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Sunday, July 30, 2006

Networking social networks: Looking into the future

Social networking, the phenomena that most of us have been talking about is fast approaching a saturation point in terms of its market. What will the future look like for social networking? What are the social networking websites missing? A reminder of Reed's law about Group Forming Networks for those who have forgotten or are unaware - there is much greater utility in connecting group forming networks than mainting individual networks.

An article in Business 2.0 on the introduction of the Korean social networking giant, Cyworld, in the US set me thinking in a couple of different directions. (Yes, I do think sometimes! It's focussing that's hard as the last sentence suggests)Plenty of people have talked about Cyworld (see this and this as examples) and there has been much noise about whether Cyworld will be able to replicate its Korean success in the US market. Everyone has offered their own opinion on why Cyworld will succeed in the US market. However, for now, we will not talk about Cyworld or why it will succeed...for now I want to draw your attention to the following excerpts from the article.

Cyworld is entering the U.S. market at a time of social-networking saturation. MySpace and Facebook are already well entrenched. Hi5, Multiply, TagWorld, and even the much-maligned Friendster are gaining fast. Cyworld has discovered many more waiting in the wings. "Our intelligence shows there are probably 30 launching this year," Streefland says.

A couple of paragraphs later, you'll find this:

The single most important factor in getting people to join is having friends who are already on the network. So when every teenager and 20-something already has a profile on MySpace or Facebook, how many more social networks are they willing to try?

The answer, according to Lee, is more than you might think. Two-thirds of U.S. youths have profiles on multiple networks - but 53 percent would join another if it were compelling enough. "They are playing with identities," Lee says. "They are trying to figure out who they are."

On MySpace, they can be glamorous party creatures. On Facebook, they can be students. And on Cyworld, the bet goes, they can be themselves. "Everyone in our focus groups has a MySpace page," Streefland says, "but it doesn't necessarily satisfy them.

The observation of interest here is "Two-thirds of U.S. youths have profiles on multiple networks - but 53 percent would join another if it were compelling enough"

How many of us had multiple email addresses (at least those in their 20s did) and we ended up thinking that multiple email accounts were a nuisance? Of course maybe many of us keep personal separate from work and maybe even have one for junk etc. Yet, don't we sometimes wish we had one? So, how many of us will not, sooner or later, start thinking that multiple profiles are a nuisance?

Also, don't forget one thing with the email analogy - unlike email, these social networks don't communicate with each other. How irritating would it have been if you couldn't have sent someone with a yahoo email account an email from your google account? If there is something interesting on my myspace profile, wouldn't I would want to share it with my facebook friends? So, as people get spread across these social networks the need to communicate across networks is going to increase. I don't see any of the social networking sites going that way. Instead, it seems they'll be waging the battle for consumer loyalty the way businesses in the past did.

Web 2.0 is about convergence. Think RSS...the reason I like my RSS reader is because I can get all I read at one place. I don't have to go to multiple sites. Why should I have to go to multiple social networking sites?

Also, does anyone remember Reed's law? Here's an excerpt from David P. Reed's paper on the sneaky exponential:

When we combine two networks together so that users of one network can connect seamlessly to users of the other, Metcalfe's Law tells us already that substantial new value is created: (M+N)² = M² +N²+2MN. This bonus term, 2MN, is substantial-up to 100% of the value in the original unconnected networks. Thus there is an enormous incentive to find ways to interconnect networks, since the members of each network can access a much larger set of potential transaction partners. With the GFN law, interconnection is even more powerful, creating many new potential groups that span the two networks: 2M+N = 2M2N. The GFN interconnection bonus percentage itself grows exponentially with the size of the smaller network.

What we see, then, is that there are really at least three categories of value that networks can provide: the linear value of services that are aimed at individual users, the "square" value from facilitating transactions, and exponential value from facilitating group affiliations. What's important is that the dominant value in a typical network tends to shift from one category to another as the scale of the network increases.

For the complete article, click here.

The obvious conclusion then is that very soon there is going to be a need for a service that can connect major social networks.


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