Social Networks

This year's Reboot theme was Free, a subject I have some views about. I couldn't make it, but have followed with some interest. Here are a few of the blogs covering the things I found interesting, plus some of my comments. I find many commentators critiquing these new ideas don't go far enough - this post, on the other hand, probably goes too far

New Thoughts in Social Media:

1. Jyri Engestrom on Nodal Points (blogged by David Weinberger). Jyri is imho one of the structured thinkers in the Social Media space (which is sadly far too full of neo-hippies, snake oil salesmen and general fluffbrains) and talks about how this all ACTUALLY WORKS. He has pushed his concept of social objects - ie reasons for connecting but expressed in codifiable form - forward to nodal points, which are connection nodes in the social matrix where information is stored and which can give peripheral context

“Imagine a physical world where we have as much peripheral information at our disposal as in WoW.”

Like Jyri, I've been fascinated for awhile about how we can leave context data at key point in data matrices and have it pop up where / when needed - so more thinking on this is welcome!

2. Don Stowe Boyd follows the whuffie factor to its endgame and argues that the cosy nostrums of warm fluffiness will be more like the cosa nostra of the Mafia. Its not all sunshine and flowers..... (more of this below)


FreeConomics

3. Jerry Michalski on Free (as found reported by Dieter Rappold in one of the few good overviews of the sessions I found)

On the second day Jerry Michalski also talked about different free business models based on the Article of Chris Anderson in the Wired Magazine:

1. Freemium (Flickr)
2. Advertising (Google)
3. Cross Subsidies (donate CDs, have packed concerts)
4. Zero Marginal Costs (digital goods)
5. Labor Exchange (digg, Amazon Reviews)
6. Voluntary Donations (A throusand friends)
7. Pay what you want (TerraBite)

- He showed us also that so much can be done for so little - Craig Newmark shook up 3 industries of billions and billions with craigslist: Yellow Pages, Classifieds, Directory Services! No wonder given the fact that 60% of the internal cost at Telecoms are histrocial costs for legacy systems and billing processes. If one could get rid of that! We got told in business schools that Scarcity = Value. But we increasingly see a growing abundancy mentality.

As Dieter notes, the risk is that:

Todays abundance of Music/Content/Software imposes an important question: Why pay before I know that it’s good? That means we have to be famous first - then get rich!

Which is a Zipfian economy model - ie a very small number of people get very rich (and the advantage goes to those already famous on Record Company money), but most get very little, even with tiny talent differentials.

Also, as you can also see, few of the above models are actually Free, they are Offset models, wherein someone else pays for the free lunch - and herein lies the mental sleight of mind in the FreeConomy. This sleight of mind leads to risky errors, such as:

4. Working for Free - An argument about the freedom of free work (Last seen in large numbers c 1970's), fine thesis except for the small flaw that unless you have a trust fund you either (i) moonlight from your daytime job, (ii) have to trust others to feed you or (iii) you go for the "starve in a garret" mode.


Impact of Low Transaction Costs on Organisation / Social Structure

5. J P Ragaswami (Confused of Calcutta) made the basic point about ease of arbitrage in a low transaction cost world - “for every artificial scarcity there will be piracy. It will be destroyed.”

6. Traci Fenton on Democratic Organisations - 10 democratic Design principles (again thanks to Dieter for the list):

1. Purpose + Vision
2. Transparency (open book management)
3. Dialogue + Listening
4. Fairness + Dignity
5. Accountability
6. Individual + Collective
7. Choice
8. Integrity
9. Decentralization
10. Reflection + Evaluation

7. Lee Bryant (Headshift) on freeing the Battery Human. Dieter's report:

And asked how we can codify freedoms and values to provide longevity to them. Ironically we are stuck in the concepts of Max Weber and Frederick W. Taylor. But the consumerisation of Enterprise IT is a big chance to change that. Given the fact that Taylorism is simply too costly in complex, global ever changing market. Social Networks combined with weak ties are a efficient corporate immune system - whistleblowing when things go wrong.

I must admit to being hopeful, but also fairly sceptical about this sort of thing in any large scale organisation, firstly for the reasons of organisational complexity explained well over here by Dare Obasanjo:

There is less politics at a startup. In any activity where humans have to come together collaboratively to achieve a goal, there will always be people with different agendas. The more people you add to the mix, the more agendas you have to contend with. Doing things by consensus is OK when you have to get consensus from two or three people who sit in the same hallway as you. It’s a totally different ball game when you need to gain it from lots of people from across a diverse company working on different projects in different regions of the world who have different perspectives on how to solve your problems.

