Posts Tagged‘social networking’

Social Networks: Monetization Even in Death.

The explosion in social networking sites and technologies over the past few years has been nothing short of staggering. When I first joined Facebook sometime back in 2007 I only did so because of the social pressure to do so, not because I had any interest in the technology itself. Fast forward a year or two and you would be hard pressed to find anyone of my generation who isn’t on at least one social networking site with many of them on several. Today social networking and media are the biggest draw cards of the Internet with them only being surpassed by the long time giants like Google and Yahoo.

As with the dot com crash before it the kind of sensationalism that surrounds the social Internet has led to a veritable army of competing services all looking for a slice of the extremely profitable pie. For the most part they all have their niche, such as Tumblr and DeviantArt, and a dedicated following that will ensure that they’re around for a long time. Other sites are popular due to a critical mass of users within a region, such as Friendster and hi5. Any social networking site that doesn’t fit into these two categories generally comes and goes without too much fanfare leaving their creditors in the lurch and a set of users looking for another service. Due to the fact that social networking is still a new phenomenon we have yet to see a giant fall, but that doesn’t mean some aren’t about to.

Take MySpace for instance. Ever since it was dethroned as the number 1 social networking site by Facebook it’s been on a long downward path to becoming irrelevant. The past year have seen it drop from its lofty heights of the top 10 most visited sites on the net to its current position of 16. Whilst I doubt that it will fade from existence completely, thanks mostly to the niche it cornered with band/music sites, you can bet that this drop in traffic is hurting their bottom line.  Still the current owner, media giant Rupert Murdoch, has no plans to sell off his interest in the flailing site so that begs the question: what’s he got up his sleeve?

About 6 months ago I was having a healthy debate with some of my friends about the life and death of social networking sites. A few held the belief that these sites were going to be very short lived and we’d soon see them fall off the face of the earth. I didn’t share their view but became interested in what would happen as a social networking site started to circle the bowl. In the end I came to the conclusion that when advertising revenue began to wane they’d turn to the thing that once made them great: their users. So whilst you might not have the eyes to attract the advertisers you once did you do have a giant database on millions upon millions of people, with all sorts of delicious data mineable data held within. I made the point that upon the company realising the site was going down they’d start selling off data whilst it was still relevant in a desperate hope to keep themselves afloat.

You can then imagine what I thought when I saw this little tidbit of news:

MySpace has taken a bold step and allowed a large quantity of bulk user data to be put up for sale on startup data marketplace InfoChimps. Data offered includes user playlists, mood updates, mobile updates, photos, vents, reviews, blog posts, names and zipcodes. Friend lists are not included. Remember, Facebook and Twitter may be the name of the game these days in tech circles, but MySpace still sees 1 billion user status updates posted every month. Those updates will now be available for bulk analysis.

This user data is intended for crunching by everyone from academic researchers to music industry information scientists. Will people buy the data and make interesting use of it? Will MySpace users be ok with that? Is this something Facebook and Twitter ought to do? The MySpace announcement raises a number of interesting questions.

The 22 sets of data being made available are cheap. Prices range from $10 for raw dumps from the MySpace API to $300 for everything broken out by latitude and longitude. Subsequently derived data sets can be put on sale by InfoChimps users as well, with a revenue split.

It’s always nice when you make predictions that are eventually vindicated :)

Save for the companies that will build their revenue streams off doing exactly this your traditional free, ad supported social networking site will one day turn around and start selling your data when times get tough. To be honest I’m surprised that they didn’t do it sooner as in June last year they slashed their workforce by about 30%, another sign of their imminent downfall. So whilst this maneuver won’t draw anymore users to MySpace it will probably keep them afloat for a little longer, maybe in the hopes of revitalizing or re-branding it.

Does this mean that other sites will quickly follow suit? Unlikely, whilst its tempting to start peddling out your data to anyone who wants it you open yourself up to a whole lot of issues with privacy that might not be immediately apparent. Whilst I appreciate that most users will probably be unaware of MySpace doing this if, for example, Facebook did this you can guarantee that there would be a noticeable backlash amongst the more privacy savvy crowd. It probably wouldn’t hurt them in the long run, but it really wouldn’t do them any favours as well.

