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Facebook is the nicest company in the world. When logging in this morning, I got a pop-up asking me to “add your phone number to help secure your account and more”. Nice people, very thoughtful.
There is one phrase from that sentence that intrigues me: “and more”… So not only can they secure my account by having my phone number (which raises questions by the way) but they can also do…. More. Exciting! Will a soft and genteel voice call me every morning to describe all status updates on my timeline? Or suggest new music I might be interested in? I expect nothing less from a giant like Facebook.
You’ll all know what I’m referring to: Facebook bought Whatsapp. For $19 billion. For that amount they could’ve financed half of the 2014 Olympic Games in Sotchi. They also could have bought Instagram 19 times. But still. So why did they really do it?
Why Facebook Bought Whatsapp
Let’s look a little closer on Why Facebook bought Whatsapp. And while we’re at it, why they bought Instagram as well. First of all: market penetration.
1. Big, Bigger, Biggest
Late last year, word came out that Facebook was losing young, US-based users. Apparently, young people were leaving Facebook and going some place else. In my opinion, Facebook made a smart move to buy Instagram because that medium is popular amongst youngsters. Winning back lost ground.
Buying Whatsapp is similar to this move: buy a big medium that is popular amongst young people (Whatsapp has 450 million users, the majority of which are youngsters).
Business wise, it’s a strategic move to not be big, but to be the biggest.
2. Data mining
How do you win back 19bn dollars on a service that is either free, or only costs one dollar per year? Advertising in Whatsapp? Unlikely, as Facebook announced that they will not do that. Asking for a higher subscription fee? Possible, but not very likely as most users of Whatsapp are youngsters that don’t like to pay much for such a service. So how can Facebook win back $19bn? Data mining is an option; collect as much data as you can to target Facebook users with content they appreciate the most. Just imagine Facebook suggesting an album that you love, right after you mentioned the band’s name on Whatsapp! In marketing terms this is called ‘the ultimate user experience’. You could also call it ‘having so much data that privacy itself can possibly not be secured’. I don’t think the ‘and more’ phrase above refers to privacy…
Benefits for the music industry
First of all, Facebook has now set a stepped into a different part of social media. Whereas Facebook is being used for sharing information and updates, WhatsApp is a real-time messaging platform. WhatsApp, from that perspective, shows more similarities with Twitter than Facebook itself. This step into another usage type of social media can be seen as an opportunity for music industry. Facebook hereby gets data on large groups of young users. What if bands could get access to metrics of WhatsApp usage? If metrics show that certain part of a live show has more interaction between WhatsApp users, what if this data can be used to tailor Facebook messages? If bands and artists have better insights in how their fans use social media, fans can be approached in a better way.
Another benefit from Whatsapp & Facebook moving closer to each other could be sharing of musical preferences. If a Facebook status update about what playlist a person is listening to can be transferred to WhatsApp, what is to prevent it from going viral? We all remember Harlem Shake, don’t we? Since Whatsapp is more of a messaging service, opportunities for music industry rise as Facebook now has access to a much bigger group of people from different ages and demographics. If one medium enhances the other one, cross-media marketing campaigns can be used to make music go viral.
If big loads of data can attribute to anything, it’s certainly to the advertising business. Big companies that advertise on Facebook can be offered detailed information about users and their behaviour. Which means ad targeting more accurately and in the end less disturbing for users; they will only be targeted with ads that they are interested in, based on collected data. It could be a way to win back the large investment.
This, in fact, can be seen as an opportunity for music industry. More relevant data means targeting your fans directly; it can possibly enhance the user experience on Facebook. Imagine that you can make your Spotify playlist visible for the right person, the one that enjoys your music? That way, and ad is not annoying, but is adding value.
‘Because we can’
That’s possibly another reason why Facebook bought Whatsapp. Simply because they can; they are worth the 19bn to do so. On weekends, I like to go shopping with my family and buy nice stuff, because I can. On a Wednesday in February Mark Zuckerberg went shopping and bought Whatsapp. Because he can.
So add your phone number to secure your account…. And more. And especially focus on ‘and more’ because More you will certainly get. Security, user experience or privacy? Only time will tell.
Bas Kruijssen is new media manager for Black Hole Recordings, the Dutch dance music label co-founded by superstar DJ, Tiesto. He’ll be back on midemblog soon; meanwhile, follow him on Twitter here; and watch his “Who needs labels?” interview here!