.....if you do the maths, you find that the number of transactions you need to get anything done in a peer only, dis-organised structure is huge and grows geometrically as you add people - and thus soon becomes unsustainable (the downside of Metcalfe's Law). This is the reason hierarchies come into being, Taylorist get on the job etc - to reduce the messaging and complexity. National "democracies" are in fact very hierarchical by definition, and if you go through Traci's 10 points you'll find that most of them are precisely what we criticize those in power for not doing!

Secondly, the thing less talked about in Social Media is that it operates under power law maths - the Zipfian economy I refer to above - ie, without checks and balances a few rich get richer faster, and the rest are worker drones. This is just another way of saying "Feudal". There is a long tail, but it doesn't necessarily wag the Big Dogs. Thus, seductive though this all sounds in the "sunshine and flowers" way its usually painted, it just does not actually work this way without very careful design. (Don't get me wrong, its possible - see Ricardo Semler's work here for example - but its non trivial to do and its not a "Social Media" thing per se - so caveat emptor!)

Exacerbating that, the laws under which public companies operate force a level of Corporate Evil (yes, even Google) that probably needs to be tackled before peace, love, brotherhood etc breaks out - if not, its more likely just a California Cult scam to make you feel good while being reduced to digital sharecropping.


Other Stuff

Nicole Simon has a whole lot of video interviews over here. There is also Twittering ad nauseam on reboot10 etc etc. It is interesting that as these tools increase in use, the content creators are doing far less long style blogging (at least it was far harder to find it about Reboot10 ).

Now my problem with this is that I just don't have time to listen to N linear video interviews and try to make sense of a plethora of loosely connected twts (Stowe Boyd usefully edits those of his talk on his blog page) - I think the issue with these tools is that they shift the attention time from the creator to the reader, and that is hugely inefficient. Not only that, but I can't do that copy/paste thing to create my own content as easily - so its far less user-friendly for me as a potential amplifier / echo chamber.

Hopefully more people will blog this week so more of the sessions can be linked in here (add any you know of in the comments too!).

All that being said, its great that things like Reboot happen, and I hope to be able to add my (irreverent) contributions next year

The Facebook / UConnect case is over, but as the NYT notes, an interesting aside emerged:

ConnectU was apparently upset that Facebook’s valuation is not, as media reports have widely suggested, $15 billion, the valuation at which Microsoft invested in the company last year. The judge’s ruling says that subsequent to the $15 billion valuation, “Facebook’s board of directors determined a value of the company’s shares which was different than the valuation disclosed in the press release” announcing the Microsoft investment. That diluted the settlement amount, apparently enough to give ConnectU second thoughts. The decision does not reveal Facebook’s current valuation.

And lets be clear here - the sort of difference that would entice people to go to law again is seldom immaterial. Now a few days ago TechCrunch valued Facebook at $2.4bn based on the Bebo deal (we calculated a similar price a few months ago) to $13.5bn using the Linked In deal - but Linked In is based on people with money, and I somehow doubt the uConnect people would have gone to all that trouble for a 10% valuation difference (unless the payout was sizeable of course....).

No, I'd bet there is quite a spread on the Facebook Buy / Sell prices.....I can see the arbitrargeurs running their rulers over this with renewed interest now

Be very, very interesting to see what Facebook's management actually thinks its worth. This being the internet, wonder how much time it'll take to get out - would you go long or short

Update...3 days later, this post appears on TC implying a $3-4bn valuation.

...at an investment level of $53m for c 5% of the company, the end valuation is monopoly money*.

GigaOm has as good a valuation as any for now:

So I decided to do a back-of-the-envelope comparison with XING with some of the publicly available data on XING, a European Social Network that is publicly traded in Frankfurt. It is a pretty good proxy for a business-focused social network, such as LinkedIn.

It has a market capitalization of about $300 million. It has has 5.71 million subscribers. XING had revenues of around $11.6 million at the end of first quarter 2008; about 70 cents per month per subscriber. That works out to about $52.30 per subscriber. For sake of comparison, Facebook’s reported $15 billion valuation works out to $125 per subscriber.

If you use those numbers, then LinkedIn’s rumored 20 million users are worth $1.04 billion.

The thing I like about Linked In is it addresses people who actually have money, and has a clear opportunity for a Freemium model. But when we see 20%+ investments in it we'll know what its really worth.

* Though I do wonder if many founders know what happens if it then takes a down round...its not the investors who get scraped. They must know that, surely.....