MySpace is well on its way to be the first casualty of the social web and its demise will provide interesting insight into how these giant social sites unravel as they venture downwards. It will still be a long time before we can stick a fork in MySpace but the slow downward trend it is facing will show us what to look for in the other Internet giants should they begin to falter.

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Google’s Buzz: Geon’s Goldmine, Wave’s Demise.

So a couple days ago I caught wind of yet another upcoming Google service called Buzz. On the surface it looked like another attempt to crack into that oh-so-lucrative area of social networking (remember Orkut? Still big in Brazil and India apparently) but with a slight twist, it was going to appear in Gmail. Initially I wrote this off since I don’t use the Gmail interface very often, I’m more of an Outlook kind of guy, but when I logged in this morning and was invited to give Buzz a go I thought I might as well give it the once over to see if there would be any value in switching across.

So the integration into Gmail is pretty seamless, its just another folder on the web interface. With Gmail attracting some 150 million users every month (Less than half of Facebook, FYI) that means they have a good amount of eyes on their product already. Still it will be interesting to see the conversion rates from regular Gmail users to Buzz as the welcome screen lets you opt out completely with one click. There’s really no bells and whistles on the landing page for Buzz either so you’re not going to have to duck and weave your way through a new UI to get Buzzing. Overall you could be mistaken for thinking that Buzz was just a strangely named email folder with an icon.

I set about adding contacts to my Buzz page to see how adding people would go. Much like Facebook searching for anyone’s name directly usually ends up with thousands of people who you’ve never seen before. You can search through your contacts but this is probably the first place where Buzz falls down. To add all my Gmail buddies (which are few since I don’t use the web interface) I had to go to the search box and type in their name. I wouldn’t want to have a long list of people I’d like to add to this as I’d have to type them all in again to add them to my Buzz feed. Also while running under Firefox 3.5 I had the search box lock up on me at least 3 times and had to wait for the script kill pop up to be able to regain control of my browser. Granted this was the only technical difficulty I had with it (a long way from Wave, which we managed to crash regularly) but still any web application that locks up my browser doesn’t give me a good impression, especially when it’s something from Google.

After getting all my contacts into the list (and noticing that they haven’t posted anything to Buzz yet) I started adding in some “connected sites”. These are basically sites that you either contribute to like Youtube and Twitter or sites you own, like this blog. If you’ve created a Google Profile before you’ll be familiar with this process and the list they create is drawn from the same information. Most notably if you’ve used Google’s Webmaster’s Tools it will pick up on the sites in there as well as some other services that use your Google login. Unlike their profile service the number of extra sites is quite limited with services like Youtube, LinkedIn and Orkut missing from the list. This is strange considering 2 out of 3 of that list are in fact owned by Google.

So the real meat in Buzz seems to come from its ability to aggregate information from a whole bunch of sources into one location. I can understand the motivation behind this as it is pretty much the same idea that drives Geon. There’s also the fact that Buzz will have integration into other Google services like Maps and will also let you export a person’s feed as RSS. It would be quite an understatement to say that this wasn’t a goldmine for Geon as at its core these 2 technologies are what drives the information that will be available through it. For good measure Google slapped on the ability to post directly to Buzz which I think is completely useless but is required to get those Gmail users using Buzz sooner rather than later.

Overall it looks like a decent service and the captive Gmail audience was a good target to launch this product at. However Buzz detracts quite heavily from Google’s other communication product Wave. I sung high praises of Wave when it was first released but I’ll be honest with you, my last couple logins have seen it turn into a ghost town. My last wave is dated the 27th of November and I haven’t heard anyone else mention it in well over a month. Buzz claws away that tiny amount of market share that Wave had by giving the same level of information aggregation minus the confusing interface and social convention shift. Wave may be great for collaboration but its current market is pretty narrow, especially when there’s no one else using it. Had wave been introduced in a similar way to Buzz I could have seen it garnering much more acceptance and Buzz would’ve become an augmentation of it. Rather now it seems Wave will be left to its niche and Buzz will be the one to enjoy more widespread success. That might have been Google’s plan all along however.

Will it ever be as popular as Facebook or Twitter? Probably not but I don’t think that’s Google’s intention. It’s another avenue that Google can exploit to better target their advertising and increase user engagement with their services. With Wave still trying to find its place (and monetization stream) in the world Buzz is a more cautious step towards getting more people on Google’s products other than search. Personally I can’t see myself actively using it, but I’ll definitely be integrating it in much the same way as I did with Twitter.

