Social Networks

Apple has released a new social network around music, called Ping! This post is not to bury it, nor even to praise it, but to understand why they have launched Yet Another Social Network, especially into the crowded space of Music and the resounding cries of "where is Last.fm now" et al....

Giga Om says that Ping! is The Future of Social Commerce:

My belief has only been affirmed by growth in the amount of data available. With 12 million songs and 250,000 apps, the best way for Apple to enhance the iTunes store – aka its shopping experience — is through the use of social. Back in 2007, I argued that social networking was merely a feature that had to be embedded into applications to enhance their value. Apple has done a great job of that, but it’s also gone one step further, not only by adding a social networking layer to iTunes, but by meshing it with its commerce engine, the iTunes Store. And it’s made this experience available on both the desktop and its devices.

Apple received much of this social capability with the acquisition of Lala, an online music service, which as a standalone company used sharing of social objects to drive folks towards paid music downloads. Now Apple is only closing the loop by further sharing what users bought. I wouldn’t be least bit surprised if sales of music on the iTunes store rocket upwards, thanks to social discovery.

Our review of Lala strategy is over here by the way

From MySpace onwards "Social" music has failed to deliver the goods, for a whole host of reasons but primarily its not a big enough "Social Object" to capture enough attention for a full grown sustainable Social Net. Music is a subset of why and how we interact with people, not a reason (in fact, based on some of my friends' musical tastes its probably a reason to drop people....).

Now, GigaOm is sounding Ping's praises from the rafters, but whether they were paid to do it or not, I ain't buying it as the Future of Social Commerce. My hypothesis is that "Social" and "Commerce" are uneasy bedfellows at best.

But Apple are no fools, they will know all this. In fact, I would hypothesize that Apple does not need this to be a sustainable social network. All it needs is for a sufficiently large crew of volunteers to add sufficient folksonomic aggregation data around iTunes to ramp up its purchasing attractiveness some more.

No, the real play here is harnessing this to the iTunes store - this is all about selling more songs, not about being sociable. It's about getting a Folksonomy going - Folks do the heavy lifting (recommendations etc), Apple gets the economic benefit (aka the loot in extre spending). I await with eager anticipation the use of kickbacks to "influential" super-users.

Think Social Recommendation Engine, not Social Network.

And of course, getting some more behavioural data about YOU never hurts in the Social Network game...

Today Facebook announced their much pre-heralded Location service, Places. The interesting thing is how they are treating competitors such as FourSquare and Gowalla - are they partnering with them or planning to eat them? TechCrunch:

Representatives from both Gowalla and Foursquare were invited to take the stage at the event to talk about how they plan to leverage Facebook’s new Places API. Both will allow you to check-in and publish the data to your Facebook feed. Your badges and pins from each of those apps will transfer over as well. As we expected, Facebook is playing nice with these guys — and they’re clearly excited to play nicely back given Facebook’s 500 million users.

Yelp and Booyah (maker of MyTown) are also launch partners for this new API. Booyah is actually making a new app called InCrowd build on the Places API. WIth Yelp, you’ll be able to transfer your check-ins both to and from Facebook as well.

Its easy to see why Facebook wants this, and the probable outcome is predictable (recall the wailing when Twitter started to eat its own ecosystem?).

Foursquare and Gowalla are cleft on the horns of a dilemma - collaborate and (maybe) get access to 500m users, but you are then on your large competitor's platfotm and at their mercy. Defect and you will probably struggle to recruit Facebook customers, unless of course users want independent alternatives (I would, as I'd prefer to keep my data split up among the dataminers, as a first line of defence). But the facebook logo - a pin through the heart of a 4 in a square - may say it all....

But they have clearly taken the Remora option - stick around to get scraps from the big fish, hope you can clamp on, and avoid being eaten.

Watch the body language of the Foursquare and Gowalla people at the announcement (its on the techCrunch link above), they looked somewhat uncomfortable as "guests" at the feast. There is no such thing as a free lunch, unless its you......

Yelp and Booyah are in a different position as they are not direct competitors.....yet.