Nice summary of good listening aggregators in social media here by Chris Brogan. Nothing you wouldn't know if you read this blog regularly, except this:

Here’s an off-the-beaten path one. Go to SEO Pro and use their free link checker. (Note: it’s a bit slow to crawl for technical reasons, so don’t get worried if it takes a while to respond to your query). This tool checks who’s linking to your URLs, what the link text is (what’s in blue on the web page that people might click to get to you), and all kinds of stats that matter to search engine optimization experts, but might not matter to you. Why? Because it’s important to know what people are saying about you with their linking efforts.

He also talks about professional buzz measurement systems, but as we build 'em too we'd far rather you got one from us

News this week that the growth of social networks is plateauing, a number of people have picked up the story - GigaOm for example:

Today there are numbers out from comScore that indicate plateauing growth for the big two — MySpace and Facebook — in the U.S. Last week, Revision3 canceled “SocialBrew,” an online video show dedicated to social networking. Meanwhile, Monster killed its Tickle social networking service, following closely on the heels of CondeNast’s shuttering of Flip and Verizon’s decision to close up its virtually unknown network, which had managed to garner a mere 18,000 members. (Verizon has shifted its community to Facebook.)
As the article notes, this will have knock on impacts on the me-toos following behind. However, it will have an impact on the big ones as well, because people's activity by and large declines over time - thus even if they keep the members they have, the traffic reduces over time. In the early days as they grow, users are also highly active, so you get a double whammy on traffic growth - but user activity declines over time, and if numbers flatten out - a typical S curve growth pattern - then traffic collapses

Now I originally wrote about this effect here - but here it is again graphically.

The impact of growth decline on social network traffic

Now when I originally wrote the article, I thought the major issue was that advertising revenue would decline, but at the time the jury was out on the potential advertising revenue. However, in parallel with the levelling off of user visits has been the realisation that pure social net Ad revenue CPMs are in the pennies. I have an new hypothesis therefore - that walled garden pure play SocNets will prove to be uneconomic, and will shift to open "pure play" - think web, email - to get low value commodity scale benefits, and also to niche higher value plays.

There's a deja vu here. Time Warner bought AOL at the peak of the Web 1.0 bubble in , AOL has bought Bebo at the top of this one. Soon after the Time Warner purchase the dotcom game collapse, I suspect that buying Bebo has marked the top of the silly SocNet valuation season.

But the SocNets won't go away - just as the Internet carried on growing even as the dotcom world crashed, so social network usage will carry on, even if the current crop collapse (In fact, AOL has made quite a lot of money in its slow decline and fall, and Facebook, MySpace et al are unlikely to collapse overnight). There was an interesting article in Fortune today about how companies are starting to use social networks internally - the article features a CEO who has implemented Facebook in his company:

"In Facebook, they can see what the people who are in the next generation of workers are already using. Every single software company has to go through this software-as-a-service transition. But it's not only how you build your software. It's how your people think. The people issue is much harder. Facebook gets people thinking along a new axis."

Now 800 of the company's 900 employees have Facebook accounts, and many use it actively. "It's been a game-changer for us," Burton says, "to go from an insular culture that doesn't communicate much to a more collaborative culture." Some employees still resist, like a few in France, for example, who worry about risks to their personal privacy.

Tsk - its those silly Europeans, worrying about Beacon and Facebook's Terms and Conditions et al . We do believe that privacy issues are one thing that will have to be resolved before we see widespread adoption of Social Nets outside the "naive young consumer" space.

I was also amused to read that the Fortune article is by a guy who is writing a book about how Facebook is changing the world (starting with the 100 year Media play I wonder?). If the above analysis is correct however, there is a risk that the book could suffer the "In Search of Excellence" curse (nearly all the companies in there failed miserably for years thereafter).

However, the spread of the impact of social networking has only just begun, as the Fortune article shows.

(Update - this storyline is also reinforced by this report - pointer via Read Write Web)

This post has been stewing for a few days, and its genesis goes something like this.

On Tuesday afternoon, I saw a message (on Twitter) from a person who a few weeks ago I never knew, talking about 2 other people who a few months ago I never knew, who were going to be playing at a gig, and another person I met last year was going to be playing with them. A few quick messages and there I was, and had a great evening listening to some great music, in pleasant surroundings because - strangely enough - the other people on Twitter who also decided to go wound up chatting to each other as well - so going on my own was not a "spare part" story at all..

So, to Lobelia Sabo, Steve Lawson and the Woods, Dodds & Lawson band, and Lloyd Davis thanks for a great evening, you guys rock - and roll, and jam, and sing torch songs, and between the wars classics .

Now, two other things about this.

