Nothing particularly ground-breaking here. Just some thoughts that’ve come to me in over the last few days on the similarities between the development of the domination of supermarkets in the modern retail industry and that of Facebook and Google in online social media and services. (I’m trying to take away the pressure to write something particularly insightful when I post and accept that it’s ok to make mistakes in public.)
Facebook announced this week that users of online music streaming services like Spotify will soon be share or every song they listen to to Facebook automatically, so-called frictionless sharing. I’ve used a similar service for years called Last.fm which is owned by CBS. Every song I listen in Spotify or my desktop music player foobar2000 to is sent to Last.fm, who then build a picture of my listening habits and recommend music I’d probably like. I’ve found countless new bands this way and it’s only been possible because lots of other people with similar listening habits use the service too. It’s one of my favourite web services.
Facebook has about 750 million users while Last.fm has about 40 million. Facebook is in a very strong position to become dominant in yet another aspect of online life. Facebook already offers many services within one website. which other websites and mobile apps focus entirely on: location sharing (Foursquare and Gowalla), instant messaging (countless services), surveys and questions (Ask MetaFilter etc, Survey Monkey) and so on. A similar observation could be made of Google who have a huge array of products and services.
What strikes me about this is how similar this is to the relationship between supermarkets and independent traders. Supermarkets like Tesco offer everything from fruit and vegetables to laptops. Independent traders sell either fruit and vegetables or laptops. Speaking recently on the ‘Tesco-isation’ of Britain, the Labour leader Ed Miliband commented
I think it is a problem that people think the character of their local high street is being changed and they have no power against big corporations in this country.
In its report The Guardian made the point that
Labour…has to make a judgment on whether the big four [Tesco, Sainsbury, Asda and Morrisons] dominate simply because they are popular and more efficient, or because they can stifle competition and choice.
The same questions need to be asked about the domination of large internet companies like Facebook and Google. Is it in the interests of the online public for small companies offering specific services to be dominated by much larger companies who can offer a myriad of services?
I haven’t completely made up my mind on that yet. The concentration of shopping and online activity on companies who offer lots of services within the same site or building do seem to be the effect of the same phenomena though. I made a similar point a while ago here where I said
In the same way that small, independent shops are going out of business because customers find it easier and more efficient to go to large shopping centres to do their shopping, internet users have turned from complicated HTML sites, to slightly less complicated Myspace pages and finally to the easy-to-use Facebook to create their online identity. What both of these phenomena have in common is a societal shift towards a more market-friendly behaviour.
Supermarkets are more similar to Facebook and Google than shopping centres but my general point is the same. The effects of capitalism of companies driving towards making efficiencies by reducing costs and of increasing profits by expanding into different markets apply to the online world just as they do in the offline world. This is having effects on small internet companies just as it does to small traders on the high street.