Red Herring has an interesting piece about social networks as software business. Some of the players are attracting venture capital, but some VCs see social networks as the making of another bubble, which, I suppose, means shiny, empty, and ready to burst at any moment.
The question seems to be whether there's a business model for social network sites, which build followings by attracting, not just individuals, but the networks of friends and colleagues they tend to bring with them. The sites offer various ways for members to find each other, interact, and potentially have productive association that extend relationships, whether in business, romance, or just friendship.
The Internet, which is a scale-free network, tends to support the formation of scale-free social networks. Using the Internet over many years, I know I've come to perceive networks everywhere more readily, evolving a world-view that focuses on links, connections, nodes, and hubs. In the Scientific American article linked above, the authors demonstrate that scale-free networks are pervasive, so the various business entities forming around social networks are finding ways to facilitate what's inherent and capture profits from the resulting numbers.
I've joined five of the social network sites, and I visit four of them fairly regularly. Though the broad premise behind each site is the same, each is a little different in its approach and functionalities. Since I'm kind of a mad networker, I know a lot of people, and each site has a different combination of people I know. There are a handful of people I communicate via Tribe.net, for instance, and I do enough business networking via Ryze to justify a gold membership.
I assume that people will use many such sites in many ways, and those of us who do communications consulting already suggest ways to leverage network effects within organizations using social as well as software affects. There's also political potential in social networks. The Howard Dean campaign has set up its own social network site, called Deanlink.
Meanwhile, come people just don't get it:
Ms. Lee (sic?) of Forrester Research says her main concern with social networking sites is their ability to retain users. “Unless I am actively looking for a job or date, I have no reason to go there” she says. However, there’s more chance that people would return to the major portals if they had their own social networking services. “Portals like MSN, AOL, or Yahoo are part of my daily habit,” she says.
This is like saying the only reason you'd meet people and hang out is to advance your career or your sex life. The Forrester analyst misses the part where you do social discovery and interaction for the joy of it. (Which reminds me, my colleague
Honoria and I are putting together a panel for SXSW Interactive on
The Aesthetics of Social Networking. (Thanks to
Ross for the pointer !)