Firstly, big picture nothing has changed in internet social media in 20 years since the first bulletin boards, the first usenets, the first listservers, the first internet groups - it was ever thus. The internet has always been a social media, because we are social animals, and the 'Net differs from previous comms media in allowing easy group interaction in asynchronous and synchronous mode.

Secondly, like being in a parallel universe where things are not quite the same, everything has changed just that bit. Broadband social media is higher bandwidth, so is just socially more efficient:

- I can tell you that these people are good - but you don't have to believe me - this time round you can go to their websites, follow a link to their music and YouTube videos, and see for yourself
- More context data about the other people attending the gig allowed ice to be broken, conversations to be had etc far more freely - I think this has facilitated more face to face meetings faster - it still happened on the textnet, but took longer.
- It's my view that this extra context allows people of more diverse background to communicate with each other more easily. I think the variety of people mixing via social media is far higher now.If I think about my use of Groupware, it resolved into belonging to many special interest groups rather than "belonging" to many people with special interest.
- This definitely lessens the friction of face to face interactions with people you don't know in strange places you've never been to
- I also think that the fact there is a feedback loop means that behaviour is moderated - be an a**hole and you then have to face those same people on the social net the next day
- Another outcome has been the amount of collaborative group working I'm seeing springing up around me now - I suspect being able to get a bigger bandwidth view of someone allows others to make up their minds about whether they trust someone or not far faster - plus that feedback loop effect as well.
- I suspect this time round its just easier to use, so a larger group of people are using todays comms media - and increasingly they are women too.

But apart from that?

Well, it also gave serendipity - one of the other acts couldn't make it, so up stepped Miriam Jones, who I also thought was rather good - and turns out she is also on my social network, so another connection is made......

There is another post on this - about talent, Zipfs law rewards, and the shift in music business models - but that is for another time.

Fascinating piece in Nature, about some work by Barabasi - who really understands social networks - after all, he wrote the books !

Albert-László Barabási and his colleagues show that most people, perhaps unsurprisingly, are creatures of habit. They make regular trips to the same few destinations such as work and home, and pepper these with occasional longer forays such as vacations.

The distances people covered varied widely between individuals, but follow a similar pattern — most people move on average a short distance on a daily basis, whereas a few hardy souls move long distances in a short time.

The data showed that nearly three quarters of the 100,000 customers surveyed moved "mostly" within a 10 mile radius of home. Mostly means about 67 per cent of the time. There's also significant group of the population that behaves quite differently. Between 2 and 3 per cent of those studied "regularly" traveled to locations more than a 100 miles away. Regularly means almost every week. In other words, the study proves the existence of jet-setters and business travellers.

Seems like our small-world network structure in action to me, though Barabasi notes:

“It’s weird to see such mathematical regularities in such complex behaviours,” says Brockmann. The challenge now is to find out why something as complex as human movement follows such consistent patterns, he says..

Which surprises me, as I would have thought it deduceable en masse from small world network theory. I must be missing a trick - any thoughts ?.

Juxtapose this with this interesting thought from Adrian Monck:

We live in a strange world. I work forty miles from where I sleep. The shopping gets delivered and the garbage gets taken away. The Atlantic and New Yorker arrive by post. Friends, work and everything else arrive via broadband. That’s my life.

There’s not much local about it. Strike that. There really is nothing local about it.

Adrian was talking about the Washington Post's attempt at "Local Reporting" in Loudoun, which seems to have not gone as well as expected. Interesting, since we are clearly pretty localised. Clearly some missing link here.

Still, it is always good to have some real data in Social Networking, an area which too often these days makes fine art look like a data driven subject*

* which of course it increasingly is, or at least the prediction of prices is.

They say a picture is worth a thousand words, so here is a long essay equivalent on Sarah Perez's* note on the need for Social Media mavens to get out more!



So - two axes - the amount of time you are actually connected to Social Media, from the occasional dip in to the always-on, always there mode - and the other axis is level of active contribution, from total observation to active participant.

Hypothesis - if 90% of all social media users are the very occasional users, they probably fit into the bottom left box.

Those who are always on (I think mobile-heads and/or those who predominantly work from a desk are in this category) but are usually in observe mode are - in my view - what Leisa Reichelt calls being "ambiently intimate". These people are linked to all sorts of social media, drawing them back to their (online) clients in realtime. Those who just dip in occasionally ( the laptop brigade? ), get what they want to, leave their comments and go again - are what I've called "Twitternuts" - a medium that has low persistence and easy input suits them well, as do RSS readers and services like Techmeme. These two groups constitute the 9% who participate and contribute some of the time - but their use of social media requires very different functionality.

