Just as water was the lifeblood of agriculture, content—photos, videos, links, status updates, and check-ins—is the lifeblood of the social Web. And those who would rule our digital worlds seek to have content pool up and flow at their command.

(Yes, in most cases, "content" is a loathsomely generic term. But it's hard to think of a better catch-all description that embraces all the varied material that flows between the Web's social services.)

Like water, the torrents of data generated by the billions of people online can never be fully controlled. But they can certainly be harnessed. And every node of connectivity between these networks is a potential flashpoint for border skirmishes.

Looked at in this light, it makes perfect sense that Tumblr went to Yahoo for $1.1 billion. Thanks to years of neglect of properties like Flickr, Yahoo was a social backwater. Without a pool of social updates to call its own, Yahoo would always be subject to the whims of Twitter, Facebook, and the rest. Now it is part of the flow.

Battle Lines

Just like water in the physical world—a scarce, well-guarded resource—these flows of content can turn contentious.

Just ask Instagram, which saw Twitter cut off access to its list of friends, and retaliated by requiring an extra click to see images. Or Path, which lets photos flow to Facebook but had the return flow abruptly (and quietly) cut off earlier this year. Or how, last year, Twitter snubbed Linkedin, a longtime partner, restricting access to the tweets that used to show up on users' online resumes.

To begin to understand these conflicts, it helps to start with a map. For that, we're borrowing a concept from hydrology—that of sources and sinks.

Sources And Sinks On The Social Web

Content must begin somewhere. These points of creation, like the upload of a YouTube video or the snapping of an Instagram photo, are sources.

It must likewise end up somewhere. The nexus of creation is not always the natural place of consumption. For example, on Path, the mobile-focused social network, a substantial number of users opt to share moments on Twitter, CEO Dave Morin recently told me. That may seem odd, considering Path's limitations on the number of friends you can add, but it allows users to reach more people with updates that aren't especially private.

And a large reason why Instagram became so big so fast—and was courted by Twitter before it was bought by Facebook for a billion dollars—was that it was so easy to share photos not just on Instagram but on those larger social networks. By establishing itself as a source to those sinks, Instagram emerged as a powerful pool of visuals in its own right. 

Foursquare, which began as a source for location check-ins posted out to Twitter and Facebook, may now be more important as a sink for other apps' check-ins—in particular, Instagram, where many photos are tagged with a location derived from Foursquare's vast database.

Precisely because these flows have value, they are points of leverage and vulnerability. Yet they also show the social Web's fragile interdependence.

Twitter And Facebook: A Sinking Feeling

The world's most important social networks have long battled over their lists of friends. Early on, Facebook invited Twitter to be one of the first apps on its platform. But in 2010, when Twitter added a feature to let people find their Facebook friends on its information network, Facebook abruptly cut it off. Since then, the two services have engaged in a tit-for-tat sparring.

After Facebook bought Instagram, Twitter cut off the ability to find friends on Instagram. Facebook did the same when Twitter launched Vine, its short-video app.

Yet while they fought over friends' lists, they never cut off a mutual flow of status updates. You can use Twitter to update Facebook—and, confusingly, you can opt to automatically send your public Facebook statuses out on Twitter, too. That's because while each service prefers to be the ultimate sink for content, it doesn't want its rival to become a more powerful source.

LinkedIn, lacking the leverage over Twitter that Facebook holds, went from being what Twitter called "the perfect combination" in 2009 to something incompatible with "delivering a consistent Twitter experience." After some worries that LinkedIn would feel less lively without tweets, the rift actually worked out for its media ambitions. It turns out that many tweets weren't that professional in nature, and LinkedIn has moved from being a sink for tweets to a purer source of work-related information. Which, of course, it is now trying to have flow to more sinks.

There are more twists and turns and intriguing dead ends in these flows of content. Did you know, for example, that you can't pin updates from Facebook to Pinterest—even if they're posted publicly on a brand's Facebook Page? Or that Google+ is a virtual island, rejecting crossposted material as "social spam"?