You Young Whipper-Snappers: Get Off My Blog!

Even though I’ve been doing this whole blog thing for a while now (well, longer than I’ve held most jobs in the past 5 years which is saying something) I still feel that’s probably one of the more out-there hobbies that people take on. Whilst I share this interest in blogging with many of my social circle for the majority of them they have little to no interest in the long form of social media, gravitating much more heavily towards Facebook. Can’t say I blame them either as the format there lends itself easily to posting a quip or comment in under 5 minutes and usually generates a very immediate response. Writing a blog post takes at least 1~2 hours out of my day and the results vary wildly from a slew of comments to barely registering on anyone’s radar. It’s definitely akin to shouting into the darkness hoping someone listens.

Maybe that’s why I feel so comforted by my Google Analytics account.

More interesting however is how the long form of social media on the Internet is on the decline:

Blogging is falling out of favor among the young’uns these days as they move to quicker-moving social networking sites. At the same time, older adults are getting into blogging and teens still aren’t hot on Twitter, at least according to the latest report from the Pew Internet and American Life project.

Only 14 percent of teenage Internet users said that they blogged last year—that’s half the number from 2006. Similarly, teen commenting on blogs is way down from 76 percent in 2006 to just over 52 percent in 2009. It doesn’t matter whether the blog is on Blogspot or buried within MySpace, either—blogs in general are definitely not the new black.

Delving into the statistics that the article above was based on reveals that not only did the teenage population leave the blogging platform en masse but also the young adults. There was a slight improvement in the over 30s and as a whole the Internet has seen a rise in the usage of blogs but for the youngsters and fledgling adults it would seem that blasting your thoughts out hundreds of words at a time is just not the in thing anymore. That left me wondering: why the hell is that?

I could easily write the whole phenomena off as being part of the revolution of mobile Internet. Nearly every modern phone has a Facebook application on it or you’re a Twitter account away from enabling it on any SMS capable phone. I’ve tried doing blog posts on my phone in the past and even with a hardware keyboard its laborious work and I can imagine would feel quite unnatural to a demographic who grew up with short form communication method SMS as their defacto standard. Thus with our increasingly mobile generation the longer forms of social media become outmoded for the quick, up to the minute feeds that services like Facebook and Twitter provide.

However I believe there’s also another side to this phenomena that will be hard to find in statistics like this. The blogging medium has evolved quite a lot over the past 10 years, going from something that only the technically elite were capable of to becoming freely available to anyone who cares to spend 5 minutes setting up an account on Blogspot. Over this time corporations began to see the value in such information channels and so the corporate blogs were born. The same thing could also be said for celebrities with their blogs functioning as a direct channel between themselves and their fans. A great example of this would be the Dilbert blog as prior to launching it no one really knew the face behind the comics that parody our cubicle life so aptly.

To use a musical analogy, blogging sold out. For the most part all the large blogs around the world are centered around driving traffic and getting more eyes on the content you’re either producing or regurgitating. Gone are the days when a blog was someone talking about their life or what interests them. No today you’re more likely to find a corporate blog or niche news aggregator, with the one you’re reading now being no exception. It started out as a platform for me to collate my various Internet censorship fighting exploits and evolved into what it is today. But make no mistake I’m just a few steps away from being the newsbots I used to loathe so much.

Personally though it feels like an evolution of the medium. It initially started out as an easier way for anyone to have a presence on the web and has since evolved into a tool that’s been applied in a much wider sense. The younger generation hopped on this tech because it was new and cool but with all the late adopters coming to the field the platform of blogging has lost its cool and the likes of Facebook, Twitter and MySpace are here to pick up the slack. It will be interesting to see how long social network can go before it starts to lose its shine to, if it ever does.

Internet Privacy? Surely You Jest…

Ever since the social web revolution of the past few years the issue of privacy has been thrust into the limelight repeatedly with the same results every time: people whine and complain yet nothing really changes. Unfortunately the majority never end up realising that anything you put on the Internet can be considered private, just as anything you left out on your front lawn would be. Still people continue to use the service and put increasingly inappropriate information up causing sites like Fail-Book to materialize that exploit everyone’s misplaced trust in this service.

