Internet companies: Social graph-iti

November 2, 2007

A NEW fad is sweeping across Silicon Valley, causing excitement, confusion and hyperbole not seen since the dotcom bubble. It began in May, when Mark Zuckerberg, ten days after turning 23, took the stage in a San Francisco warehouse and announced that he was opening up Facebook, the social network he founded at Harvard University, to outside programmers. Anyone can now build little programs, or “widgets”, into the network. To illustrate his idea, Mr Zuckerberg projected onto the wall behind him a “social graph”—a pattern of nodes representing Facebook users and the links among them.

Since then Facebook and the idea of the social graph have become the favourite, if not the only, topic of conversation among the valley’s geeks, venture capitalists and internet moguls. Mr Zuckerberg compares his graphing of human connections to the work of Renaissance mapmakers. Facebook is growing furiously and may catch up with MySpace, the biggest social network. Outside programmers have added about 5,000 widgets.

One of Facebook’s investors estimates the social network’s revenues in 2007 at only $100m, mostly from selling ad space, with tiny profits. Nevertheless, the internet’s giants—Yahoo!, Microsoft and Google—are offering to buy Facebook or a stake in it for a price that would value the firm at many billions. At a Facebook conference on “Graphing social patterns,” panellists said the firm may be worth $100 billion and that it is the new Google.

How much of this is hype? Facebook has made two genuine breakthroughs. The first was its decision to let outsiders write programs and keep all the advertising revenues these might earn. This has led to all kinds of widgets, from the useful (comparing Facebookers’ music and film tastes, say) to the inane (biting each other to become virtual zombies). The entire internet industry reckons this was clever and is planning to copy it. This week MySpace said it would open its site to outside programmers. Google, which owns Orkut, a social network extremely popular in Brazil and parts of Asia, is expected to do the same soon. Facebook’s second masterstroke is its “mini-feed”, an event stream on user pages that keeps users abreast of what their friends are doing—uploading photos, adding a widget and so on. For many users, this is addictive and is the main reason they log on so often. Jerry Michalski, a consultant, calls the mini-feed a “data exhaust” that gives Facebook users “better peripheral vision” into the lives of people they know only casually. This mini-feed is so far the clearest example of using the social graph in a concrete way.

Silicon Valley’s craze for the “social graph”, however, is overdone. The term has been around in computer science for decades, says Eric Schmidt, Google’s chief executive, so it is puzzling that Mr Zuckerberg should get any special credit for using it. “We have address books, and the sum of the address books is the social graph,” he says. Companies such as Plaxo, which help to synchronise address books, and Google itself, which has a primitive address book in its web-mail service, plan to turn these books into fully fledged social graphs that can do useful and productive things, perhaps including new variants of mini-feeds.

This analogy to address books points to an important limitation for social networks, such as Facebook, compared with older sorts of network, such as the postal or telephone systems. These benefit from Metcalfe’s Law, which says that the value of a network is proportional to the square of the number of its users. In other words, the more people have phones, the more useful they become. This “network effect” leads to rapid adoption and puts up barriers for new entrants.

But unlike other networks, social networks lose value once they go beyond a certain size. “The value of a social network is defined not only by who’s on it, but by who’s excluded,” says Paul Saffo, a Silicon Valley forecaster. Despite their name, therefore, they do not benefit from the network effect. Already, social networks such as “aSmallWorld”, an exclusive site for the rich and famous, are proliferating. Such networks recognise that people want to hobnob with a chosen few, not to be spammed by random friend-requests.

 
 

This suggests that the future of social networking will not be one big social graph but instead myriad small communities on the internet to replicate the millions that exist offline. No single company, therefore, can capture the social graph. Ning, a fast-growing company with offices directly across the street from Facebook in Palo Alto, is built around this idea. It lets users build their own social networks for each circle of friends.

So are Facebook and its graph really worth many billions? From an advertiser’s point of view, says Rishad Tobaccowala, the boss of Denuo, the new-media unit of Publicis Groupe, an advertising company, Facebook is so far anything but the new Google. The search giant does have traditional network effects in its advertising system, he says: it aggregates advertisers and sends them to potential customers who have expressed specific intentions by typing search queries. But Facebook has only “large crowds who are communicating without expressing specific interests”, says Mr Tobaccowala. On Google, advertisements are valued; on Facebook they are an annoyance that users ignore.