Here's where the Web's content flows stand as of 2013. For simplicity, we haven't shown every possible connection. And events may swiftly make this map outdated. Last year, it certainly looked different. Next year, we'll see new linkages and blockages. Like a fast-moving river cutting through the landscape and reshaping it as it goes, the only constant we can expect is change.

(Click on the image for a larger version.)

Photo by Saad Faruque; infographic by Madeleine Weiss for ReadWrite

Still, that's a lot of money, and with the new cash stash, the company is shifting its business focus away from check-ins toward selling its trove of user location and behavior data to businesses, ad exchanges and others. This may be the company's last, best chance to succeed. 

What went wrong?

Here are five primary reasons why Foursquare failed to capitalize on the disruptive market potential of social-local-mobile — despite its early mover advantage.

1. Gamification Doesn't Scale

From the beginning, Foursquare incorporated gamification elements deep within the user experience. Users could earn virtual points, garner "badges" and become, say, the "mayor" of the local donut shop. 

Gamification, according to Wikipedia, is the use of "game thinking and game mechanics in a non-game context in order to engage users and solve problems." But Foursquare showed that gamification may not terribly relevant to smartphone users — nor much of a revenue generator. In its latest iteration, Foursquare has shifted the user focus away from the app's traditional gamification elements to make local search and discovery more prominent.

2. The Business Model Remains Elusive

What is Foursquare? Does the company itself know, even now? 

Foursquare currently bills itself as:

a free app that helps you and your friends make the most of where you are. When you're out and about, use Foursquare to share and save the places you visit. And, when you're looking for inspiration for what to do next, we'll give you personalized recommendations and deals based on where you, your friends, and people with your tastes have been. Whether you're setting off on a trip around the world, coordinating a night out with friends, or trying to pick out the best dish at your local restaurant, Foursquare is the perfect companion.

That's a lot of different things. Which ones are going to pay the bills? 

Foursquare, an early mover in social-local-mobile, is still searching for proven business model. And numerous companies now focus on this space. Google, Facebook, Yelp, Path, Groupon, LivingSocial and a slew of others are all aggressively seeking to profit from the ongoing integration of offline and online retail, marketing and advertising, and the merging of social, local and mobile data.

Google offers Reviews, Google+ recommendations and advertised links within Maps, along with search. Facebook's local Check-In feature has no doubt already limited Foursquare's potential.

How is Foursquare going to compete? The company has long allowed select businesses to buy promoted listings and sponsor special offers inside the app. Now, the company is allowing any merchant to purchase an ad. If users check-in to a coffee shop, for example, they may receive an ad from a competing establishment. Foursquare's unique user behavior and location data make this possible, but users may find these kinds of ads intrusive. And both consumers and marketers now have plenty of alternatives.

3. Yelp Is Better

Foursquare's new direction takes it into direct competition with Yelp — a battle Foursquare will have trouble winning. Yelp simply does a better job at gauging and responding to real-time, location-based user intent.

Yelp users, for example, typically start searching for establishments when they are interested in a particular time and place. Yelp makes it easy for them to filter within specific categories and by personal preference. No matter the quality of its data, Foursquare's "search and discovery" recommendations will always have trouble competing with user-driven intent. 

The two companies also expose a core divergence over value of data that offers personalized recommendations versus data that aggregates the wisdom of the crowd. Compared to Yelp, Foursquare does a far better job telling you that a friend has recommended a particular neighborhood bar, for example. It may be far more important to you, however, to know that a nearby bar has been recommended by more than 100 people, even if they're mostly strangers. This is the Yelp model. While recommendation algorithms and anticipatory systems may someday prove more valuable, so far Yelp's aggregate data model has proven far more popular. 

4. Better Design Isn't Enough

The new Foursquare app incorporates crisp, visible fonts; real-time mapping; colorful icons; and user pictures. It makes adequate use of touchscreen swiping to move across the app's core functions. It's slick, but a bit confusing.