Interesting article by Paul Carr in TechCrunch today, in essence he is pulling out of most forms of social media:

I’m probably not the first to have decided to delete Facebook, Foursquare, Blippy, Google Buzz, LinkedIn or Delicious either. I may be the only person this year to have deleted my Friendfeed account, but only because I’m probably the only person this year to remember that he has a Friendfeed account.

No, I would hardly be the first person to decide to embark on a Social Shutdown (as Blippy’s Philip Kaplan termed it) having grown tired of the relentless look-at-me-ism of the Status Update Generation. And I wouldn’t be the first to realise that there’s more to life than feeding the insatiable blood-eating plant of social media – imagine Audrey II in Little Shop Of Horrors – just to keep the fifteen people who care appraised of my every move.

His reasoning is at first glance counterintuitive:

But that’s not why I’m doing it. Quite the opposite in fact: I may be the first person to decide to close down most of my social media accounts for purely narcissistic reasons.

....................

As I shared more, though, I started to notice a funny thing happening. Rather than people becoming more fascinated by my life; the exact opposite occurred. “I loved your book, so I started following you on Twitter” people would tell me at parties. And then their expression would change: “your real life isn’t as interesting as you sound in print.”

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Social media allows us to become familiar with people who in a previous life would be unknowable “stars” — and we all know what familiarity breeds. There’s a reason why reality stars fade from the limelight so quickly and why none of the movies on Project Greenlight became a success: to mix a metaphor, you can’t become a star if everyone has seen the sausage being made.

Now Paul is a self confessed media-whore, but he is also (i) fairly intelligent (he tries hard to hide it, I know ) and (ii) is in my view one of the earlier adopters in this game so its worth watching for that reason.

And I think this is a trend worth tracking, as another memetic swallow has just been spotted - Jeff Jarvis points out that privacy is now the scarce resource, not publicity:

At the latest New York Tech Meetup, Drop.io founder Sam Lessin did just that with my favorite topic: privacy and publicness. In a rebuttal to Clay Shirky’s Cognitive Surplus he said:

“Privacy was once free. Publicity was once ridiculously expensive.

“Now the opposite is true: You have to pay in a mix of cash, time, social capital, etc. if you want privacy.”

Whether your reasoning for Social Shutdown is contrarian media-whoring, a desire for a bit more privacy, or just that it is too hard to keep a profile going on so many and varied networks, I think this is a trend that will grow in social media usage - people will rationalise onto a few ( 2- 3 in my estimate) social networks. Probably one "professional" one, one "social" one, and probably something like Twitter which is more of an Alerts + Chatroom service. (I've pretty much rationalised to this blog, Twitter and Linked In - plus all the Yahoo special-interest email groups of yesteryear, but they are very easy to manage)

Add to this the growing worry about massively intrusive datamining from Facebook, Google et al (I wonder if that is actually driving this reaction in some indirect way) and I think we are possible seeing the start of a Social Mass Media backlash?

Today Twitter released its new "Who to Follow" List (I saw it on Techmeme). If you sign on to the Twitter Page for your account, on the right hand sidebar you will see it - 2 or so recommends amd you can click through to a whole list.

It seems to work on the logic that if several peopel I follow also follw X then logically I also should like X. It is the same problem I had with Last.FM's view of my taste in music - if 3 of my friends had the appalling bad taste to like Led Zeppelin, then so should I.

It is also, as Stowe Boyd points out, probably optimising around "most popular" which just makes it another Digital Social capital "Rich Gets Richer ratchet".

(By the way, my Twitter Inbox is deluged by people I follow who are p*ssed off with the Twitter "Who to Follow" function for the above reasons. So I don't think its a success, as yet anyway, except in the posts by the paid-for press and tame bloggers)

But that was not what intrigued me - no, what was more interesting was that of the 30 or so people it suggested I follow, I counted 21 people I was pretty darned sure I was following already! Now I didn't deliberately unfollow them, I don't think they can do a reverse unfollow of me (Can they? You b*stards?). Also, none of them are the sort of sleazoids (well, not on Twitter anyway) that Twitter picks up and automatically rubs out.

So how are they being unfollowed if I am not doing it?

