Contrary to recent opinion, social networking is still growing by leaps and bounds. However, the news that people are focusing on is the “high profile” exodus of Bill Gates from Facebook, or the lack of monetization for the sites. The Bill Gates profile can be ignored as it is not a sign of things to come. Bill Gates does not need a profile, everyone knows who he is. The idea behind social networks is to connect with people you know and get connections to people you don’t know yet. If you look at LinkedIn, they explicitly tell you where someone is in your “network” by using the degrees away concept. So, if you want to connect with people, you run to a site and register. Then you spend hours adding contacts, finding old friends and adding a little flavor to your profile. This contact hunting probably continues for a good month or two, and then your interest wanes a bit. The timing is probably different for everyone, but that is the general cycle unless there is something specific you can do that you would not do somewhere else.
My favorite quote from the recent news is from Business Week (you can read the full story here) :
The MySpace generation may be getting annoyed with ads and a bit bored with profile pages. The average amount of time each user spends on social networking sites has fallen by 14% over the last four months, according to market researcher ComScore. … The total number of people on such sites is still increasing at an 11.5% rate, but that’s down sharply from past growth rates. “What you have with social networks is the most overhyped scenario in online advertising,” says Tim Vanderhook, CEO of Specific Media, which places ads for customers on a variety of Web sites.
MySpace has a lot of eye candy that attracted a younger audience, sometimes teenagers who have the attention span of a gnat. Facebook started as the online college yearbook, but more recently decided to open up to everyone. LinkedIn started as a business networking tool and continues that way, though it technically is open to everyone. So, where does the revenue come from? LinkedIn has a subscription model and the ability to purchase more “InMail”. Facebook is using ads heavily, and everyone probably remembers the Beacon fiasco. Greg Linden also has a nice summary of the problems with Facebook Beacon. Now, Techdirt is talking about how social networking ads suck. What should the social networks do?
What the general consumer sites (think of MySpace and Facebook) do not seem to realize is that people will not stay just because it is the hot site to use. There has to be a reason for people to use it. MySpace can target those people who want lots of spice on their profile, pictures, music and videos. If they promote a vertical version of their platform for photographers, models and bands, they can charge a small fee of about $5 per month and use some advertising to bolster revenue a bit. Facebook has their application platform which can now run everywhere. They need to use this advantage now before Google does the same with their widgets. Facebook needs to promote the group concept as well. Ning and other social network creation platforms will own the niche network. Facebook can take a bite out of that traffic with making their groups a “niche network powered by facebook”. If you have a niche network, it is very easy to target advertising.
The key for all of the social networks is to give the users something to do. Connecting with other users only connects people. What are we supposed to do once that is done?