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Summary:

In the Internet’s relatively brief history, a lot of things that could be described as social networks have already come and gone. The past provides valuable insight when it comes to assessing the real value of social networks as businesses, as well as anticipating how they are likely to evolve in the future.

Written by Brian McConnell

As Facebook enjoys its moment in the sun, we should take a moment to step back and look at the history of computers and social communication. Some historical perspective is in order, both to assess the real value of social networks as businesses, and to anticipate how they are likely to evolve in the future.

I’ve been using the Internet since 1988, and have been using various commercial online services such as CompuServe, Prodigy and GEnie since I had my first computer. A lot of things that could be described as social networks have come and gone in that time.

Bulletin Boards

People have been using computers for social communication since the very beginning of the personal computer industry. Long before the Internet became accessible to the general public, people were hosting BBS systems, many of them focused on an interest group or local community. One particularly prescient invention was FidoNet, a network for BBSes that allowed systems to transfer data (messages, files, etc.) in bucket-brigade fashion to sites around the world. It grew to, at one point, cover much of the world, and was an entirely community-based effort.

Since not everyone had a computer , the communities that emerged in the BBS world largely revolved around computers in some way. Some BBSes focused on DIY computer projects, others on games, and more than a few were devoted to pirating commercial software.

Online Services

Commercial online services reached their peak in the 1990s, first as destinations in of themselves, and later as a way to access the Internet. These services provided access to a broad range of services that are now mirrored on the web. News, travel reservations, shopping and social hubs were all part of the package; much of what we see today on the web existed in some form on these sites. Social communication was one of the big draws for online services, as a major source of their revenue was derived from billing for usage on a per-minute basis. AOL in particular recognized this and allowed users to create communities about just about any topic.

Just as online services were reaching their peak, the web became accessible to ordinary users, turning the Internet into a mainstream phenomenon. Online services, in turn, gradually morphed from destinations to a means of accessing the Internet.

Throughout this period, the population of computer users expanded rapidly. AOL, for all of its faults, deserves a lot of credit for introducing millions of people to the Internet. As the user community grew, online services began to build communities around more diverse interest groups, most having nothing to do with computers. The community focus shifted from computers to people who happened to use computers to do something.

Web 1.0

From the mid-90s to 2000, there was an explosion of activity as companies rushed to reproduce existing online services on the web. There were many social services created during this period, notably GeoCities and theGlobe.com. One thing the web did was to eliminate the walled garden problem that plagued AOL and their brethren. This promoted the development of niche communities, such as PlanetOut/Gay.com, that may have otherwise been stifled by corporate censorship in controlled environments. While none of these services advertised themselves as a social network per se, they had many of the same characteristics.

Friendster

Friendster deserves special mention because it was the first popular web site that contained all of the features we expect from social networks today — especially the notion of using a social graph to track relationships. But was an unfortunate example of being too early in a developing market. Everything I have seen since Friendster is highly influenced by it, and generally offers the same basic features, just in a different package.

The Future

While I think commercial social networks will continue to be popular, it is dangerous to project future growth from past trends. There are several important trends already underway that, while they are good for social networking as a whole, will undermine proprietary commercial services.

Commercial social networks today are a lot like online services in the mid-90s — they’re popular because they make something easier to do (maintain a social graph, keep track of friends, search for new people). It was not that long ago when getting online was difficult for novice users. Large businesses (EarthLink, Netcom, AOL) were built around making the Internet easy to use. They became superfluous as broadband became standard and devices with built-in Net access were shipped.

I think the same thing is likely to happen to social networks, so let’s look at what a social network really does, and think about how that can be implemented on the open web.

Profiles

Social networks make it easy for people to create profiles using standard templates. This makes sense, but this is really no different than a web page. I like what Chris Messina and co. are doing with their distributed social networking project, which uses blogs as a basic building block, and microformats to embed metadata in pages. Separating profiles from other functions, like search and discovery, makes a lot of sense because then you can have one page or site that is visible via many different search tools.

Search (and the Social Graph)

The social graph is a function that can easily be added to search engines. Once web sites, blogs, etc. are tagged to indicate that they are profiles, search engines can crawl them to pick up metadata, links to friends, etc. Search engines are already good at indexing the web, so adding a vertical search for people and social information is not a daunting task. Expect the search engines to add social/people search features. While the conventional wisdom holds that this task will naturally fall to Google, I think this is an area where AOL or Yahoo could score an unexpected win, as both companies are much more people- and community-focused.

Updates

One of the reasons Facebook is so addictive is because it is a convenient way to track the status of friends. This, too, is something that can be moved onto the open web. Anyone who wants to can publish updates, events, etc. via standard formats like RSS and iCal. Anyone who wants to monitor their friend’s updates can do so, via a feed reader, or via custom applications that have yet to be built. If this becomes standard practice, there will be many opportunities for software developers to create new and better ways to track and display this information.

