Facebook, MySpace, LinkedIn, Windows Live Spaces, the list goes on. These are the sites that everyone has been going bananas over for the past year or so. Tons of money have been poured into these systems, and a lot of ink has been spent philosophizing over what they mean for the future of technology and how they’re the Brave New World of personal information sharing and management.
The Social Networking site is the media darling of 2007 the way Blogs were the “big thing” in 2004 because of the US Presidential race. Back then, Blog “networks” were the hot web property to own. It was when the mainstream media and so many others realized that publishing opinion, news, information etc wasn’t the exclusive domain of media organizations anymore, that the average Joe User could type away at home, push a button and suddenly have a global audience.
Blogs were big because they supposedly democratized the world of news reporting, though what it really did was open the flood gates to a lot of poorly reasoned analysis and a fair number of ignorant opinions being passed off as news and fact.
But now, in 2008 we can look back on the true boom of the Social Networking site. Facebook was the poster-child of the feeding frenzy, and it made out quite well for itself financially in the process. Now worth somewhere in the neighborhood of $15bn , Facebook is an incredibly valuable web property, only beaten by the likes of Amazon, eBay, Yahoo and Google. Why is it that everyone has gone nuts about Facebook and to a lesser extent other Social Networking sites?
Well, to begin with there’s the “oooh, shiny” factor. While we’ve had social networking for years now with sites like MySpace, it’s only recently that these sites became more than a toy for angsty teenagers looking to rebel against their parents and express their individuality through dark poetry, brooding photos and talk about how no one gets how hard it is to be a teenager. In 2007, folks started to realize that you could build networks centered around things like business (LinkedIn) and academics (Facebook). This revelation opened up the concept to the rest of the Internet using population, as well as those who had grown past sites like MySpace and were in search of a new site to reflect their own personal growth.
The basic idea behind Facebook, MySpace and others is pretty well understood. In the real world, you are a member of a number of social networks (or circles), each defined by some common characteristic, some of which overlap in strange ways, and some which have nothing to do with one another. Anyone who’s ever had two friends who don’t get along understand the concept immediately. You have two social networks centered around each of those friends. We form social networks around activities, games, jobs, classes, interests etc. These sites translate those ethereal relationships into information you can see and track.
Now, take those seemingly unrelated networks, add in a bunch of friends and strangers with their own networks, and suddenly you begin to discover connections with people you never knew. Now, not only are you able to track your personal networks, you can use the data available to form new networks, start new relationships and in general widen your social and professional horizons. The more people you add to the system, the more connections there can be, the more potential value there is to becoming a member of the system. Of course, that’s an intangible value for the user, and what brings them to a site in the first place.
But what about the quantifiable value of this data? Imagine you run a service where people willingly tell you everything there is to know about them, down to the details of their date the other night with the girl from their English 302 class. Companies usually pay out the nose for that sort of detailed information. Without it, they can only guess at what appeals to their customers and users. These sites are so valuable because of the data they contain and have access to. A Social Networking site with enough users can do some very interesting things with data analysis. Do you actually want to know what specific band, movie or book college students are most interested in? How does that overlap with their geographic location, gender, race or political views?
The more complete a person’s profile is, the more value they get out of the site because it opens up new connections. On the other side, the more data the company has for each of its users, the more creative things they can do with analysis. As value increases for the user, so does it for the site owner. It’s a unique system that can’t necessarily exploit one side over the other. If Facebook does something naughty with the data, it loses the trust of its users, and will lose some of their precious data.
It’s also a system that resists tampering. Once you pass a critical mass of users, individuals or companies can’t attempt any meaningful manipulations of the system. The more people you have involved, the less important/potentially damaging any one user becomes. This also means that overall, information and data analysis extracted from the system is going to be largely accurate since falsified information, intentionally misleading details etc. are negated when averaged out against the mass of true and accurate information.
While the shine is wearing off, and social networking sites like Facebook are becoming as common and unexciting as a blog (to users at least), they continue to gain in value with each additional user connecting up. In the case of Facebook, social peer pressure drives people to sign up. If all of your friends use Facebook to organize events and parties, you either join up yourself, or get left out on real world happenings. These sites are transforming from fun toys to social and professional utilities.
2007 was the year Facebook was big, and in the news all the time. In 2008 it will become part of the status quo, less interesting to the media, and not the hot new thing to technophiles, but that doesn’t mean its value is decreasing. It actually grows constantly. The question now is, can they effectively mine the mountain of data they have access to, to do new and interesting things? Or will they aimlessly slap on additions and features that turn the site into a cluttered and confusing mess?
But regardless of what Facebook or MySpace does, we have reached a point where it will be very difficult for anyone new to break into the market and be able to take away market share. The more data a user pours into a single site, the harder it is for them to switch. Most users spend hours detailing their profile pages, sometimes days. And to switch to a new site, their closest friends need to as well. As momentum grows, it becomes virtually impossible for a newcomer to pop up on the scene and make a meaningful impact.
Facebook brought Social Networking out of the exclusive realm of teenagers and opened it up to just about everyone else. It is turning that data into information it can put to good use, and through things like the application platform, making it available to some extent to external partners. Sites like Facebook are finally beginning to exploit the potential of “The Cloud” and the vast amount of data available online. Collecting it in one place, we can discover the hidden connections, find real trends, and discover true value of items, products and ideas we could only guess at before.
Just like web search faded from the foreground of cool and shiny things, social networking is going to get less attention in 2008, but it is quickly becoming part of the underlying fiber of the Internet, that we depend on to manage, index and use information.
1 – Arrington, Michael. “Perspective: Facebook Is Now 5th Most Valuable U.S. Internet Company.” TechCrunch.com 25 October 2007 <http://www.techcrunch.com/2007/10/25/perspective-facebook-is-now-5th-most-valuable-us-internet-company/>