Facebook might nonetheless be suited for other sorts of marketing. Reuben Steiger, the founder of Millions of Us, a marketing agency for social networks and virtual worlds, says that brands need to design “experiences” that use the social graph to engage groups of friends. If a wrestling association, say, wants to drum up ticket sales for an upcoming bout, it could build a widget that turns users into wrestlers and lets them fight bad guys and win gifts, while making them aware of the brand and the match.

But that possibility hardly justifies the sorts of valuations bandied around for Facebook and other social networks. Such valuations, indeed, may reflect a misunderstanding of the social graph. For bigger companies such as Google, the graph is simply the web of links among its many users. It can be used to make existing services more useful. But Google increasingly views such utilities as “features, not products,” says Sergey Brin, its co-founder. Facebook, like many hot start-ups in Silicon Valley, has some fantastic features, but maybe not much more.

Source:Economist.com


Will Google’s OpenSocial API Program Kill Ning?

November 2, 2007

By Stephen Wellman,

Google this week stormed into the social networking world and stole Facebook’s thunder with its new OpenSocial API program, an effort to create an open standard for creating and integrating applications into social networking platforms. While the rest of the blogosphere is pondering Facebook’s fate, I want to ask another question: Does OpenSocial spell the death of Ning?

For those of you who don’t know, Ning is startup that offers a platform designed to let users create and manage their own social networks. Ning has been around since 2004 and it has a list of big Silicon Valley boosters and investors, including Marc Andreessen of Netscape fame.

Ning is targeted at both consumers and businesses.Ning is trumpeting the OpenSocial platform and its participation in it. Ning’s leadership thinks that OpenSocial will allow Ning to explode (in a good way).

I am not as convinced that OpenSocial will be so good for Ning — or other social networking upstarts either. But for the sake of this post, I will focus on Ning.

Ning’s real value prop to date has been its ability to let users build fully custom, white-label social networks. While competitors like Facebook are aggregations of social networks (not just one social network), Ning’s advantage has been its ability to offer more user customization. Lots of different networks using the same platform behind the scenes vs. bunches of networks on the same interface.

Now, with the addition of Google’s OpenSocial APIs, Ning will offer the same kind of functionality as the rest of its rivals, including Facebook’s arch-nemesis MySpace. So if the entire social networking universe will soon offer integrated application functionality using the same standard (assuming Facebook signs on, which I think it will) what does Ning bring to the party?

Hear me out on this. I see how OpenSocial benefits MySpace. And I can see how Facebook might benefit from this too, despite all the naysayers who claim this move could kill Facebook. But, how does Ning really benefit from this?

As I see it, OpenSocial potentially gives Facebook and MySpace the ability to beat Ning at its own game. Assuming Facebook and MySpace integrate OpenSocial and these APIs give users the ability to create and integrate new kinds of applications and functionalities, why not give users the ability to create their own standalone networks in these respective platforms? Why not launch custom networks on both of these platforms and skip Ning all together?

As I see it, all Facebook, MySpace, Orkut, etc. have to do is add an additional level of interface customization and they can easily take Ning’s market right out from under it. Why use Ning when you could build a professional network for a large company on Facebook or a custom network for a movie or TV show on MySpace?

What do you think? Will OpenSocial spell the end of Ning?

Source:


MySpace Joins Google Alliance to Counter Facebook

November 1, 2007

By MIGUEL HELFT and BRAD STONE

MySpace and Bebo, two of the world’s largest social networking sites, today joined a Google-led alliance that is promoting a common set of standards for software developers to write programs for social networks.

The alliance now presents a powerful counterweight to Facebook, which, after opening up its site to developers last spring, has persuaded thousands of them to create programs for its users. The addition of MySpace, the world’s largest social network, and Bebo, the No.1 site in Britain, could also put pressure on Facebook to drop its own standard and join the alliance, called OpenSocial.

“OpenSocial is going to become the de facto standard for developers rights out of the gate,” said Chris DeWolfe, chief executive and co-founder of MySpace. Mr. DeWolfe said that developers using OpenSocial would be able to instantly reach 200 million users across various sites.

Google and others said they had invited other social networks, including Facebook, to participate in the alliance, whose existence was first reported Tuesday.

“The most important principle about openness is that everyone is invited to join,” said Eric E. Schmidt, Google’s chief executive.

Other members of the alliance include Friendster, Hi5, LinkedIn, Plaxo and Ning, as well as the business software makers Oracle and Salesforce.com. The creators of several of the most popular programs on Facebook, including Slide, RockYou, iLike and Flixter, have announced their intention to write programs conforming to the OpenSocial standards.

