Is the social media sector in crisis?
Posted by Neil Davey in Social CRM on Mon, 19/04/2010 - 11:21
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- AOL is searching for a buyer for Bebo - but could scrap it altogether.
- Twitter has added sponsored promotional tweets to its search listings.
- Ning is scrapping its free service and making staff cuts.
- Is it crisis time for the industry or merely the first signs of rationalisation?
Bebo’s in danger of disappearing, Ning’s scrapping its free service, and Twitter’s risking the wrath of users with its ads. Is the social media sector in crisis? Or in the process of rationalisation?
When social network Ning announced that it would be cutting staff and its free service at the end of last week, it topped off a tumultuous 10 days for the social media sector.
The first drama came courtesy of beleaguered social networking business Bebo, revealing its precarious position in an email to its 40 remaining employees in an email. "As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success," wrote Jon Brod, head of AOL’s start-up acquisition and investment unit.
"Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking."
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