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The Rise & Fall of Another Social Media Platform
Threads seemed to have all the ingredients for success but hit a bump in the road just weeks after its launch.
Have you ever wondered why some social media apps take off like wildfire while others struggle to gain traction? In today's interconnected world, the success of digital platforms hinges on a concept known as network externalities. Threads, the new social media app from Meta, seemed to have all the ingredients for success but hit a bump in the road just weeks after its launch.
So, what exactly are network externalities? It's a simple yet powerful idea. As more users join a platform, its value increases exponentially. When it works, it creates a self-reinforcing cycle of growth. As more users join a platform, it becomes more valuable, attracting even more users. Threads leveraged this concept right from the start, tapping into the extensive user base of Instagram to quickly scale up its platform. That growth was enough to scare Twitter’s owner, Elon Musk, into threatening legal action.
To fully grasp the significance of network externalities, let's reminisce about our first cell phones. If you were among the first in your circle to own one, the value was limited, with few people to connect to. But as more friends got their phones, the value soared, thanks to network externalities at play.
Threads masterfully capitalized on this concept, tapping into Instagram's vast user base. With pre-existing connections and interactions, it felt like joining a party where everyone already knows your name - an enticing proposition for users. No more awkward introductions that would have prevented you from signing up in the first place.
But here's the catch - network externalities can only take you so far. It can result in a large user base looking around and wondering why they’ve all gathered in this one place. Threads' initial success was impressive, and I don’t want to diminish that. Unfortunately, its user engagement soon plummeted. The problem? The app lacked unique features to keep users coming back after they signed up. Analysts last week reported that the site saw a 50% decline in engagement among its 100 million users.
Imagine stepping into a bustling party with all your friends. Everyone seems to be talking about this new social media app, Threads. Curiosity piqued, and you decide to join the excitement. After all, "all your friends are using it" - a classic case of network externalities at play. As the initial buzz fades, you start to realize that Threads isn't quite what you expected. Sure, your friends are there, but the experience feels somewhat lackluster. Network externalities can bring in the masses, but they alone won't keep users engaged.
Here's where product differentiation matters. To stand out in a crowded marketplace, Threads needs to offer something unique, something that sets it apart from its competitors. Its blend of Twitter and Instagram features isn't cutting it. Social media platforms thrive on user interactions and connections, so a distinct value proposition is essential.
It's not enough for everyone to be there; they need to enjoy their time on the site compared to other platforms. Many users found themselves spread thin across social media platforms that all had a seemingly identical user interface without any real differentiating features that made the site superior to Twitter.
Mark Zuckerberg's promise of big changes to Threads acknowledges this issue. But will it be enough to lure back users who had a disappointing first experience? It’s not really fair to compare a brand-new social media site with one that has been around for 15+ years. The app currently lacks direct messaging, a "followers only" timeline, trending topics, and hashtags - all features that users expect from social media platforms like Instagram and Facebook, Meta’s other platforms.
Threads' massive initial growth was indeed fueled by network effects, but that wasn't enough to retain users in the long run. To be a true "Twitter Killer," Threads needs those essential features to win over users. Other sites like Mastodon and Bluesky are trying to take over the space, but can’t leverage the connection to a site like Instagram.
Let's not forget the broader market for social media. While there are only a few micro-blogging sites like Threads, there's a plethora of options for social connections, each serving different purposes. There hasn’t been a recent survey of social media usage among adults in a few years, but a focus group of highly engaged social media users led by the Pew Research Center included a quote from one woman in her 20s that accurately summarized the distinctions:
“Twitter is more serious for me. Snapchat is a playground. We just get on there and post a bunch of goofy, great filters. … Then Facebook is more of a neighborhood or a village in a way. You can create your own set of, I guess, people that understand you. … Instagram … is a picture book. … [Twitter is] politics and world events. I get a lot of news on my Twitter.”
To truly differentiate itself, Threads might consider offering unique differentiating factors that would allow it to stand out among other sites. It likely depends on which demographic Threads is targeting, but it could create dedicated communities based on specific topics and interests, or incorporate live audio conversations to capitalize on the growing popularity of audio-based social media experiences.
While adult social media usage has been relatively flat or moderately increased across platforms over the past decade, the same isn’t true for teenagers. The market for social media platforms among teenagers can change dramatically. With a recent focus on short-form videos, sites like YouTube, Instagram, and Facebook have already undergone updates to attract users away from TikTok. It’s not clear that the same feature on Threads would be all that appealing.
And that's where the story stands now. Threads is at a crossroads, facing the need to reevaluate its features and carve out a unique space in the dynamic social media landscape. The rise of Threads was a fascinating example of network externalities, but it’s current status is an important reminder of product differentiation. It was a fun couple of weeks for social media users, but only time will tell us if Threads becomes part of the regular rotation of morning check-ins.
Mark Zuckerberg is worth an estimated $104.3 billion, making him the 8th richest person in the world [Forbes]
Threads reached 30 million users just 16 hours after launch [Forbes]
Facebook bought Instagram back in 2012 for $1 billion, the equivalent of about $1.35 billion today [The New York Times]
Teenagers mostly commonly use YouTube, but 62% of teens say they use Instagram [Pew Research Center]