Next Wave Factors

by Jay Deragon on 10/14/2007

Next Wave Factors As we prepare our own social networking predictions for the coming year we wanted to share some of the perspectives we’re finding of interest.Dan Farber  posted an article at Zdnet  titled What will social networking be like in ten years?  Who knows, but we won’t be having panels about it. At the AlwaysOn Stanford Summit 07, there was such a panel, titled “Social Networking 3.0,” led by Charlene Li, a senior analyst Forrester Research.

The panelists included representatives from some of the more prominent social networks: Travis Katz, senior vice president and general manager of MySpace International; Dustin Moskovitz, co-founder of Facebook; Rich Rosenblatt, CEO of Demand Media and former MySpace executive; Gina Bianchini, CEO of Ning; and Karl Jacob, CEO of Wallop.

Jacob dealt with the ten year question: “If we are here in ten years talking about profiles, web sites or social networks, something is really wrong. Social networks will be woven into every product and thing we touch,” he said.

One of the big questions is whether social network would be more open, especially in terms of allowing profiles to be shared among users of different social networks. “We are pushing boundaries of what closed and open mean. It’s very necessary for people to take identities with them and supplement with content from elsewhere,” Facebook’s Moskovitz said. At this point Facebook users cannot export their social graph or profile to another service–nor do any of their competitors with large populations offer an API for sharing the data.

Facebook’s definition of open is allow external developers to tap into the social graph so that users can maintain their identity and graph of friends across apps build on the Facebook platform.

Rosenblatt said the Demand Media is developing a portable profile for its users that allows them to have a single log-on and to pick and choose what to expose on different social nets.

Bianchini’s service allows users to create their own social networks. “In ten years we’ll see millions of social networks for every niche, need, language, location and passion,” she said. “I disagree that people want a single profile–they want to have identities for different social networks.”

That may be true, but users will want to manage their identities in a unified manner and to have the kind of openness that would allow them to map friends list across different services.

The application of social networks like MySpace and Facebook in a business context has been an issue of late. Many corporations are turning off access to social networks as productivity wasters.

The panelists put targeted ads at the top of the list for how they will make money. Moskovitz noted how businesses that integrate with social networks, such as Netflix, could surface better recommendations from the social graph and generate more revenue.

A question was asked about the MySpace, Facebook and a few others owning the social networking space in the long term. “The lesson from the Internet is that it’s never game over,” Katz said. Indeed, looking back over the last decade you can see the leapfrogging that went on in the search arena.

Stefanie Olsen  Staff Writer, CNET writes  “Social networks, mobile video and “Googlism” will continue to transform the Net in years ahead, said Piper Jaffray analysts  at the opening of its annual Global Internet Summit last year.”

“The Google revolution is not over yet,” said Safa Rashtchy, managing director and senior analyst at investment firm Piper Jaffray, referring to a fictional term, “Googlism.” The search giant “has been inspiration for many new companies,” as well as changing how many companies are formed today, he said.

Rashtchy opened the three-day conference here by highlighting current Internet trends. The conference, in its second year, is focusing on several topics, including entertainment, advertising, international markets and social networks.

Social networks, for example, are poised to shape the Internet’s future, Rashtchy said, despite some skepticism about how they will make money. Social networks such as are already challenging traditional portals. MySpace, for example, has surpassed MSN and AOL by measure of monthly page views, Rashtchy said, and its traffic equals roughly 75 percent of Yahoo’s, the No. 1 site on the Web.

James Lamberti, a research analyst at ComScore who spoke at an opening panel, marveled at the rise of MySpace, which attracted 50 million visitors in March. “Google did not grow this way–it was much slower over time,” he said.

Growth opportunities within the market will be for niche communities targeted at middle-age or young Web surfers, Rashtchy said. For example, a host of family social-networking sites have cropped up already. Rashtchy suggested that Yahoo and other portals may have to team with MySpace and others to attempt to direct their mounting influence among Web surfers.

One overarching issue, Rashtchy said, is that online advertising dollars continue to lag behind Internet usage in the United States. Roughly 172 million Americans visit the Web in a month, according to ComScore, but online ad sales, expected at $16 billion in 2006, are still a small fraction of the hundreds of billions of ad dollars spent annually. In the next 10 years, this gap will close, but the spending will likely never be equivalent, Rashtchy said.

For that reason, content and communities are corners for investment and growth, Raschtchy said. The advertising gap will not likely be closed by blogs or social networks, however, researchers said. That’s because blogs may contain unsavory material that marketers often don’t want their products to be associated with, they said.

Mobile devices are another growth opportunity, Rashtchy said, and video will be a particular complement. “This is going to get big, folks,” he said.

Could it be that the factors driving the social web are yet to be understood? Is it hype or a shift happening before our eyes?

What say you?

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