And then there are the 1% that are always on, always there, always talking. These are the people with 20,000 followers on Twitter, 5,000 friends on Facebook. For them, Friendfeed and such are a godsend - they capture every conversation, every comment, and store it into perpetuity. Sometimes, observing that these people seem to be "on" 24/7, I suspect they are actually bots (the first turing machines?) - or at least operate in relays?

What Sarah wanted to know was, because she was not as...obsessed...as these high priest mavens, was she in some way less faithful to the cause? :

.......when the weekend rolls around, I crave distraction. I want to trade the glow of my laptop screen for fresh air and sunshine and new activities…offline activities. Activities where Twitterberry may be there for me, but I don’t need to check it as obsessively as one would check Twhirl. This “taking a break” has become more and more of a trend as of late, leading me to wonder if I’m suffering from social media burnout or whether I’m secretly just a luddite who has somehow mastered the tools of an early adopter.

Nope - as my master-chart shows, Sarah is just part of the other 99% of the population who understand that in all things, moderation is best. After all, that is the wisdom of the crowd

(A thought arises about how social media can help get you laid, but the actual..... )

As an aside - and maybe its just me - but I do get tired of seeing the same people saying the same things on every piece of social media. Is there a case for an "Anti Techmeme" where the "top 100" are automatically blocked?

* Sarah was riffing off a post by Colin Walker, but her link love seems to have crashed his blog so I can't read it- and I won't add to his server load now!

Update - finally read his piece, starts off seemingly as a standard paean to Friendfeed / poo on Twitter tribal thingy, but then the second half gets much more philosophical and interesting. This quote resonated with most, because it agreed with this post ;-):

Yes, we appear to have an echo chamber but this is an unintentional circumstance and not entirely the fault of those involved. With FriendFeed likes exposing items to a wider audience via the friend of a friend system the scope exists for a far greater number to get involved but the percentage of those that do is small. Out of Scoble’s thousands of followers you only ever see the same names cropping up as getting involved in the conversation and the same names dominate the FriendZone charts of FriendFeed users. This is not because of any elitist exclusion policy but because of a lack of involvement by others outside of the usual suspects.

I think that's because those same names do nearly all the talking - as I noted above - but, if you care to cut them out, as I have done - using Twitter followings by the way - you will find a great set of discussions going on underneath!

Fred Wilson notes today that he sees a future of social media where:

every single human being posting their thoughts and experiences in any number of ways to the Internet.

Its the Microsoft Gambit for social media, but be careful what you wish for ! I mean, do you really want the banality of all human thought digitised forever

( OK, OK - its a great aim, but can we talk about filtering as a matter of priority then! )

Update - Alex van Elsas pointed me to this post of his - arguing that the killer app is Interaction. As it has been on every social media since it began, brom BBS, via Usenet etc. We forget things so quickly

Whisper who dares....that sacred cow of the Social Media play, the Wisdom of Crowds, is actually being questioned by those who have benefited most hugely from it so far - Read Write Web realises that (referring to the gaming of Digg):

SitePoint's experience is an example of herd behavior or groupthink, where the Digg group acted blindly on poor information, without rationally thinking it through. This is a problem with the wisdom of crowds concept: if unchecked, rather than coming to the best conclusion based on the wisdom of the group, a crowd can come to the worst conclusion based on dumbness that spreads from a single bad node.

This is exactly the problem with Social Media and Wisdom of Crowds stuff - it can be swayed by flashes of Mob Rule. (The madness of crowds)

It's also not necessarily that accurate. In the UK, before Pandora was stopped, I far preferred it to Last.fm because it actually gave me the music I like via its Music Genome database, whereas Last.fm gives me the music tastes of other people who like what I like - not the same thing at all. We both may like A, but I love B and you detest them. With a social media selection, you are going to get B!

Now, RWW lays out 4 rules to mitigate this:

Last year, we laid out a set of rules to get the most out of a crowd. It might be a good idea to revisit those here:

1. Crowds should operate within constraints. To harness the collective intelligence of crowds, there need to be rules in place to maintain order.
2. Not everything can be democratic. Sometimes a decision needs to be made, and having a core team (or single person) make the ultimate decision can provide the guidance necessary to get things done and prevent crazy ideas and groupthink from wreaking havoc on your product.
3. Crowds must retain their individuality. Encourage your group to disagree, and try not to let any members of the group disproportionately influence the rest.
4. Crowds are better at vetting content than creating it. It is important to note that in most of the above projects, the group merely votes on the final product; they do not actually create it.

But in a Social Network, delivering user mediated decisions, point 3 is a tough gig - everybody can see everybody else's reaction, so keeping individual decisions going is hard.