Is Facebook now “too big to fail”? I don’t mean in the sense that the taxpayer would have to pick up the pieces if it went under, but in the sense that the social networking service has achieved a position of such dominance in the online ecosystem that its eclipse is unthinkable. Is Facebook, in other words, the next Microsoft or Google?

The question is prompted by a couple of milestones recently passed by Facebook. The first is that it now has more than 400 million members. The second is industry gossip predicting that its revenues for 2010 will exceed a billion dollars. Other straws in the wind are estimates of the size of the “Facebook economy” – ie the ecosystem of applications, services and products that has evolved around the service; and the moral panics it now triggers in the mainstream media – a sure sign that they fear a competitor…

By gradually breaching their walled garden, the Facebook founders have managed to avoid the fate of AOL – so far. Their boldest move was the launch of Facebook Connect – which allows external services like Twitter to interact directly with subscribers’ Facebook accounts. What this means is that people can interact with their Facebook friends without being logged in to the site. This has triggered an avalanche of development as companies strive to cash in on the network effects of such a large subscriber base. The metamorphosis of Facebook into a platform on which other people do interesting stuff was not just a smart move; it was also a necessary one, because social “networking” is intrinsically self-limiting. If you have too few friends then people think you’re a loser; but if you have too many, they think you’re either a social slut or a self-publicist. As we know from the anthropologist Robin Dunbar – see My Bright Idea, page 26 – the cognitive capacity of the primate brain limits the size of the social network that an individual can develop. Last year a study by Facebook’s in-house sociologist calculated that the average number of friends in a Facebook network is 120. And when it comes to real, intensive interaction, that number shrinks dramatically. It turns out that the average Facebook male interacts with only four people and the average female with six. Raed more.

Whatever one thinks of Google (and all publishers think about Google), there is little doubt that in just a few years, Google cofounders Larry Page and Sergey Brin have become the most influential people in the publishing industry, at least in the U.S., taking that distinction away from Jeff Bezos.

… Google is now the defining entity in the information landscape.  To flourish, as best as publishers can hope to flourish, it’s necessary to find a place within the Google ecosystem.  There is no world elsewhere, no little pocket of commerce beyond the reach of Google’s audience aggregation, no opportunity to erect protectionist barriers or to appeal to the legacy of one’s own institutions.  To those who resent Google’s huge bulk and ambition, it has to be said:  Get over it.

… With the invention of the motion picture by Thomas Edison, the book lost its place as the center of the media universe.  All other innovations, from radio to television to the Internet, helped to push the book out further.  Now we live within a media landscape that has no center, but which does have a dominant issue, and that is the matter of online discovery, for which search engines, and Google in particular, are the dominant modes.

For publishers, this is the Google century, or maybe just the Google decades, but either way, not to engage this extraordinary organization is likely to lead to obscurity. Read more

Thanks to Eric Rumsey (Seeing the Picture, @ericrumsey) for pointing me this post.