The app's home page, for example, includes a bookmark tab, chat function, search bar, small map, information on the user's last check-in, data on "places nearby" — without details — trending topics and a large floating button that pops up a short list of nearby businesses. It's hard to see how the new design will drive engagement or draw in new users. 

The app's design seems to mirror Foursquare's mash-up of old and new business models — an apt metaphor for the company's struggles.

5. Selling Data Isn't A Slam Dunk

Integrating offline and online, merging social, mobile and local — in real-time — seems to be the sweet spot for the future of commerce. Foursquare lives in this space. It's user base, billions of check-ins and location data, including across the thousands of apps it's linked to, may in fact be the single best collection of social and local personal data currently available. 

The value of all that data, however, remains unproven. Plus, Foursquare can't just only on the existing database, it has to continually inject new information from new users to remain relevant. Even then, while some ad agency executives recently quoted in AdAge called Foursquare's "unique and proprietary data incredibly valuable," others suggested that Foursquare's data didn't offer anything they could not already get elsewhere.  

Positive Signs?

Foursquare is forging ahead regardless. On the plus side, the company's non-financial metrics are quite impressive:

• 30 million users worldwide
• 3.5 billion check-ins
• 1 million businesses signed-up  
• API integration with 40,000 apps - including with Facebook, Instagram, Vine and Twitter

With its latest $41 million infusion, the company plans to increase its sales staff from 10 people to 40. The company claims that ad-related click-throughs on its app run 3% to 5%, far higher than the industry standard of 1% or less. These are all positive signs.

Will it be enough? Despite its popularity, for the past four years, Foursquare has failed to fully capitalize on the social-local-mobile opportunity. The move from check-ins to data mining is a huge gamble. One that Foursquare has to win, as it won't likely get another chance.

Lead image from Foursquare

No investors plunked down cash for new Foursquare shares. Instead, new investor Silver Lake Waterman led the financing with what other reports are calling a multiyear loan, while existing Foursquare investors — Andreessen Horowitz, O’Reilly AlphaTech Ventures, Spark Capital and Union Square Ventures — offered loans that will convert to equity if Foursquare's valuation rises.

In other words, Foursquare just put itself into the hole in a high-risk gamble. The Silver Lake loan will most likely force the startup to make regular interest and principal payments lest it risk default — creating a steady cash drain that most startups try hard to avoid. We've reached out to Foursquare for more information on that investment, and I'll update when and if I hear back.

The convertible debt, meanwhile, represents a hedge of sorts for the company's existing investors. They get to sidestep the question of Foursquare's actual valuation — which obviously suggests it's not doing that great — and, should things go south, may stand a better chance of recouping some of their investment than if they held nothing but equity.

A Foursquare In Flatland

This means Foursquare, which has increasingly found itself in trouble with the entry of Google+ and Facebook into local search, is under a lot more pressure to demonstrate that it can make money. Investors like Union Square's Albert Wenger claim they see opportunities for Foursquare to take off, with the explosion of smartphones and abatement of couponing services like Groupon.

Wenger highlights what Foursquare really wants you to do with its app: Don't just check in, but identify retailers and businesses more actively so that your data in turn can drive better local searches. It's a tough nut to crack, particularly since Android users are more easily tied to Google to do the same thing, and many smartphone users of any platform are apt to use Facebook.

This may be the key problem for Foursquare: it's too specialized. Users may be more likely to share information on Facebook, for example, because they're already using it to socialize. I don't use either service regularly, but if I did, I'd rather share a review with my more well-developed network of Facebook friends.

Foursquare is going to have to turn itself around and get more money coming in the door. If it can't do get positive cash flow through its services, it may have to resort to other methods, such as raise equity privately or publicly to pay off debt holders.

There's also the option my former colleague Jon Mitchell has put forth: Fourquare could sell itself to Apple. Or any bigger company, for that matter. Given Apple's need for better local data, Mitchell's argument makes a whole heck of a lot of sense.