Don’t get me wrong though, I have a Facebook account with quite a lot of information on it. However for the most part the majority of it is locked out to the wider world, but I’m under no illusions that I’m a social engineering attack away from one (or more) of my friends being compromised and my full account being laid bare for whomever was after it. That doesn’t worry me however as the data I have on there is nothing a quick Google or thumb through the Whitepages wouldn’t pick up. I also have a damn good level of trust in my friends to not put anything stupid up there and three years of use of the service hasn’t seen this trust broken. It would seem however that I’m in the minority.

This still doesn’t detract from the fact that some of Facebook’s policies are a ass-backwards. Mark Zuckerberg, Facebook’s co-founder and CEO, has gone on record recently saying that privacy is no longer considered “normal”, something which I’m finding hard to swallow:

Mark Zuckerberg, the founder and chief executive of Facebook has said that people no longer have an expectation of privacy thanks to increasing uptake of social networking.

Speaking at the Crunchie Awards in San Francisco this weekend, the 25 year-old web entrepreneur said: “People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people.”

Zuckerberg went on to add that the rise of social media reflects the changing attitudes among the general public, saying that this radical change has happened in the space of five years.

We have a term here in the IT and engineering industry called eating your own dogfood. When an organisation provides a service it speaks volumes when they use the service themselves. Zuckerberg, to his credit, does use Facebook however it would seem that he has a different expectation of privacy to the one he preaches. I say this because recently Facebook enforced all users to update their privacy settings, with them oriented towards exposing more information to the wider world. It was a valid move for them from a business perspective (more public data = more visibility) however when their own CEO ends up blowing his profile wide open you have to question how the normal user will fair. Zuckerberg stated that it was deliberate, but his actions say otherwise (I.E. it’s now back the way it was). You can see why I don’t swallow the tripe that Zuckerberg is peddling, he’s saying one thing and doing another.

For some reason the social web has made us incresingly trusting of large organisations providing us something for free. In fact it’s the norm and any organisation attempting something on the web that dare charges for it is only months away from being usurped by some young upstart in a garage who does the same thing for gratis. This means now that most of the free applications on the web don’t seek revenue directly from their consumers, they get it from the data that their application harvests. The price you pay for free services is that organisation knowing some very intimate details about you.

You might not think there’s much value in knowing that you loved that book you read last week or that you and a couple friends are all fans of the same celebrity but to marketers and product researchers this stuff is a drug. Facebook’s advertising system is so detailed that you can narrow the demographic you target by age, gender, location and even sexual preferences. It doesn’t stop there either, with them tracking basically every activity on Facebook:

The Rumpus: On your servers, do you save everything ever entered into Facebook at any time, whether or not it’s been deleted, untagged, and so forth?

Facebook Employee: That is essentially correct at this moment. The only reason we’re changing that is for performance reasons. When you make any sort of interaction on Facebook — upload a photo, click on somebody’s profile, update your status, change your profile information —

If you have a product with a known demographic your advertising budget will go a lot further if you can just target them, rather than say posting a billboard on a highway. Facebook isn’t the only one doing this, our friendly search giant Google’s advertising network has been using such demographic capturing technology for years now to better target their Adsense and Adwords programs.

So while I won’t go on a crusade and say that everyone should stop using these services I will say this: manage your expectations appropriately. Facebook et al are great tools for staying in touch with friends (and finding long lost old ones) but if you wouldn’t put it on your front lawn you shouldn’t put it on Facebook. If you can’t trust your friends not to put something on there then it would be best not to be on there in the first place. Whilst I would lament the death of such humourous sites like Fail Book it would be a small price to pay for the populace at large wising up to the fact that there’s no such thing as a free lunch in this world.

But then again I’m probably asking too much. (Seems I’m getting more and more cynical in my old age ;))

The Oldest Form Of Advertising.

Everyone knows someone (or is that someone) who’s so involved in a certain hobby or profession that they can spout the latest news about anything in that field. I often do this to my friends with things about space since I can’t help myself when and often lose hours trawling through Wikipedia and online space publications. It’s these kinds of people that advertisers love, since they’re basically a captive audience for their marketing and are basically employees working as pro bono evangelists. There’s nothing companies love more then getting something for nothing.

