Social Media: Is the Bubble About to Burst?

There’s trouble in the world of social media.   The market has become saturated and growth is slowing.  During the last six months, growth in the number of Facebook users in the US and Europe has become stagnant.

It may be the end of the Social Media bubble, or as Umair Haque, London-based consultant and author, in a Harvard Business Review article calls it, relationship inflation.

Gartner predicts that the Social Media bubble will burst sometime between now and the end of next year and that the Enterprise Social Media boom that is following the same path will also pop sometime before 2014.  The Gartner report says that “Vendors in the consumer social network space are competing with each other at a rate and pace that are unusually aggressive, even in the technology market…While substantial excitement will be raised by private firms going public, valuations of smaller independent vendors will diminish as recognition sets in that the opportunities for market differentiation and fast growth has eroded.”

Gartner isn’t the only analyst firm predicting a fallout in the Social Media space.   George Colony, Forrester Research Chairman and CEO,  said that “Social Media is running out of hours. Social is also running out of people… We are in a bubble for social startups.  When it bursts this is going to sweep away some of the nonsense, like FourSquare. We are going to move to a post-social world that’s a little like the Web in the year 2000. A lot of companies launched, but they did not survive.  The next wave of social services will be more efficient and more time-saving.”  Colony cited the fact that 86% of Americans are using Social Media, and the use of Social Media has become addictive to the point where it is now consuming more time than people spend communicating by phone or exercising.  People have reached a limit on the amount of new time they have available to allocate to more Social Media.

The bubble may break soon, but is that necessarily bad?  Your answer will depend on the extent of  your involvement with the technology, but technologies have life cycles and Social Media is no different.  Broken tech bubbles lead to newer and more mature technologies, and no doubt, it won’t be any different this time around.