Paul Clarke hypothesized that Twitter was doing it deliberately, a bit of Socal Fuzzines, a White Lie in the machine, so we can oil the wheels of online social intercourse with the "no - sorry - never saw that" or "odd, I was sure I was following you" gambits and the other person knows it might be true and takes no offence, rather than thinking that you are a b*stard who doesn't want to know them anymore.

And if so, how does it decide who to (randomly?) unfollow. I would love to have a "time-out" unfollow algorithm - 3 in a row of Sleb RT's, cats, lunch or using the word "Awesome" and you're in Purdah for a week

Or is it just glitches in the machine?

Interesting post by Ethan Bauley on HP Labs' research on Influence on Twitter - confims something our own analysis was telling us:

According to the research, it is important to separate the concept of “influence” from “popularity.” While a user on Twitter may have a large number of followers, his or her influence is more strongly associated with their engagement with the network, rather than the raw number of followers or retweets.

To automatically identify influencers, the authors devised an algorithm called the IP Algorithm. This algorithm assigns a relative influence score and passivity score to every user:

- “Passivity” is a measure of how difficult it is for other users to influence him or her

- “Influence” depends on both the quantity and quality of the user's audience

The paper concludes: “This study shows that the correlation between popularity and influence is weaker than it might be expected. This is a reflection of the fact that for information to propagate in a network, individuals need to forward it to the other members, thus having to actively engage rather than passively read it and cease to act on it.”

As we remarked about a year ago, our initial analysis showed that the then-popular metric used by all the PR agencies of equating "Influence" and "Social Capital" on Twitter with "Followers" was miidly correlated (ie lame) at best.

The actual HP paper is over here and makes for interesting reading. I'd love to see their algorithms

Twitter is becoming quite the Digital Anthropology testing ground, the Digital Rwanda, as we noted a while ago on Twitterers in the Mist dealing with recent research on monitoring Twitterer happiness.

Also, at our TEDxTuttle 2 session we had the fascinating Dr Caroline Wiertz of Cass Business School giving us a sneak preview of their work looking at how Twitter influences consumer reaction to things like movie selection (especially opening weekend movies - Movie Critics beware).

It's interestng to think about why Twitter is such a good research ground. Our own experience is that it:

(i) Is very easy to parse as it is all easy to scrape
(ii) The tiny message size is (relatively) easy to analyse for meaning
(ii) The linkages are very easy to analyse and map so it really lends itself to mathematica analysis
(iii)There is a a large heterogenous population which is growing so it is increasingly representative
(iv)Topics covered are vast, from the sublime to the ridiculous via the intelligent and the lame.

I predict a plethora of PhD's in Digital Anthropology using Twitter. I do recall a piece of work done some years ago on predicting infidelity from telephone call patterns, so not all of this new analysis is going to be comfortable reading.

You have been warned

Update - by the way, my Twitter Inbox is deluged by people I follow who are p*ssed off with the new Twitter "Who to Follow" function. Could be that Twitter needs to get HP Labs and Dr Wiertz in there fast!

Overhyped, overspecced, and....over:

Maybe it was just ahead of its time. Or maybe there were just too many features to ever allow it to be defined properly, but Google is saying today that they are going to stop any further development of Google Wave.

No, it was just over-egged - like Friendfeed before it.

The lessons were there for the learning, but Google didn't. As we noted earlier, Social isn't yet in their DNA and this was Social Networking by Numbers.

What is encouraging is that Google is prepared to experiment, but even more that it is prepared to kill it.

Update - Dave Winer makes a good point - when Google elsaed Wave, it was "Invite Only" anfd oogle controlled the invites so you couldn't invite your friends. Worked for hyping Gmail etc, but not for systems where the value is having your social network on the same system. Talk about not "Getting" Social Media.

Interesting article in New Scientist about digital anthropology providing the sort of data that will allow it to become a science:

Social scientists have long had to rely on crude questionnaires or interviews to gather data to test their theories; methods marred by reporting bias and small survey sizes. For decades, the field has been looked down upon by some as a poor cousin to the hard sciences. The digital age is changing all that - practically overnight, the study of human behaviour and social interactions has switched, from having virtually no hard data to drowning in the stuff. As a result, an entirely different approach to social science has emerged, and studies based on it are appearing with increasing frequency. The impact has been remarkable.

