There is No Social Media Bubble

It’s sexy to say that the recent valuations of social networking companies and platforms is very similar to the dot com bubble valuations. Except, it was easy to see back then ( or is that now?) that commerce driven sites whose success was going to be reliant on transactions is a lot different than social sites and platforms with hundreds of millions of people with millions upon millions of daily visits that are reliant on nothing more than activity, conversations, shares, likes and content creation.

The implicit difference between the 2 bubbles, if we’re indeed going to call this period in tech history as a social media bubble, is that one was propped up on just bad business models and just plain dumb valuations, where the traffic had to buy product or the traffic had to go to a physical location whereas with all the social sites, the action and the CTR’s, its still predicated on traffic, but the traffic doesn’t necessarily have to buy something in order for the network to thrive.

It’s community based and people based and not sales based.  Though the model to make money in social networks is still based on traffic pouring through the site- the need to separate someone from their cash isn’t as large a priority as it was in the dot com bubble days. Big diff