So enter Viral Marketing. Whilst the term itself has only been around for the past 12 years or so the concept has been around for quite a lot longer. Probably one of the best examples of this was Charles Ponzi’s famous Ponzi Scheme which went viral very quickly as news spread about the amazing returns on investment he was offering. Its this kind of reaction that many marketing companies try to achieve these days by targeting “high value” individuals who will do a lot of the grunt work for them. In the end the hope is that the advertising critical mass will be hit with little involvement from them, and hopefully without the public at large knowing it was orchestrated by them.

Up until recently the public of Australia hadn’t experienced a successful viral campaign, but that all changed when a love-struck waitress found a coat left behind by a dashing man. The story had all the elements of a great love tale: a chance event, love at first sight, tragic departure, a small clue and a desperate struggle to find the “one”. It’s the kind of thing that the media loves to grab a hold of because it’s got something in it for everyone and makes for a great chat over a coffee (It was on most of the morning shows, but few of the more serious evening programs). From the start people were sceptical, but it managed a good few days of press before someone decided to do some actual investigation and find out who she really was. There was of course a bit of backlash from the community at large who felt they’d been led up the garden path and were astonished that advertisers would do such a thing. There was a brief period after the whole thing came apart where the media actually educated the Australian public about such campaigns, something which I found quite refreshing.

Viral campaigns are a double edged sword when it comes to drumming up hype for your desired product/service/idea. Sure you might end up creating an environment where the product advertises itself (like it seems to do with any Apple product) but at the same time you give up control over what the outcome might be. Whilst you might be successful you have to take caution not to make a fool out of the people you’re advertising to, as the bad news will spread just as quickly as the good. Additionally it’s hard to gauge the results of a viral campaign as they’re notoriously unpredictable, unlike more traditional methods which have decades of research behind them.

I guess it all comes down to an old Japanese proverb: “If you believe everything you read, better not read”. As always, keep a sceptical eye on the media and practice self education on anything that someone might posit to you.

That’s not to say that all viral campaigns are bad or misleading, some are actually quite entertaining:

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Your Website, Their Work.

Back in the early days of the Internet only technological giants and the technical elite were able to put up a website and make people aware of it. When things like search engines relied on you submitting your website to them it was obvious that the majority of the web would not be available to you unless someone in the know pointed you in the right direction. As with any technology this started to change very rapidly as it became more mainstream and this caused a major shift in the direction many sites took.

Enter the wonderful world of user generated content. In essence the idea outlines a publicly available system whereby the content of the site isn’t driven by the webmasters and contributors, but by the users of the site. Whilst this initially started off with text based sites like message boards and mailing lists it as the capacity of the Internet grew so did the range of applications that these user focused sites could provide. Sites like Flickr and Youtube began popping up all over the place and long established websites, like Amazon, began augmenting their sites with user reviews and so on. No longer did the websites have to rely entirely on their own staff to generate data for the website, the world at large would do it for them.

It’s an interesting idea for a website to undertake, basically relying on the assumption of if they build it, they will come. There’s got to be something attractive about the website initially to draw the crowds in and then it has to be provocative enough to get people to share something with everyone else. Message boards do this well since they are usually dedicated for a purpose and are more like a social club then just a plain website. Sites dedicated to just sharing content with each other have the tougher task of enticing people in and the ones who are really successful are either the first to market or ones that provide value-add services on top of what their competitors offer.

Although it’s typically seen as the lazy way of building a website there’s still quite a bit of work involved in providing a web framework for people to thrive in. Granted it’s a lot less technical and most of the work is around brand management and marketing (which is probably why they’ve proved so successful, they’re starting from the ground up as marketing ploys) but since the content is driven by the users webmasters will often find the direction that site takes driven by them as well. I guess the cost of not having to provide content for the site is submitting control of the site to the crowd.

With so many user based services already established these days anyone trying to enter this market really has to provide something new and innovative in order to gain any traction. This is a great thing for the Internet services industry as it promotes innovation rather than stagnation. Granted there’s a lot of services out there are just mash-ups of several online services (which can do well in their own right) but the majority of new user-content based services are trying to offer a slight spin on the current concept often capturing their own niche market.