"The data revolution is here for social science," says Albert-László Barabási of Northeastern University in Boston. "For the first time, scientists have a chance to study what humans do in real time and in an objective way. It's going to fundamentally change all fields of science that deal with humans."

Barabasi, old hands may recall, was one of the early thinkers on Social Networking as a predictive science. what Malcolm Gladwell called the Tipping Point. Curiously, one of the experimeters looking at how this worked was a Gladwell critic, Duncan Watts:

To examine what made some songs more successful than others, Watts and Salganik created a project called Music Lab. It featured a website where more than 14,000 people listened to any of 48 songs by relatively unknown bands, rated them, and downloaded them if they wanted. These options provided a measure of quality (the average rating given) and popularity (the number or downloads). Crucially, the duo were also able to control whether listeners could see how many times other people had downloaded any particular song, or instead had to rely solely on their own judgement. In this way, they could effectively compare outcomes with the power of social influence turned on or off. They also grouped the socially influenced participants into eight independent "worlds" so that they could explore how the outcomes - the popularity rankings of the various tunes, based on downloads - might change if the tape of history could be rewound and run again.

The results strongly support the idea that human influence has a huge effect in making some songs more popular than others. This factor also makes it much harder to predict what will happen, and which songs will do well. The worlds in which social influence was operating had much higher inequality - with popular songs going up and unpopular songs going down to an even greater extent than in the worlds lacking social influence. With social influence turned on, song popularities fluctuated wildly between one world to the next. So, like it or not, it seems like many of us follow the herd.

As we pointed out at the time, Watt's attack on Gladwell was more about positioning that point of order. The article goes on to talk about an experiment that shows we have two natures - an investgative and a sheep like following nature, and the one tips over into the other in much the same way as other systems change state -

Onnela and Reed-Tsochas realised that analogous changes take place in Facebook, on which people share their profiles with their online friends. Facebook users can also choose to install applications - software components that personalise their Facebook page. If one person adopts an app, their friends are automatically notified, and they can also see the apps their friends are using. Facebook users also have access to a list of popular applications, akin to a best-sellers list.

.......

The data stored on Facebook makes it possible to analyse the growth in popularity of individual applications in unprecedented detail. Onnela and Reed-Tsochas analysed the popularity of several thousand applications in 2007, shortly after those apps were introduced, and then studied how other users adopted them over time. They looked to see if the sequence of adoptions for each app followed an essentially random pattern - indicating that each "adoption event" was independent of other previous adoptions - or whether previous adoptions by a participant's friends influenced the likelihood of their subsequent adoption of an app.

The results showed that both independent thinking and copying behaviour play a role, reinforcing conclusions reached by conventional survey methods. However, the study also indicated there are two very different processes in action. On the one hand, their analysis shows, at first, when a new app appears it is adopted by users independently of their friends' opinion. But if the popularity of an app crosses a threshold, its very popularity then seems to draw many people to adopt it, and its growth can become explosive. Just as Watts and Salganik found in their Music Lab experiment.

"We found very distinct regimes in which individual or collective behaviour dominates. The change from one to the other is a sharp on/off process," says Reed-Tsochas. They don't yet know whether tipping points of this kind might influence real-world processes beyond the web, such as shifts in political opinions or the popularity of books. "It's certainly possible," says Reed-Tsochas, "but we'll need to wait for equally good data in those areas to find out."

Others are looking at Twitter's ability to predict movie popularity

Huberman and his colleague Sitarum Asur wondered if it might be possible to do even better by exploiting the enormous volume of opinion expressed through social media such as Facebook and Twitter. Opinions voiced in these media, they reasoned, should have strong predictive power because they actually play a role in determining which films do well. "What gets discussed through these media often ends up setting trends," says Huberman.

In an attempt to mine these opinions, they studied the chatter on the microblogging site Twitter. They started from the supposition that movies that get talked about a lot - that generate a lot of buzz - should end up being more popular. To measure the buzz for each film, they looked at the rate at which it generated tweets immediately following its release. They used this as a predictor of the ultimate film sales.

