Wednesday, October 10, 2007

Some Observations on Social Networking

I took a rather long break from reading technology news while I was in London and Abu Dhabi and just got back to reading some of the things I used to follow closely. While it seems to me that I didn't miss much (on looking at Techcrunch), I did find it extremely interesting to read the analysis presented on Chris Anderson's blog.

In one of his posts, he states in no unclear terms that social networking ought to be leveraged in innovative ways everywhere rather than have soc-nets which are for the sake of soc-nets themselves. This post also captures what is wrong with a new soc-net coming up everyday. There is great scope of using social-networking as a feature in your product, making it viral, making it authentic and useful. Unfortunately, a host of internet startups seem to only want to create social-nets without giving a thought to how it can be useful. Reminds me of the heydeys of the internet age, when it had become fashionable to start a new business that had a .com suffix even if all you did was just register a company. Something very similar seems to be happening to social-nets now -- people just want a social networking component to everything without giving a thought to how it is making sense in the context of the product. That is the point. If you want your product to be useful in the new world, you need to have a clearly thought out social component to it, because otherwise somebody else will add it and peddle your own product better.

Another observation which I found interesting was that facebook applications (which are a rage now-a-days) don't seem to exhibit the pareto distribution characteristics which is what Anderson uses to explain the Long Tail. He attributes it mainly to the effects of viral social networking, and that most apps are pretty much useless. It might also be a case of "limited" shelf real estate. I agree with the first two points, but not so much with the third because that is also true of book in my personal bookshelf. The Long Tail is typically defined not at the end of the consumer but rather at the end of the producer/seller. Facebook as a marketplace is governed by the same arguments as Amazon because there are good search tools, and strong recommendation channels. Facebook has a strong collaborative filtering engine though which is stronger than Amazon's primarily because it is more explicit. I, personally, would believe that as a marketplace of Apps, facebook is fairly new in the game, and it may not be in the 'quiescent' state as yet, and starting to model based on the pre-mature data we already have might not give us correct indicators. Currently, it is just seeing a massive growth which is characterized by almost factory-produced similarity. The apps on everybody's profile are very similar. However, my guess is that as things start to settle down, we will start seeing a lot more differentiation (and usefulness!).

To use a metaphor, currently, it is signing on children who are just discovering the ABCs of facebook apps, and hence the apps that have become very popular are like children's books which are characterized by sameness. However, as the books become more mature and deeper, people will resort to have things that are more tuned into what their personal interests are. Also, the people will demand books that are useful in their content and perhaps design. That is when we will start seeing the Long Tail effect kick in. In a similar fashion, the early days of the internet were dominated by technology centric pages and it was only much later in its evolution that the internet became the downtown for all kinds of information.

However, the different dynamics of the Facebook social network will mean that the marketplace characteristics are never going to be identical to those of (say) Amazon. Since there is a far more stronger viral network, if we view the network as a graph, we will see a lot more cliques. Users would be far more tempted to install apps which are common to their friends networks. However, if we look at these graphs at a higher level of granularity, there might be less ineraction across cliques as compared to traditional retailers like Amazon -- we will see more isolated vertices if seen from far away. The fact that installing apps (for now) is free, will also alter dynamics considerably.

It will be interesting to see how things pan out.