However it does it, Foursquare now has to make money fast to work off this new debt in a very competitive market. If it doesn't get traction soon, Foursquare won't be mayor of anything.

Image courtesy of Juan Camilo Bernal/Shutterstock.

Lately, though, there's one big concept that seems really exciting, and that's anticipatory systems. 

We're starting to see glimmerings of these new, smarter systems in everything from check-in services like Foursquare to calendar apps, advertising and even online-personals services. Increasingly, rather than waiting for us to tell them what we want, in the form of a search query or command, they'll prompt us with suggestions.

What Is An Anticipatory System?

Here's a simple definition of anticipatory systems. Think of them as artificially intelligent services that are aware of external context — including ambient inputs like time of day, social connections, upcoming meetings, local weather, traffic and more. Taking all of that into account comes naturally to humans. But for computers, it's hard.

The big challenge in artificial intelligence isn't that computers are stupid. It's that they're ignorant. We haven't given them enough data, nor the tools and rules to process it all. But that's rapidly changing.

The notion of anticipatory systems in computing dates back at least to the late 1990s. Daniel Dubois, a professor at the University of Liège in Belgium, defined an anticipatory system as one "that computes its current states [by] taking into account its past and present states but also its potential future states."

That's a bit vague, and the practical application of anticipatory systems has proven accordingly tricky. But all of the trends we're kind of bored with now — social, local, mobile, big data — have laid the groundwork for the realization of anticipatory systems' promise.

Foursquare, for example, has been collecting years of data about where people are and what places they're interested in — not just their explicit check-ins, but their local searches, tips and likes. So far, that's allowed Foursquare to offer personalized recommendations. But now the company is taking the next step into anticipating users' needs, Foursquare's head of search, Andrew Hogue, told Fast Company. Hogue gave the example of giving users recommendations for lunch spots at 11 a.m., rather than requiring users to type "lunch" into a search.

That kind of ambient awareness is at the center of the latest version of a mobile dining guide made by Ness Computing. Older versions of Ness sucked in data from Facebook, Foursquare, Twitter and other sources to offer personalized dining recommendations based on friends' tastes. The next step Ness is taking is to tailor those recommendations based on context — time of day and location. Currently in beta, the new version should come out later this month.

Merely analyzing social data isn't enough, says Ness CEO Corey Reese: "Just because a computer is aware of what you're doing doesn't mean it will add value to your life."

Anticipating Your Schedule

Schedule-management apps are another field getting reinvented by anticipatory computing, as startup consultant Semil Shah recently noted in TechCrunch. Apps like Twist and Leave Now alert people we're meeting with to our real arrival times. That's a welcome, computer-assisted acknowledgement of the reality that calendars are a perpetual act of optimism, subject to real-time revision by factors we can manage — like self-discipline — and factors we can't, like traffic and transit delays.

Even our social lives are getting transformed. Consider Facebook's "People You May Know" feature, which draws on both its own social graph of our connections and external cues like our email inboxes to recommend friends. That's perhaps the most widely distributed and used anticipatory system in the world. Dating sites are getting smarter, too, relying on the implicit cues of self-presentation as well as explicit data in user's searches to match up people. That's what online daters are already doing, more or less manually as they sort through profiles — the trick is for personals sites to start doing the work for them.

The biggest bet on anticipatory computing at present is Google Now, Google's intelligent mobile assistant that's built into Android. Drawing on all the data Google has, from flight confirmations in your Gmail to upcoming events in Google Calendar to your history of Web searches, Google Now attempts to give you what you might search for without making you search.

Apple's Siri, though more of a voice-command system, also has anticipatory elements. But it is hobbled by the thinness of the data Apple has on tap. If it wants Siri to anticipate our needs, Apple will have to partner more deeply with Facebook, Yelp and a host of other services so it knows more about us.