The results show that the rate at which movie tweets were generated can provide accurate predictions of box-office revenue, more accurate even than the Hollywood Stock Exchange. In the end, predicting successful movies may only be of interest to film companies and investors. But Asur and Huberman reckon this is just the beginning, and that their technique should be able to predict social outcomes of many kinds. "When properly tapped, social media express a collective wisdom which can yield an extremely powerful and accurate indicator of future outcomes," says Asur.

Huberman says such analyses could soon help predict many other events, such as election outcomes, or quickly gauge public reactions to major events, just as long as we have evidence reflecting peoples' views on the relevant issue. "Twitter and texting in general were influential in the election of Barack Obama and some businesses are already analysing these kinds of data to assess the likely success of their products," says Huberman.

(Cass Business School's Dr Caroline Wiertz presented corollary findings at TEDxTUttle II, by the way). Anyway, what is emerging is something akin to Isaac Asimov's science of Psychohistory - we are all different, but en masse we are remarkably predictable:

It's the discovery of underlying patterns of this kind that has excited so many scientists. Given the undeniable complexity of individual human beings, it's not as if social science is going to become like physics, grounded in eternal and general laws, but access to data on human events makes it possible to identify the patterns that do exist and these can be useful for demystifying the social world.

Interesting times...........................

Ooops - she's at it again! Every so often Danah Boyd does an analysis that brings un-PC differences to light in Social networks. This time its race (last time it was class...see here).

And, one suspects, this time (just as the last time) - she has exaggerrated it a tad for publicity (surely not because - you would no doubt be surprised to hear - there is a book to flog?) - GigaOM:

The book chapter is entitled “White Flight in Networked Publics? How Race and Class Shaped American Teen Engagement with MySpace and Facebook,” and is part of a book called Digital Race Anthology, which is being published later this year by Routledge Press. In it, Boyd describes how during her research in 2007, one teenaged interview subject named Kat said that she didn’t like MySpace any more because it was what she called “ghetto”:

It’s not really racist, but I guess you could say that. I’m not really into racism, but I think that MySpace is now more like ghetto or whatever.

Boyd says that this kind of comment in a number of interviews drove home the point that “Facebook went beyond simple consumer choice; it reflected a reproduction of social categories that exist in schools throughout the United States. Because race, ethnicity and socio-economic status shape social categories, the choice between MySpace and Facebook became racialized.” Later on, Boyd uses the metaphor referred to in her chapter’s title when she says that one way to understand the shift that teenagers appeared to make in 2007 from using MySpace to using Facebook is to see it “through the lens of white flight” — that is, the departure of white and middle-class residents from inner-city neighborhoods.

Digital White Flight, Ghettoisation, incipient racism, class and income inequality - marvellous stuff. Its a pity battered women and asylum seekers can't be shoehorned in too (wait for the 2nd Edition - Ed)

As GigaOm imples, (and this would be our hypothesis too), MySpace is a last-generation SocNet, and it was overtaken by a nerwer and better executed design, and also had a "last generation" user base - music fans etc - rather than Chatterati.

Facebook has also arguably done a far better job of monetizing and expanding its social network and its features, while MySpace has not had much success, despite repeated attempts to monetize its user base through the use of widgets and other features. Could it not be that one network prospered because it was just better, easier to use, offered better features and was better managed? And that the other has declined because it is ugly, the user interface is terrible, and all you can do is listen to small snippets of largely irritating music? Does it necessarily have to be driven by some kind of “white flight” from an online ghetto?

It was also bought by a large corporate just as the Next Generation hit the scene, so the ability to innovate was removed at a critical time.

Overall I like her stuff on privacy, but I think her stuff on web demographics is skewed because it looks too narrowly - I think two of the comments on the GigaOm page explained the bigger picture well - this one:

Can PhD’s (or microsoft employees) really be this dumb? Have they ever heard of something called the ‘network effect’? Or how about studying the reasons behind why Microsoft’s OS became even more dominant in PCs than Facebook is now in social media.

