Netflix (NSDQ: NFLX) could double its own projected growth rate by feeding out viewers’ usage habits to Facebook, Netflix CEO Reed Hastings, speaking at F8, said Mark Zuckerberg promised him. How about the rest of us?
Facebook’s F8 announcements were all about getting users to share massively more of their lives, with far greater granularity than just “Like” – their cooking, running, watching, reading, playing and listening habits; any verb a developer cares to commandeer, ad infinitum, forming an ultimate lifestream.
Though media partners mostly won’t function on or be delivered through Facebook, as had been speculated, the promised benefit to them is that each of these new shared mini-actions constitutes a referral to a potential new customer. Every time I see a friend is listening to a song in Rdio, I am more likely to become a Rdio user; every time I see a friend is reading a Guardian story, I might be inclined to read the same story, the theory goes.
“This next wave of companies understands that, if you can help people discover an order of magnitude more content than they could before, that enables all kinds of new models to work, whether ad-supported or subscription,” Zuckerberg said. “These companies are not just rethinking the experience of watching content with your friends. They’re rethinking these entire industries.”
On this, Zuckerberg has drunk the Kool-aid brewed by Spotify CEO Daniel Ek, who has long said music, for example, is inherently social and supremely sharable.
“People discover music through their friends,” Ek told F8. “Because they’re social, they’re more engaged. Because they’re more engaged, they’re also twice as likely to pay for music. Social discovery on Facebook means we’re bringing people back to paying for music again.”
That’s an interesting sell. At the least, the whole idea promises new-wave services like Spotify a huge shop window – scale enough that they have a greater shot at making their own numbers stack up.
But Netflix CEO Hastings has drunk this Kool-aid, too. He told F8 how he had ignored viewing recommendations made to him by his own service’s in-built engine several times over, but suddenly watched the same show when he saw a Facebook contact had seen it. “My friend trumped the algorithm,” Hastings said.
http://player.soundcloud.com/player.swf?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F23951627 Spotify UK MD Chris Maples by robertandrews
Studies on ecommerce show the same effect – time and time again, product reviews by our friends more heavily influence our purchasing decisions than those we have discovered through retail marketing or via strangers’ reviews. “More people will discover Spotify through Facebook,” Spotify UK MD Chris Maples told paidContent following F8.
“Truly social experiences create inflection points in the growth of companies,” Facebook’s EMEA platform partnerships director Christian Hernandez told paidContent following F8.
“Sharing with your friends generates an amplification. When more of your friends see it and it generates clicks back to a site, that’s of value to a media company. We’re going to significantly increase the amount of sharing.
“Algorithmic discovery worked very well in a world where links were the dominant force. When you overlay social component, you begin to see a new way of discovery which, in the real world, happened already – you bought something at Topshop or a book, movie or CD because your friend recommended it.”
Hernandez says The Independent newspaper website had previously already seen a 600 percent traffic hike from Facebook after earlier introducing Facebook features. For the new features, Facebook claims dozens of partners in each of video, music and news.
http://player.soundcloud.com/player.swf?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F23952392 Facebook’s Christian Hernandez by robertandrews
For users, the new-style referrals will be a barely avoidable assault. Though media operators, who will develop the apps that connect their services with Facebook, can set their default sharing action to on or off, and users naturally can do the same, fellow friends cannot switch off the kinds of shares they see from buddies. If Laura wants to set Mog.com to share out her every listening habit, I have see a live list of every song she is playing…
That is one of the key messages from F8 – Facebook wants to enable apps to share minute habits automatically, after gaining initial permission, rather than ask permission each time, massively multiplying the subsequent number of shared actions.
“You’re in the best position to tell what stories they want to tell,” Facebook’s CTO told developers at F8. In fact, recipient users might well wonder if that honour shouldn’t be bestowed on them. At least these entire activities are fed primarily out through Facebook’s new real-time “ticker” (a live, chat-like module, which can be hidden) and not through its core news feed, where they might become interminable.
The algorithm is not dead – Facebook will use code called GraphRank to determine which of these activities should make it in to news feed. And sharing users can also choose with whom they share different types of content habits. “My running app (Nike+), I share with my running buddies; my music app, I share with my music buddies,” Hernandez told me.
What is in all this for Facebook? The whole idea takes gives the network a far deeper understanding of users’ behaviour, makes it look far more accomplishes and so appears to put it on a firmer footing toward maturity. But there is no obvious direct commercial model here beyond the announcements’ deepening of the existing Facebook experience.
There was no suggestion Facebook will benefit financially from referring new customers to media subscription services, for example. “It’s not a commercial decision,” Facebook’s Hernandez said.