Monday, July 26, 2010

Is the Social Media bubble about to burst?

I've lived and worked through the dotcom boom and bust years in the late 1990's. I was there when the bubble burst and trust me it wasn't fun or pretty. I therefore have an interest in making sure I never experience that again.... so I write this post with one eye on the past and one firmly open in the hope that I am not right about the future (never have I written a post before that I truly hope does not come true).

An economic bubble is caused when a combination of factors come into play at the same time:
  • Hype takes precedence over fact and thought
  • A market fills to the capacity of this hype... not the demand of the buyer nor the quality of the supplier
  • People and companies of varying quality and expertise rush to reinvent themselves, to take advantage of this mythical un-tapped revenue
  • Everyone chases each others tails, thinking that someone else has found the foot of the rainbow (along with the appropriate pot of shiny yellow metal)
And what we now have with Social Media feels a lot like that situation back on the 1990's. A situation that Paul Williams likes to call the Social Media "goldrush"
Social media is our gold rush. With the zillions of tweets, Diggs, blog posts, and Facebook updates all panning for attention I’ve only heard of a few who have ‘struck it rich’ as a result.
Sure its not exactly the same as a dozen years ago.... but in various ways it resembles the time just before everyone started realising that there was precious little client or customer money around to support all the crazy valuations placed on these dotcom darlings. Just before the investors saw the digital emperor actually didn't have many clothes on... and what he did have was pulled to shreds and fought over by too many people on over-inflated salaries and opinions of themselves (along with some rather expensive & illegal habits).

But that would never happen now would it?

We'd never make the same mistakes again....