Now I just have to work out how to mash up something like FaceMyTubeDigg……. ;)

Social Networking – The Voyeur and Exhibitionist Unleashed.

With the increasing prevalence of social technologies more and more of our daily life is becoming part of an online community. Increasingly spending leisure time at the computer is no longer a “geeks only” activity and what we’re seeing is the transition of what people would regularly do through another, less public, medium onto online sources viewable for almost anyone who would want to see them. What is truly surprising is how people willingly share some of this information, until you consider the origins of these social applications.

Take a social group (friends, colleagues, etc) what are some of the main activities that such a group might carry out? Going out to places, sharing experiences about recent events, chatting about topics and so on. In essence social networking tools have just enabled a greater audience to use the Internet as a more convenient place for them to gather, and as such they will use it as they would say a table in a coffee shop, sharing experiences and the like. This is the two sided coin of exhibitionism and voyeurism, we all want to share our lives with other people and we’re also intersted in learning about others.

Sites like Twitter and MySpace take it one step further. Instead of it being focused directly on a circle of friends it’s more about your own personal space on the Internet that you can just happen to share with your friends (and let everyone else know who your friends are). These sites are more suited to people who’s personality tends towards the exhibitionist in them, as it’s basically an open invitation for anyone to come in and have a look at their life. They’re also a boon for the more voyeuristic types as well, since they can get a glimpse of someone’s life without them knowing about it.

It’s this strange combination of unleashing two sides of a (usually) socially taboo coin that drew a lot of people to these sites in the first place. We all know someone who has 300+ friends on Facebook and know full well that at least half of them are just on their to bump up their friends count. However this is exactly what would attract them to the site, since they now have a captive audience of 300+ who will get all their status updates and delightful quiz requests. On the other side there are those who want to see what people they used to know are getting up to, sometimes out of a slightly twisted desire to see if they’re doing better then them (basically a real time high school reunion, with all the lovely embarrassment/embellishments that come with it).

Personally I got into this whole social networking thing for two reasons. The first was that a lot of my friends were on it and were using it increasingly to organise events and get togethers. This got my foot in the door so to speak, and I stayed as it became a great tool to keep in touch with my friends in far off lands. The second was after I discovered LinkedIn, as I began to use social networking professionally. Although I do question the benefits of doing so currently.

In essence these online social networking sites are just another playground for groups of people to do things that they would normally do, just through a different medium. Whatever attracted them to these sites originally existed in the real world first and it’s no surprise that these sites have brought their real world problems along with them.

First One’s Free.

In this rapidly changing technologically driven world many new up and comers find it hard to differentiate themselves from amongst the hundreds of similar projects. In an effort to drive people to use their services we’re seeing more and more companies going the route of providing some or all of their products completely free to the end user. Whilst I believe this is a great idea there is, of course, always some catches when it comes to accepting free gifts from corporate overlords.

A great example I can think of is the good old de facto corporate communication device, the Crack(Black)Berry. Recently at my current gig for the Australian government my department decided to do a trial of these in order to see if there was any value in implementing it. Of course Telstra comes to the table offering a free 3 month trial with pretty much everything included. The handsets were sent out to the executives and we went through about 2 days of configuration work to get it all done for them. It didn’t matter that we’d already installed Exchange Activesync, which would allow them to use any Windows Mobile device and wouldn’t cost them a cent since we’d bought the license in a bundle. So since the Blackberrys had been in the Qantas lounge magazines we were basically stuck with trialling this technology for them, and we all knew where it was going.

Fast forward to the end of the trial and we have half the execs praising the new system, a few dissenters and the rest on the fence. It was pretty obvious from the onset that once this was in place they would not give it up, even though the corporate directive is to investigate all possible solutions and judge them on their merits.

The same situation has been used in many different situations with online services. LinkedIn used to be a completely free service for professional social networking, and it did a great job at that. It was basically a no frills Facebook, something which is handy when you’d be browsing it at work. Of course the creators saw that they could then add in extra features and offer them as premium accounts, something which is akin to buying an expensive car in real life. Sure, it will probably improve people’s impression of you (if they’ve never met you before) but past that it’s value is rather small. Since many people use LinkedIn in order to build a professional network and hopefully generate business from that the paid services might hold some value there. There’s still no substitute for good old fashioned real life networking though, but that doesn’t stop people from trying to charge for that, either.