Or, acknowledge that Fox utterly mismanaged MySpace. Or…and maybe she was too busy to learn this, but there are ZERO BARRIERS to join Facebook.

This is embarrassing in its complete dumbness. (Not you, Matthew, but Doctor Boyd.)

Ignore the ad hominems, but the points about causes other than race or class are well made - and also this:

Facebook started as a university only social network, which yes may mean demographically more white people but I don’t think race is really a factor.

MySpace offered more customisation, music on member pages – but all in all a more chaotic experience. And it looked to school kids that as you went to university you grew up and onto Facebook. Kids always want to be more like adults, so when Facebook opened up – those that previously had to wait until they were 18 to join, could now do so at 15 or 16, and then younger.

Facebook was also the independent alternative to MySpace which has been owned by Murdoch’s Fox Interactive for quite a while. The individualism is what made MySpace different to Facebook – but that “individualism” was under massive corporate control. This meant removing copyrighted music from people’s profiles and more policing in general.

Even without the ability to share copyrighted music on MySpace profiles, it remained the place for musicians and bands to have their homepages. But since then MySpace has regressed as a music platform. They started having ads with audio (very annoying when you want to listen to the music by the band whose MySpace page you’re on) and more intrusive ads in general. It remained very difficult until quite recently to make a MySpace page look good with the customisation tools they offered. They didn’t offer good user tracking to bands. They didn’t introduce a DRM-free music store and allow the bands to sell their music quickly and easily. Basically they completely dropped the ball.

The fall of MySpace has little to do with race, and even little to do with Facebook except that they had a critical mass of users so were waiting in the wings to pick up the slack. MySpace just threw it all away and I would be surprised if it still existed in 5 years at all.

Incidentally, I read this week that Twitter has a more valuable/professional/dynamic/upmarket demographic than Facebook now....and (shock) its more MALE!

We eagerly await the cries that Twitter is a White Male bastion....

Pew study of social media users' views on social media (full report here):

....a significant majority of technology experts and stakeholders participating in the fourth Future of the Internet survey say it improves social relations and will continue to do so through 2020.

Some 85% agreed with the statement:

"In 2020, when I look at the big picture and consider my personal friendships, marriage and other relationships, I see that the internet has mostly been a positive force on my social world. And this will only grow more true in the future."

Some 14% agreed with the opposite statement, which posited:

"In 2020, when I look at the big picture and consider my personal friendships, marriage and other relationships, I see that the internet has mostly been a negative force on my social world. And this will only grow more true in the future."

Most of people who participated in the survey were effusive in their praise of the social connectivity already being leveraged globally online. They said humans' use of the internet's capabilities for communication -- for creating, cultivating, and continuing social relationships -- is undeniable. Many enthusiastically cited their personal experiences as examples, and several noted that they had met their spouse through internet-born interaction.

The underlying drivers are seen to be the lowering of the "friction" of communicating - cost, geographical barriers and time required to keep in contact with people.

The drawbacks perceived were....

Among the negatives noted by both groups of respondents: time spent online robs time from important face-to-face relationships; the internet fosters mostly shallow relationships; the act of leveraging the internet to engage in social connection exposes private information; the internet allows people to silo themselves, limiting their exposure to new ideas; and the internet is being used to engender intolerance.

So what's not to like?

One of the issues with all this is that the survey was done of "experts" and "stakeholders". Pew says that:

The surveys are conducted through online questionnaires to which a selected group of experts and the highly engaged Internet public have been invited to respond. The surveys present potential-future scenarios to which respondents react with their expectations based on current knowledge and attitudes

And if you read that detailed survey methodology (I do this sort of stuff for a living, these things interest me) and the list of famous Soc Med fans questioned, the worry is that the recipients are not neutrals. "By design, this survey was an “opt in,” self-selecting effort. That process does not yield a random, representative sample" says Pew. I'll say - read the respondents opinions over here.

Which begs the question of the whole point - never mind the veracity of - the study. It is clearly not useful as research, so what is the aim here? I have no objections to a "Delphi" technique (questioning experts to get their views), but ths isn't one, as the questions are pre-structured to derive a result, and the approach is not made very clear in the press release.

