3 Feb 2011

The internet IS the social network

Fortunes are being made and lost in the quest to create the next great internet business model.

Trees are dying, electrons are flying, in the debate over social working, web 2.0, whatever.

To me, these debates are simultaneously boring and interesting.

Obviously, people are social; they are using the internet to socialize.

Obviously, they don't like being monetized while they socialize.

So there's a tension between their willingness to adopt better, cheaper tools and paying for these tools.

We understand that face to face conversations are free, but we often forget how expensive it is to get faces in the same place, at the same time.

That's why we've been willing to pay for services that save us time while delivering some version of that face to face conversation -- letters, phone calls, email, text messages, etc.

Technology (hardware, software and internet protocols) has lowered the cost and improved communication over time. A free video chat with someone on the other side of the planet is an amazing improvement on a letter that takes 2-3 weeks to get there, at a cost of a stamp and trip to the mailbox.

These new technologies are evolving, in both format (from voice to video) and quality (from hotmail to gmail). Amazing services (napster, digg, orbitz, myspace) are quickly replaced by more amazing services (torrents, reddit, kayak, facebook).

Where's the business model here? Subscription (buy broadband, get skype for free) and subsidy (see ads, get gmail) can work, but they fail when the competition gives a better deal (gmail ads are less intrusive than hotmail ads) or when the revenue model doesn't match the use (facebook is not about buying things from advertisements).

Most of these thoughts are directed at the unfolding Facebook disaster, but they apply to the rest of the internet, where volunteers produce the best services.

Why are so many people willing to work for free? Personal pride, community standing and/or participation in a gift exchange. It's hard to monetize these instincts and ever harder to compete with them.

Just sayin.

Bottom Line: The internet makes our lives better when it helps us to be better humans.


Wainstead said...

And speaking as a programmer, because for us it is a meritocracy.

CRG said...

"Obviously, they don't like being monetized while they socialize."

Not sure I agree with that one. Coffee shops and bars (not to mention matchmaking companies) have been monetizing socialization for years and no one seemed to mind much.

I think that what people don't like is being monetized without getting anything (or enough) in exchange.

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