However, there are those that still buck the trend when it comes to providing services for free and staying away from the premium service charge. Google has released service after service that, whilst most of them still carry the beta tag on them, remain free after many years in service. This can all be put down to their ruthless precision in refining down an advertising model that appeals to every business, which is built upon their solid leadership as a search engine.

In reality most new up and coming technologies these days are being offered as a free baseline with the additional features costing you a couple pennies more. It’s all done to drive up market adoption and it is a great thing for the consumers, who get a lot more for their dollars since they can try before they buy. Just don’t be too shocked when your favourite free service starts asking for your credit card ;)

The Dot Com Bust and the Social Web.

Back in the hay days of the Internet companies were all looking at exploiting this new means of marketing their ideas. This saw the meteoric rise of many Internet firms who specialized in either creating an online presence for a company or building web enabled apps. I liken it to when you were a child and one of your friends got the latest and greatest widget, you just had to have it for yourself. It was this kind of me-tooism that lead to the technological stock ticker of America (NASDAQ) to reach a dizzying height of 5048 points on March 10, 2000.

Anyone can tell you that the only place to go from the peak of achievement is back down, and boy it did.

After the rush that was the Y2K problem many companies found themselves set for the next couple years. Generally speaking most IT equipment has a life between 3~5 years when speaking in terms of major upgrades. This left many of the companies who had based themselves around selling equipment and services for the web and Y2K compliance without clients for years. Combine that with the dodgy accounting practices and the excessive IT culture that had developed (Aeron chairs anyone?) many IT companies found themselves failing in a heap very quickly, with a lot of them declaring bankruptcy and flooding the market with IT professionals.

In reality this was a good thing for the IT industry. With any new market you’ll get a time when investors will go crazy over it because it’s the latest and greatest, which leads to an asset price inflation bubble. Once people realise that the market is based purely on speculation (or someone reveals it’s just a fancy ponzi scheme) then it will inevitably crash. However, once the crash is complete and the vultures have flown away the new market will seek to establish itself as a true discipline, and I can tell you that the quality of many Internet based companies and applications improved dramatically after the dot com bust, as the business struggled to entice investors back.

Whilst I can’t remember who said this to me first I do have a great quote from one of the engineers who rode out the dot com bubble (probably paraphrased to):

I remember sitting down with some executives and explaining their new accounting system to them. About 10 minutes into the meeting one of the execs said to me “That’s all great, but can you put it on the web?”

Using this as an example, can you think about a current trend that also lends itself to this quote (I’ve already given it away with the title for this blog post).

Right now Social Networking sites and services are growing rapidly in popularity and it seems every other week some new fangled Web 2.0 application comes out that will revolutionise the way we communicate with each other on line. The popularity of these services is now starting to affect business decisions, with many companies wanting to increase their online presence utilising them in some way or another. There are some benefits to this however, as since many companies want their services available through social networking tools they have to increase their ability to interoperate with the world at large, and openness in communication is always a great thing.

It would seem the quote for the Social Web Bubble would be “That’s all great, but can it update my Facebook page?”.

However, thanks to the global financial crisis I don’t believe we’ll see another dot com bust style drop in the technology stocks like we saw back in 2000. All the speculative value that was created in the short time between the dot com bust and now has been effectively killed by the crisis, but with the strange side effect of leaving many of the companies in tact. The GFC may be a blessing in disguise for the companies who have based their wealth on social technologies, which will hopefully lead them to establish themselves properly as the times get better.

When I first thought about writing this blog post I was reminded of the old saying “Those who are ignorant of history are doomed to repeat it”. With only 8 short years between the dot com bust and the GFC it would seem that many tech companies would be wiser then to try and hop on a bandwagon to make a quick buck. The answer lies in the pioneers of the new social technology. Primarily these people are made up of those who, whilst have a rich technological background, where not in the industry at the time of the crash. A great example would be Facebook’s CEO Mark Zuckerberg, who would have been only 16 at the time of the bust. I’d bet my bottom dollar that whilst he created the idea there are many engineers working on his team who were in the dot com bust, but make their money on their skills rather then their ideas.

It would have been interesting to see what would have happened to the Social Web had the GFC not came along.