Social Networking's Next Phase - New York Times

This article examines the future of social networking sites by looking at current trends in the market, specifically Cisco’s seemingly odd decision to buy the tiny social networking company Tribe.net. Cisco’s decision reflects the belief that social networking sites will soon be everywhere, and they want to get into the game right now in order to offer these services to their clients. The article discusses the future of social networking Websites, hypothesizing that they will continue to grow in number and type. It also discusses the possibility that although large-scale sites like facebook.com and MySpace.com have been immensely popular, other niche sites (like Shelfari) are becoming more popular. These sites allow users to gain more control over their network and express their interests in a more focused community than, say, facebook.com. However, there are certain barriers to entry for social networking sites, and Cisco (and other large corporations who try to dive into this market) very well may face some of these difficulties. First of all, it is tough to get consumers to initially buy into a social network until many other people have also signed up. Also, getting consumers to sign up for multiple sites is difficult because of the redundancy and tedium of entering the same information. This article is interesting in that it shows how ubiquitous and economically important social networks have become. Cisco clearly thinks it a worthwhile investment and that there are diverse possibilities for social networks. However, this article also points out the challenges of starting a social networking site. Something this article did not mention are the joint deals that are being made between corporations and social networking sites, like Facebook.com's deal with Comcast. This is another dimension of diversity and growth for this industry.

This article did offer a succinct look at how far social networking sites have come and where they might go. I was especially intrigued by the idea of a long tail of social networking on the Internet which could be much more personalized; and yet there is also the convenience of the larger-scale systems. Currently, there is a mix of the large and small, and I’m interested to see how these acquisitions (like Cisco’s) affect the future of social networks. The problem for small networks is that they must overcome the aggravation of joining and of the smallness of their communities; I think the way to do that is to appeal to the smaller, niche markets which want to stay small.

Dot-Com Bubble: Why It's So Hard to Value Social Networking Sites

This article questions the very high valuation of social networking Websites (MySpace and Facebook being valued around $15 billion and $900 million, respectively) and compares these potentially inflated figures to the dot-com bubble before it burst. It describes the difficulty in making an accurate estimate of these companies’ worth because of a lack of data on their advertising revenues and cost structure. This article was an interesting look at the business end of social networking sites, as opposed to the cultural end (which is more frequently found in scholarly research). The potentially inflated valuations of these large-scale social networking Websites is also partially due to their high-speed growth. Both MySpace and Facebook have grown dramatically in the past few years (and will likely continue to do so), but this article argues that such growth does not necessarily bring profits to match.

My only critique of this article is that it vacillates between the view that the social networking companies could be a repeat of the dot-com bubble and the position that they are not in fact as risky as one might think. I didn’t feel that he fully reconciled those two opposing viewpoints by the end. They explain this discrepancy in terms of the companies being risky for investors but not for the marketplace as a whole, like the dot-coms of six years ago were. One might need a stronger background in investing and business to fully understand the implications of that statement. What I did find useful in this article though was its discussion of the social networking companies, specifically MySpace and Facebook, as major players in the business world. These new media Internet corporations, driven by user inputs, are currently being bought for many millions, and in some cases, billions of dollars. The article questions whether such Internet social networking Websites are a passing fad, but it appears that investors and corporations that buy into them (like Comcast, Viacom, Yahoo!, News Corp) think them stable enough for the time being.

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Social Networking's Next Phase - New York Times

Dot-Com Bubble: Why It's So Hard to Value Social Networking Sites