The true challenge for Apple, Google and Facebook is how to design a great anticipatory service around a specific need — without feeling creepy or, worse, clumsy. So much of what makes an anticipatory system great lies in the nuances of the service. Written prompts and design cues will play a huge role in getting people comfortable with computers that know a lot about us and make eerily accurate guesses.

But if people can get it right and design anticipatory systems that feel human and respond to our needs — well, I can only shiver with anticipation. 

With an update to a quaint little tab called “Nearby” on Monday, Facebook’s expanding mobile strategy is finally taking shape. Watch out, though, there's going to be collateral damage.

Facebook Doubles Back  

After Places flopped, Facebook snatched up Gowalla, a Foursquare competitor co-founded in 2007 by Josh Williams and Scott Raymond. It also bought Glancee, an app that emerged out of this year's brief obsession with ambient location services. "While Josh Williams is leading the location team that built Nearby, former Gowalla employees are working on other products at Facebook, including Scott Raymond who's working on our mobile photo products," a Facebook spokesperson told ReadWrite. "We spent a lot of 2012 working to improve the foundation of our mobile products and today's update to Nearby positions us well to offer more location aware features on mobile in the new year." 

A Facebook Newsroom blog post about its latest mobile update might as well be describing Foursquare: "...open the [Nearby] tab to find local spots your friends have recommended, checked into, or liked. If you’re looking for a place to eat, choose a category like Restaurants to see what’s nearby... tap to see info like friends who’ve been there and business hours."  

Uh-oh. 

Making Money On Mobile... Finally?

If Nearby gains traction, it could be mean big things for Facebook’s mobile revenue stream. Monday's update is only the beginning of Nearby’s new direction, one sure to be long and lucrative for Pages. Nearby was formerly a pretty bare bones way to check in to a spot and tag who you’re hanging out with, but it won't be a quiet feature for long. 

The newly robust vision of Nearby sure pulls the company’s acquisition of geosocial Foursquare rival Gowalla into clearer view. Gowalla boarded up its windows this March, officially integrating into Facebook’s team, ostensibly to beef up Timeline. 

Earlier this year, Facebook admitted that it “[did] not currently directly generate any meaningful revenue from the use of Facebook mobile products” before Zuckerberg did a 180 this fall, declaring that not only is Facebook ramping up in mobile, but that it’s actually a full-fledged "mobile company” now. 

Badges Are So 2010

Foursquare may still be growing, but it offers little that's compelling to new users. In September 2012, the geosocial app boasted 25 million users, up from 20 million in April. But most of Foursquare's members use it to complement a major social network, namely Facebook or Twitter.

Before Facebook came back with its new mobile direction, Foursquare might have been distinct enough to stand its ground. When Foursquare first hit, it had that playful, mobile-only vibe that makes Instagram feel fun. It gamified everyday life, awarding in-app badges for patterns of activity and special check-ins. Foursquare devotees and badge-junkies might still enjoy the thrill of unlocking a rare virtual reward, but the novelty is wearing thin. 

Beyond Foursquare, Yelp could be in threatened too. If local businesses take their proverbial business elsewhere, the company's ad-powered revenue stream could be seriously endangered. But the local-reviews leader hedged its bets against Facebook considerably better than Foursquare did. Yelp is stuffed to the gills with unique, user-submitted data. 

Google has its own check-in and local reviews tricks up its sleeve - Google has a bit of everything, after all. Now that Google+ is the epicenter of its social universe, Google's geosocial long-game is anyone's guess, but Google is anything but a one-trick pony.

Check-Ins Come Standard

Foursquare has come a long way over the years, but it's still all about check-ins. Instagram's location-tagging service is powered by Foursquare, and Foursquare check-ins can be zapped to a Facebook Timeline. The problem is that check-ins are a nice tool for adding depth to more interesting activities, like photo sharing. But they're an afterthought - not an app-worthy activity in their own right.

With Facebook's aggressive new mobile direction materializing, Foursquare had better be looking over its shoulder. If check-ins now come standard with other, richer social experiences, why open Foursquare at all?

Why indeed?