Genuine VC: Social Networks: The Network or the Service?

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July 1, 2005

Social Networks: The Network or the Service?

In the context of reviewing Yahoo’s MyWeb 2.0, John Battelle gripes,

“But, on the other hand, it's a pain in the ass to keep creating social networks, maintaining groups, tagging, sharing, etc. It's a habit I'm not sure the masses will ever get into, at least in a way that is driven by pure selflessness.”

I personally share his concerns. There is a lot of power in connecting and sharing information with others – it’s obviously a major theme driving innovation on the web now. However, the difficulty and frustration involved with the setup of these services is not insignificant, even for a fairly technology-savvy person like myself. How does the average non-techie person like my mother approach these tasks? The answer is that she doesn’t.

Currently, the companies in the social networking space or that contain a group/social aspect tightly hold onto their connection information. And rightfully so – the network effect is indeed a powerful one that comprises much of the value and competitive advantage of these companies. But as the number of social networks and connection-services grows, the likelihood of achieving the necessary critical mass for each one diminishes. With how many services is the average consumer going to invite and tell his/her friends to join or connect?

What we could turn that situation on its head? What if you could harness the power of the service as more valuable than the network itself? In a previous post, I argued that “in addition to possessing a reason d’etre, successful social networking companies will more closely integrate the revenue model into the functionality of the service.” I see the service itself as true gem, not the information about connections that support that service.

After all, isn’t your connections information going to become a commodity? In the future, shouldn’t all online services know who I know and how I relate to them? Perhaps a solution to this problem is to have an open system in which information about whom you know and the meta-data about those connections stored in an open fashion? In this scenario, services wouldn’t have to rely gaining critical mass to express value; instead, they would be able to tap into the already wealth of information about a person. I do realize that this would take enormous collective action, but perhaps there is a way to approach it incrementally. (I’ll have to think about this idea more).

In the end, I believe that the real value is in the social services (from recommending music to finding a job to sharing photos) overshadows the network on which they rest. With a little effort anyone can obtain my social connections data – the key is to know what to do with it. Could we intelligently figure out how to solve this problem that Battelle complains about above?

Posted by on July 1, 2005 2:45 PM | Permalink

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