Yes the social network – that kind of isn’t – at least in the sense that maybe we should stop classifying it with the other sites, with whom it has many superficial similarities (looks kinda similar for a start) but one fundamental difference – in the way it is used (i.e. it is actually not a ’social,’ social network at all really, but instead something people use for work/networking etc). Hence in our ‘lump-networks-together’ type thinking for purposes of ranking them, we are perhaps often missing out on a key aspect of the online networking market – that of the individuality of the business social network.

If instead we take LinkedIn as by far and away the largest of the business social networks – we can see how signifcantly smaller it is (more than a factor of 10 by most counts) than the biggest player in the social networking pond. Now it is not that the business social networking ‘pond’ (i.e. market) is proportionatly smaller – but rather the fact that, as a market, it is fundamentally different from the one accessed (and dominated) by players such as MySpace and Facebook.

Even more importantly is the fact that it has hardly been developed or accessed anywhere near to the extent that is possible – in essence there is a pond right next to the increasingly crowded one occupied by the whales and sharks of Bebo, FB, Myspace etc – only this other pond is practically empty, with only the little goldfish of LinkedIn and a few tadpoles swimming round (networks like Ryze for example).

Ok, enough with the silly extended metaphors – it’s not exactly rocket science after all. Ultimately we know social networking tools can be massively useful for work purposes (see this great post at bNet for more on this) – and we also know that many of us use social networks on a regular basis in our spare time for keeping in touch with friends etc. Yet, and here’s the odd part, we hardly at all use any kind of business social network for work related matters even though there are plenty of us out there of working age and with jobs (teens after all only make up roughly 10% on average of social network users).

Yes, there will always be the fundamental point that many businesses will prefer to own their own business social network, rather than use one where information cannot be adequately controlled or protected. But in light of this I expect that the BSN pie will simply look a little different as it grows: not chopped into six or seven larger pieces like the usual SN graphics – but instead into many more smaller networks. Either way though it seems undeniable that next to the still-unsaturated, but certainly maturing, SN market, the potential of the BSN still has yet to be even fully imagined, let alone realised.

Dejan Levi

Which is why I’m delighted to read some fascinating posts over at Techcrunch about a new way of modelling the true value of social networks. The new system is based on a key principle – that users in countries with higher average online advertising spend are worth more (financially speaking) to social netoworks. Therefore, in terms of monetising networks, a UK user (1st in average online ad spend) is worth more to a network than a US user (4th).

Techcrunch first used this method over a year ago – but user numbers and distributions have changed drastically since then, so they’ve now delivered an updated version which is far different from that of one year ago. The new estimates value the total social networking market at $27.1 billion, with Facebook representing around $10bn of that figure. Obviously networks which have lots of users in countries with relatively low advertising spends – Orkut for example – rank far lower under this new method of valuation.

There is a danger in dismissing huge players in the social network game (like the aforementioned Orkut) with this new ranking system – simply because of their relative weakness in terms of immediate monetisation potential. However looking over how much the results have changed over the past year shows just how temporary these standings in fact are. Moreover results from China – a major market for social networks – are currently not included in this version of the league table.

Minor shortcomings aside though, this work from techcrunch represents a real breakthrough in terms of our ways of understanding the real market values of social networks, and provides a more complex system of generating data that directly represents the revenue-generating processes of the networks. It might also lead to a slight change of tactic for up and coming social networks – moving away from an ‘as many users as possible’ goal, and more to targeting already saturated markets (like the UK) knowing that even a handful of users here is worth more in a financial sense than a hundred elsewhere.

All in all though – fantastic work at Techcrunch, and good news for social networks all round in that the sector (and the ‘pie’ as it were) seems to be expanding each and every day.

Dejan Levi

The ‘blackout’ has also shown signs of spreading to other social networks like Bebo, Facebook and Myspace. Organised by the Creative Freedom Foundation, the action has had some impact already in causing the offending legislation to be delayed. Whether it can actually stop it remains yet to be seen, but the wider question really is – just how effective can such internet protest ever be?

In essence it could be argued that this protest is only one step more pro-active than the millions of facebook groups entitled ‘If 10,000 people join… x, y or z will happen’ – though they pretty much never seem to come to much. (This blog has previously covered the efforts of FB users to complain about the site’s new layout for example).

This latest instance is proving slightly more effective, perhaps through a combination of celebrity participants (including Stephen Fry) and also the relatively original and visually striking approach. As Fry has correctly pointed out; in such a case where protesters are geographically disconnected from eachother, the internet, and especially these social networks, become the only means to participate in a cohesive protest together.

Despite this though I can’t help but wonder whether such protests are far too easy to ignore. After all they are unlikely to seriously hurt the networks themselves (which would be one possible method of enlisting these massively powerful corporate entities to the cause), and as for the actual NZ Government – they have not even the slightest inconvenience to consider beyond possible guilt at having ignored the wishes of a few internet users.

All that has been done is that ministers have been made aware of opposition on the issue – if they choose to listen then great, job done. But if they don’t want to listen there is little else for them to consider when making the decision.

All in all, it seems that such actions are not really strong or forceful enough to even merit the use of the word (action) or let alone ‘protest’. The Blackout is really more of a petition, and if it succeeds then well done to all involved. But we should perhaps always bear in mind that such complaint is far too easy and quick to lodge – and consequently equally easy to dismiss.

Dejan Levi

Some bloggers and commentators have been contemplating if this might mark a new phase in the development of social networking, with the earlier co-existence of the main players now giving way to a more open tug-of-war for market share. After all, new user uptake is slowing down, and one way for social networking sites to continue to grow will be to compete for the existing users of competitors…

Data portability is looking increasingly like a major front in this competition.

Question is; should Facebook’s ban of Google Friend Connect be seen as a statement of intent regarding future competition? Or simply an inevitable tactical ploy?

Well, put it this way; to have done otherwise would have been to allow certain aspects of their service to become tethered and reliant upon a Google service, allowing for an uncomfortable degree of infiltration by a competitor. Why allow developers to use a Google tool for Facebook apps when an own-brand similar Facebook device could be offered?

Ultimately the ban represents perfectly sensible self-defence from Facebook, giving them time to work on their own rival without being rushed by the need to counter Google’s permeation into its own product. Put simply, it should ensure Google does not succeed in filling a hole in Facebook’s territory that could be filled by a Facebook tool.

One thing is for sure; whatever happens in the data portability sector Google will benefit massively, not just from the success of their own Friend Connect, but also from that of the Myspace and Facebook rivals. The inevitable increase in web traffic, which will come with the new data portability services, will surely boost Google’s advertising revenues no end.

Luckily for us, the fierce competition for attracting both quality work from developers and new users should see some interesting innovation in this field over the coming months. Currently the social networking market still has room to grow, and it is unlikely the major players will be too concerned with pinching eachothers’ users for now. Inevitably though the rates of user growth will tail off somewhat – and it is then that we might see some fiercer competition. Judging by this week, the battle over data portability services, and the race to become the main central online data repository from which users port details to third-party sites, could yet prove a significant battleground.

Dejan Levi