Follow The Money

To many, social networking is a winner-takes-all market. But I don’t think that’s the case. With the three pieces above, you can recreate what any social network does using open standards and the web. At the moment, this requires more effort, so people use commercial services, but in the long run, open standards usually win.

I would bet on a company like WordPress or perhaps Tumblr to come out with a simple tool that makes publishing profiles and updates easy, and that is designed with social search in mind. Maybe this will be an open-source tool, maybe it will be a commercial service supported by monthly fees or advertising. My guess is that many companies will get into this category, and that — just as there is diversity among blogging and personal publishing tools — there will not be one clear winner. Blog authoring and hosting companies are logical entrants, as they already do the majority of what’s needed for an open social network.

Search will be an important component of this, and I would expect that Google and other search vendors will play a dominant role here. There should also be opportunities for companies that specialize in people and social search. They’ll make money, as they already do, by mixing targeted ads with their social search tools.

The good news for users is that this will be an open market, an ecosystem, with no lock in. Users will be able to choose among many profile and update publishing tools. They’ll also be able to use whatever search tool they prefer. Most importantly, users (a.k.a. publishers) will own their data, and will be able to control how it is presented to the outside world.

The bad news for social networking companies is that this is not a winner-takes-all market, with winner-takes-all valuations. Blog authoring tools are a good comparison. This is certainly not a bad business to be in, but it is not a get-rich-quick business, either. The barriers to entry will also disappear as the network effect of having a large user community becomes irrelevant when every participant is equally searchable via multiple services. I also think that the general paranoia about big companies using personal data inappropriately will be an incentive for people to switch to other tools that provide more control over the use and presentation of their data.

If I had to pick a category to start a company in, I’d pick authoring tools. There’s real long-term value there, as people tend to pick a publishing tool and stick with it — and they’ll more for higher-end tools. If I were Facebook, I’d be thinking about how to participate in this trend — in other words, deal with change before it deals with you.

  1. Keep Abreast! nice post OM!

    nhick
    http://www.itrush.com

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  2. [...] brings two new articles of interest. One is about the changing business models for online services. Social Networks, from the 80s to the 00s is an article by someone who started using the internet in 1988 (about when I did too). It [...]

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  3. Don’t forget NNTP, ie; Newsgroups.

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  4. I completely concur. Facebook is enjoying it’s “day in the sun” but being a long time user of social sites and services dating back to the beginning I see no real vauue in Facebook and especially no really long term viability. Its novel and can be fun but is by no means necessary.

    Facebook is a tremendous waste of time. Eventually they will fall the way of Prodigy, TheGlobe, Friendster, Myspace and the thousands of other sites and services that grow to big to fast to remain cool and sticky in this evolving world.

    The promise of a truly connected world will not be based on a particular site, platform or brand but on the distribution of connections – the ability not the method. And that is the core reason Facebook and its insane valuation are in deed INSANE.

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  5. The identity issue is critical. As a developer, I want to build apps that allow multiple authentication methods (user-pass, OpenID, Facebook, Bebo, OpenSocial, etc) yet maintain a core set of features.

    Building unique code for each platform isn’t going to be feasible as more sites create APIs to access their users.

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  6. [...] a rather simple idea: an open standard will be developed/adopted for social profiles (much like RSS for articles, iCal for calendars), online publishing platforms (e.g., Blogger, Yahoo!) will adopt it as a feature, and then commercial social network providers (e.g., Facebook, MySpace) will be in big trouble. [...]

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  7. For a litle pre-online social network history, have a look at The Social Construction of Reality:
    http://en.wikipedia.org/wiki/The_Social_Construction_of_Reality

    I read this book in college and it had a major impact on how I view groups. The book which was written in 1966 continues to hold it’s weigh in the classical tradition of both philosophy and sociology.

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  8. Great historical perspective. Wonder how people can make money with tools, especially when they get traction by first giving them away for free, thus training their users to expect tools for free.

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  9. Brian,

    I think you’re right on point with your historical and current review of social networks. I continually tell friends and colleagues that Facebook is worthless as it is nothing more than a “clean and friendly bulletin board”.

    I would love to be a “fly on the wall” at the FB board meeting when their investors realize that they have overcapitalized the most hyped bulletin board in the history of the internet.

    This said, the structural product weaknesses of today’s big social networks (MySpace included) combined with increasing user desire to control their personal profiles (incl. social graphs and data) throughout the web will ultimately erode the popularity of the big social networks.

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  10. [...] been quiet here for a very good reason: I’ve been writing! But I wanted to point out a recent post over at GigaOM that shows the long history of online social networks. Lots of folks believe they kind of sprung [...]

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