Facebook Going the Way of Myspace?

Princeton researchers say the end for the social network is nigh.

Feb 13, 2014 at 7:37AM

In late January, two researchers from Princeton University's mechanical and aerospace engineering department presented their findings that Facebook (NASDAQ:FB) will lose 80% of its users by 2017, causing the site to be largely abandoned.

In a paper with the title "Epidemiological Modeling of Online Social Network Dynamics," the two authors hypothesized, "Ideas, like diseases, have shown to spread infectiously between people before eventually dying out, and have been successfully described with epidemiological models."

Continuing this line of thinking, the paper alleges, "Ideas are spread through communicative contact between different people who share ideas with each other. Idea manifesters ultimately lose interest with the idea and no longer manifest the idea, which can be thought of as the gain of 'immunity' to the idea."

The researchers went deeper into the disease comparison by pointing out that "infection" begins when people sign up for the site and spreads from person to person by word of mouth, much the same way that a disease does. Their research model, known as the SIR (susceptible, infected, recovered) model of disease, creates equations to map the spread and recovery of epidemics. They used the publicly available Google Trends service to search query data to provide the data necessary for their model. The charts provided in their paper show that the number of times that "Facebook" has been typed in Google as a search term peaked in December 2012 and have trailed off ever since.

In addition to the consistent decrease in the term "Facebook" being used as a search query in Google, the duo used the same modeling on Myspace, suggesting that its lifecycle is a reasonable comparison for other social networks. Myspace was founded in 2003 and quickly grew to its peak of 300 million registered users by 2007. After 2007, it started to lose users and eventually sold for fractions of its original valuation.

Flawed logic

It's easy to go into plenty of detail about how this paper is not the best example of scientific research that has come out of Princeton based on its source of data, questionable methods, and its decision to decide that correlation guarantees causation.

However, it's much simpler to take a quick look at the numbers and a simple eyeball test to comment on the validity of the conclusions drawn by these two Princetonites.

The biggest driver of many technology industries today is the mobile technology category. Every day, more and more of our technological lives, and our lives in general, are being driven into this area via smartphones, the cloud, mobile apps, etc. You name it, it's probably being affected by mobile technology.

According to Facebook, there are 870 million people (78% of their daily users) who access the site via their smartphones each month! This has a huge affect on who is typing it into the Google search bar. The average person either has the Facebook app on their phone, has it constantly open on their browser, or just plain accesses it exclusively from their mobile device. Even those who access the social networking site from their computer often have the site bookmarked, saved in their address bar, saved in their head, or have never been on it, but still know the correct address. I would expect that hardly anyone actually searches the site's name via Google at this point.

Another telling number is that Facebook's monthly active user numbers have been steadily increasing and is sitting comfortably at nearly 1.2 billion in October. That is slightly more than Myspace ever had. As more and more people in the developing world get consistent access to the Internet, this number will only increase.

The second large indicator that Facebook is not slowing down any time soon is qualitative, rather than quantitative: the eyeball test. If you want to get in contact with someone these days and do not have his or her contact information, how do you get in touch? If you are going on a date with someone or interviewing a person for a job, how do you research them? If you are looking to sell something, where do you post it? Facebook is the overwhelming answer to all of these questions and many more. It is clearly still a very large part of our lives today. It permeates many aspects of the things we do on a daily basis.

Regardless of the discussion of whether the development of Facebook as a large part of many of our lives is good or bad, or in what ways we use it, use is use. All signs continue to point to the social networking site as a consistent element of many lives and not at all on the decline. Investors and those in business should act accordingly. And the researchers should go back to the drawing board.

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Karl Avard has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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