FB Messenger SDK is transforming Facebook from a social network to a market network
Facebook is the largest social network in the world with more than 1.45 billion active users. I believe, it is going through it’s biggest shift in business model since inception in 2004. With the upcoming release of Facebook Messenger SDK, Facebook will change from a social network, to a market network.
Definition: Market Network
Since James Currier released his essay on market networks in 2015 (http://essays.nfx.com/the-last-10-years-have-been-about-social-networks-the-next-10-will-be-about-market-networks/), there are a lot of people thinking about this entire new category of Market Networks.
A market network is a combination of a social network and a marketplace. James Currier is explaining it very precises:
“Marketplaces” provide transactions among multiple buyers and multiple sellers — like Poshmark*, eBay, Uber, Patreon*, and LendingClub.
“Networks” provide profiles that project a person’s identity and then lets them communicate in a 360-degree pattern with other people in the network. Think Facebook, Twitter, GoodReads*,Meerkat*, and LinkedIn.
What’s unique about market-networks is that they:
Combine the main elements of both networks and marketplaces
Use SaaS workflow software to focus action around longer-term projects, not just a quick transaction
Promote the service provider as a differentiated individual, helping build long-term relationships
1995–2005 was all about marketplaces. 2005–2015 was all about social networks, but the next 10 years will be about market networks. The reason why this matters is pretty simple: Market networks have strong competitive advantages, because of the network effects multiplied by social networks and marketplaces.
Facebook Messenger Bot Store
Techcrunch (http://techcrunch.com/2016/03/17/facebooks-messenger-in-a-bot-store/) rumored already in March that Facebook’s messenger bot store could become the most significant launch since Steve Jobs released the App Store.
The engagement and retention rate of Chat / Whatsapp are just stunning. We were already experimenting with Facebook Messenger and Whatsapp for client interactions and experienced stunning retention and engagement rates.
Instead of opening a website or downloading an app, going through some sort of formula, it is much more convenient for users to just chat with a business.
Chat is a much more effective way of communicating in comparison to email (not real time) and telephone (not structured). In retrospect, I believe that most people, will say, that Whatsapp was a very smart acquisition with 19b USD for Facebook.
We believe that there will be no direct communication between client and business in the first place. The reason is that businesses have to focus on their core business most of the time and can’t just spend 80% of their day on the Whatsapp or Facebook Messenger to chat with prospects.
Therefore I believe that there will be vertical market networks under the roof of the general market network of Facebook.
A simple way to structure those verticals could be the categories of Business Facebook is already offering. Like Bars, Libraries, Accounting, Doctors, etc.
The Outlook: Building a giant marketplace
If Facebook gets the launch of Messenger SDK right, there are just endless possibilities to transform into a massive marketplace.
There are just endless possibilities for pricing models to build this marketplace.
- Facebook could offer annual subscription with e.g. $1000 per business
- Facebook could get $0,10 per message to clients and do a 70, 30 split between vertical market network bot and FB platform
- Facebook could get a commission on every sale generated through the platform by building in a sales channel for ecommerce
- Facebook could make the platform for free in the beginning to drive engagement and long-term destroy Google Advertising Model.
If you combine the methodology of Market Networks with the largest Social Network’s announcement of Facebook Messenger SDK and Bot Store, it makes us Developers dream big like when Steve Jobs announced first time the Apple App Store.
Final note: We are hosting a short deep dive about Market Networks in Berlin. Feel free to join us for free in the Factory Berlin.
Topic: Fraudulent behaviour in Market Networks
Factory Berlin | 21th April 2016 | 6PM — 9PM
Register for free: www.marketnetwork.de