The worry I have with this sort of "research" is that tech journalists and bloggers will pick up on the press release without looking at how it was done, and if enough of them do that you get a distorted view of the market. Perish the thought that this may, in fact, be the aim (I see that GigaOm wasn't taken in....)

I was quite intrigued by this piece from the McKinsey Quarterly, as two people whose views I respect were quite negative about it. In essence the piece argues that two insights are key about Social Media. The first is (I abridge):

The power of importance

An effective way for a brand to be useful in the context of social networks is to make people who originate a word-of-mouth conversation seem important within their own social environment. Recognition by peers is a powerful motivator, and brands that allow users to gain it deliver real perceived value. When users publicize that recognition, it translates into word of mouth. Companies can confer this kind of importance—for example, by issuing achievement “badges” that users can post to their Facebook profiles or by deploying leader boards or achievement scores of all types. As Web sites evolve to become increasingly dynamic experiences that let people interact in real time, the value to core users of being recognized for their prominence in a community will only increase.

and the second....

The allure of virtual items

It’s our strong intuition that virtual items play an important role in facilitating virtual word of mouth. This belief, at its core, is based on observing user behavior. While the notion of virtual goods—nonphysical objects used in online communities and games—still puzzles many executives, it’s quite apparent that consumers love them. People acquire or compete for virtual items obsessively on Foursquare, Zynga, and many other sites. It is estimated that virtual goods have become a very real $5 billion industry worldwide.

So why do consumers pay real money for online objects that don’t actually exist? Their motives reinforce our notion that users seek online importance: they purchase virtual goods primarily for self-expression (such as virtual houses or virtual gifts) and for recognition (such as virtual badges for becoming, say, the “mayor” of a bar on Foursquare). These behaviors are too widespread and intense to be fads, and marketers need to recognize them as meaningful. Brands should actively experiment with ways to use virtual goods as catalysts of word-of-mouth media.

And a final thought:

One final recommendation: no gimmicks. Forget dancing monkeys, artificial contests, or stupid tricks; they add no value and waste people’s time. A commitment to being useful in social-media activities means a commitment to creating only high-quality interactions.

So, now having read it, my thoughts are that:

(i) For anybody who is familiar with the Social Media story over the last few years these are hardly "insights" - it is pretty basic stuff, but then the intended audience of this article is mainly large corporate types (the majority of the readers of said Journal) to whom this is all new, rather than the early adopters. It's aim - and thus language - is to speak of Social Media in the lingua franca of Large Corporations (the piece's author works for a large media company now - 'nuff said. ....). The TLA's and Re-Engineering Methodologies are sure to follow now

(ii) To give the author some credit, much of the Early Adopter thinking is about the technical "how" (or even wow!, gee whiz!, etc) rather than the economic "why" or the executive's "what". For all that these are not new insights, they are definitely ones that are Following The Money - ie these are major areas that are directly translateable into the business plans that mainstream adoption requires. In that, it does make a refreshing change from the financial otherworldliness of some early day Social Media evangelists

(iii) To an extent this is "The Death of Social Media" as Adriana Lukas puts it - ie it is the end of it as an early adopter experimentation era, a transition from the romance of infinite possibilities to the pragmatism of (very) finite probabilities, the shift from small, sexy startups to large, boring conglomerates, a shift from huge promises to cheese paring profits (and Google too is having another go, by the way.) and very likley its absorption into the Standard Business Processes. (The real end is when the SAP module comes out....)

The risk is that in the corporate rush to Colonise, Taylorize and Strip Mine the Social Media Golden Goose, said Goose is strangled by the corporate's red tape decks - as the author notes:

Word-of-mouth marketing through social networks could emerge as an important tool in the marketer’s arsenal. That will depend on whether marketers can tame the fundamentally unpredictable and serendipitous nature of word of mouth without losing what makes it so valuable in the first place—its authenticity.

Ah yes....authenticity. Been a bit of a problem so far, that. Still, if one can fool enough of the punters for enough of the time.....

What would I do differently if I were the McKinsey Quarterly?. I would probably reach out to a host of other alumni who are also working in this area to get a richer, more nuanced view.

Like me for example