(continued from The Accumulation of Social Capital)
Clearly users benefit as social networking applications build more extensive and richer relationship networks. Aside from advertising, however, what businesses can be built from these networks?
The network owners themselves are trying to compete in three businesses – applications, the social networking application itself, and more recently providing a social networking platform that others can benefit from. Social networking platforms and applications are likely to be most extreme examples of "network effect" systems build to date. So, for the sake of argument, let’s assume that one platform and one social network, whether open or proprietary, will eventually emerge dominant. Then what types of applications can be built?
The most basic applications for social networks are shared relationship applications — those applications which are designed to propagate the network by bringing others into the network. These are applications designed to accumulate social capital rather than exploit it in some way. Silly examples abound on widget driven networks like Facebook and MySpace — Vampires, Food Fights and the like. These applications use an enticement of some kind to encourage users to spread them. They exist only to grow their networks, and can be monetized through simple advertising based models.
Shared experience and shared resource applications provide the means for people to share experiences, such as physical events or web conferences, or resources such as files, media servers, and media services throughout the network. Again, this class of applications relies on an established network being in place. Business models can range from advertising driven systems to premium service offerings.
Shared information applications propagate information and information requests throughout the network. These can be as simple as "ask a question" or as complex as a crowd sourcing application. Recruiting is another very common information sharing application. This class of applications relies on the existence of an underlying networking, and exploits weak links and reputation in order to find answers quickly. Multiple business models are possible with these applications, depending on the value of the information being conveyed. Of all the classes of social applications, these rely most heavily on accumulated social capital and reputation.
Platforms and business models vary widely depending on the social networking application building them. The free and open model of Facebook is one that seeks to create and exploit a virtuous circle model — an open network and APIs attract developers who add value by creating new applications which in turn attracts more users leading to more developers and so on. This model tends to produce a bit of a wild west atmosphere from which dramatic innovations may be found amongst the masses of trash that are inevitably produced. In contrast, MySpace’s attempt to control the use of it’s primitive APIs, and it’s demands for a revenue share tend have tended to produce a less innovative environment. LinkedIn’s as yet undelivered platform will further constrain which developers may deliver applications. If social networking applications were real estate projects, Facebook would be a planned subdivision, MySpace a low rent trailer park, and LinkedIn a high rent and exclusive condo.
Depending on what classes of applications are supported, the platform must supply different underlying resources and capabilities. Applications class also has implications for privacy which the platform must consider.
More on that in part 3.