decline is only in developed countries. There are still billions of people out there who haven’t had a chance to make virtual fools of themselves. For Facebook — and other social media companies — that’s a long-term growth opportunity.