Social Networking is not a Winner Takes All Game

Social networks change drastically over time. People enter and depart your actual network of people constantly. The information you want to share, priorities, and thinking shift over time. A practical example: “hot or not” voting; overlooked even expected in high school, dismissal and a lawsuit in a professional setting.

Specific social networking “sites” run against these limitations inherent in their service. They must serve a segment and ultimately people will transition to another service as their network changes. Nothing wrong with this other than the services should gear themselves towards specific commonalities that bind people (e.g., life events, schools attended, interests, hobbies). Social networking is not a winner takes all game because one network can’t meet everyone’s needs or even one person’s needs all the time over time. Social networking audiences will “splinter” like broadcast TV audiences with the proliferation of cable and satellite TV channels.

Ultimately this implies that some of the valuations bandied about for the leading Social Networking sites (i.e., Facebook) are outlandish. The opportunity in the context of the overall market and value created doesn’t support $15 billion. Facebook has made many smart moves relative to MySpace, Friendster, and other predecessors. It will not replace Google as the primary entry point for the web. It will face many competitors and ultimately possesses limited “lock-in” with individuals. In fact incentives arise for people to leave Facebook to a. escape old “friends” or to b. alter how they present themselves to the world.