David Knowles - Weblogs

David Knowles

Social networks have not only changed the way we share information and stay in touch, but are creating opportunities for users and investors in a myriad of forms - and we're only looking at the tip of the iceberg.

Let's look at the roots of the social networking phenomenon: Friends Reunited, dreamt up in a Barnet semi in 1999, helped re-establish old contacts (and even contributed to divorce rates!). However, despite recent diversification and TV advertising, analysts say its subscription-based model is a significant factor in its declining market share.

Now, MySpace, Facebook, Bebo and LinkedIn have experienced huge growth as social networking has become a social imperative rather than a fringe activity for the slightly geeky.

At its most fundamental, the appeal of social networking lies in it providing a platform for sharing experiences, with information sharing and data collection as its key components.

At one end of the spectrum, Facebook et al are capitalising upon this as people discover the power of connecting with others and supplementing their own networks - not simply finding old schoolchums.

And the currently successful networks are wise to the potential for increasing value and commercial currency; for instance, in setting itself apart from its competitors, Facebook recently opened up its 'API' - the code that lets other people and companies tinker with the building blocks of the site and integrate with it. Within a month, more than 40,000 new applications have been developed for the site. These range from horoscope widgets to tools to rate other users anonymously, which in turn has led to a massive increase in Facebook usage.

Around the middle of the spectrum are sites like Digg and Flickr, where again everything is about user-powered content but the biggest area of activity is rating or classifying content added by others.

Lastly - there are sites that collect tacit information, in other words the data you leave behind as you use a site. This is very similar to the collaborative filtering technologies used by retailers such as iTunes or Amazon; your behaviours are aggregated so that recommendations for purchase are made back to you - where you read "people who bought this also bought...".

Wherever these sites feature on your radar, they link society in ways that couldn't have been done in the pre-internet age.

Commercially of course the social networking phenomenon is great news. Although sites such as Facebook are experiencing some backlash for 'over-commercialisation', steps are being taken to counter this before it takes hold. Advertisers are being encouraged to run highly targeted campaigns that improve the social networking experience. MySpace is heading off similar accusations by asking its advertisers to come up with more unique experiences "that reward customers for interacting with brands."

Social network communities can also act as bellweather for popular opinion, encourage debate and information exchange, and therefore can play a vital social role.

The naysayers tell us that social networks "institutionalise gossip"; but, they ignore the potential of one of the most exciting, inventive and inclusive channels available today.

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