What Happened to the So-Called Facebook Killer “tsū”

The Rise and Fall of tsū aka the Facebook Killer: A Cautionary Tale in Social Media Disruption
tsū
tsū Logo

The Rise and Fall of tsū, aka the Facebook Killer:

Sharing Ad Revenue with Users

What differentiated tsū’s model was not the business model itself but, instead, the sharing of advertising revenues with its users.

While established social networks like Facebook and Twitter retained all ad revenues, tsū incentivized its users by paying them a cut from the ad revenues their posts generated. This model was intended to encourage content creators to engage with the platform actively.

Monetization over Authentic Engagement

The revenue-sharing model introduced by Tsū seemed great at first glance. Still, in the end, it had an unintended consequence that altered the way users interacted on the platform.

Instead of getting engaged on the platform to make real social connections, many users seemed more focused on the money-making possibilities.


tsū
network founder Sebastian Sobczak.

This made for an experience that was all the more transactional rather than less authentic compared with other social networks, where people interact for social purposes. The emphasis changed from organic connections, the lifeblood of any social media platform, to monetization.

Challenges Faced: Established Market Penetration

tsū had the nearly impossible task of breaking into an industry where the players were already giants: Facebook and Twitter. What these established players had uniquely was a large user base with strong network effects.

tsū needed to resort to something so extreme like actually paying the users and directly paying users illustrates the giant problem that this new social network faced in obtaining more than a nominal user base.

Sustainability Issues: The Price of the Paying User

With time, the business model of tsū, which was footing the bills for user interaction, finally proved to be unsustainable. As user engagement increased, so did the costs for tsū. The more the users got to interact on the platform, the more they had to pay.

Social Media giant :Mark Zuckerbergs' Facebook
Social Media giant :Mark Zuckerberg’s Facebook

In general, this put a heavy financial burden on tsū’s resources, such that, in the long run, it became unsustainable to maintain operations. The money made from ads was finding it hard to match with the growing costs that were in the form of user payouts.

Network Externalities: The Benefit of Established Networks

The broader notion of network externalities in social media can be used to explain why tsū has been struggling for traction. Network externalities are those where the value of a network is directly proportional to the number of people who are its users.

It is also in competition with massive established networks like Facebook and Twitter, which take advantage of these significant advantages of such enormous user groups.

Users are more likely to stay on platforms where their friends, family, and relevant connections already exist. This makes it hard for new entrants, such as tsū, to get members and build a significant user base.

Reason for Shutdown: Financial Shortfall

Ultimately, tsū closed in 2016, only two years after its launch. It closed primarily because it failed to secure additional funding.

Despite the early buzz and interest that rose from investors surrounding tsū, the site simply did not provide a unique answer for the long term that satisfied many of the factors that investors often look for.

Financially falling short partially in recent years, from sustainable cost issues from paying users and the difficulties in competing against already accepted networks, chalked up the demise of tsū.

Conclusion:

Tsū’s rise and fall is a cautionary tale for aspiring social media disruptors. Its monetization strategy for people was groundbreaking, yet the company encountered insurmountable hurdles in attaining user engagement, sustainability, and increasing competition.

The struggle of tsū points to an empirical fact: the huge barriers to entry in the social media market, where entrenched players are greatly favored by network externalities.

As new platforms emerge, this is a lesson from Tsu, meaning they have to create something new and different but in a way that is also sustainable in the long run.

Tsū’s story is a reminder that the goal of changing the landscape of social media is hard work involving more than just the latest idea but instead a complete understanding of user behavior, market dynamics, and long-term viability.

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