The alliance is not likely to erode the popularity of Facebook or immediately alter the dynamics of the social networking market. But it could help revitalize the sites of some of its members, which have seen their social networks eclipsed by the popularity of MySpace and Facebook. Orkut, Google’s social network, for instance, is popular in Brazil and a few other countries, but has failed to gain traction in the United States.

Google may benefit in other ways. As other social networks draw more users, it could sell more advertising on those sites. TheInternet search giant already has a $900 million advertising partnership with MySpace, and sells advertising on various other social networks. Its ads often appear inside the applications created by third-party developers. Google and MySpace have been in discussions about developing a common set of programming standards for about a year, the companies said.

At a news conference today at Google’s headquarters in Mountain View, Calif., Joe Greenstein, the chief executive of Flixter, whose applications allow users to share movie recommendations, demonstrated his program running inside MySpace.

“We are excited about OpenSocial,” Mr. Greenstein said. But he added that Flixter was not planning to pressure Facebook, where millions of members use the company’s program, to adopt OpenSocial. Mr. Greenstein said that customizing his company’s application that runs on Facebook to run on OpenSocial had been a painless task.Facebook declined to comment.

Source:

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First Look: Ning, Nexo Let You Make a Social Network

April 13, 2007

by Edward N. Albro, PC World

Now that sites like MySpace and Facebook have popularized social networking via the Web, some people want to start their own network, away from the spam and adolescent silliness that can accompany the big sites. Ning and Nexo’s eponymous, competing services stand ready to make that happen: Both let anyone create, for free, a site for their bowling club, theater company, or other group. I liked the level of creative control in Ning more than that in Nexo.

In many ways, Ning and Nexo aren’t that different from services like Homestead, which for years have helped people create personal Web pages. Both services offer you a variety of design templates and let you point and click to add elements to the page (no need to download an application, as site creation is entirely Web-based). And both will provide you with a URL within their domain.

The difference from personal pages of a few years back is in the kinds of elements you can choose to add to your Web page. Both Ning and Nexo let you put blogs, discussion forums, and video modules on your site so visitors can interact with you–and with one another.

Make Your Site Your Way

I found both services easy to use: If you have all the materials you need (photos, logos, and such), you can easily have your site up in a half hour.

I prefer the look of Ning’s templates and the basic organization of the sites it creates. And if you know what you’re doing, Ning allows an almost infinite capability to tweak your site. Co-founded by Netscape pioneer Marc Andreessen, Ning is a tweaker’s paradise. You can easily change everything from the font used for body text to the background color of the title bar. And if you know CSS, the editing possibilities are endless. Ning has also opened the site’s source code, so programmers can build small applications to perform whatever function they need and embed them on sites. Largely spoiling the look of free Ning sites, however, are the Google text ads that take up most of one of the four columns on the page. You can remove ads from a Ning site for $20 a month.

Nexo, which was in a public beta when I tested it, doesn’t allow as much flexibility as Ning. But for now Nexo has one great advantage: No ads appear on your site. Nexo CEO Craig Jorasch says the company plans to include ads on most pages, probably in the last quarter of this year. You’ll be able to pay a nominal monthly fee to remove ads, but at the time of this writing Jorasch didn’t know what that fee would be.

In my testing, I found Nexo certainly flexible enough to satisfy the needs of most people, though it doesn’t provide all the tweaking options that Ning does. On the other hand, it does have more preprogrammed modules, from a widget that lets you show product information pulled from Amazon.com to an applet that lets you post a one-question poll. I don’t like the default organization of Nexo sites, though: The first page of the site shows just a boring list of the site’s pages, and visitors must click deeper to see much of the actual content.

Ning’s blog and forum creation tools are bit more sophisticated than those in Nexo. With Ning, you can thread forum posts, something you can’t do with Nexo. And the formatting of Ning’s blog entries simply makes them look a bit more substantial.

If you need a Web site that’s heavily customized, and you have the skills to make the changes, Ning is a great choice. But if all you want is a simple site, you should go with Nexo, especially while it’s ad-free.

Nexo

Beta site; not rated
Service lets you easily set up a Web page with lots of widget options and no ads–for now.
Price when reviewed: Free
www.nexo.com

Ning
PCW79

Highly customizable service creates attractive Web communities, but ads mar the looks.
Price when reviewed: Free ($20 per month without ads)
www.ning.com


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