The Network Unbound

Medium = Message

New ideas generated on social networks may be worth a hell of a lot more than advertising.

As in the first Internet boom, many social-media companies started out as hobbies for their founders. Jonathan Abrams, the guy who started Friendster in 2002, one of the early examples of its kind, just wanted a better dating service. But the difference on today's Net can be found in one thing: adwords. Those pay-per-clicks remain the most obvious way of monetizing the Web--and the reason venture capitalists and big companies are interested in growing these networking sites in the first place. Yet the productive quality of social networks only starts with directing eyeballs to banner ads, a fact that has eluded most business-world observers. Take one limited (and well-traveled) example: Rupert Murdoch's acquisition last summer of MySpace for $580 million. The deal was covered mainly as a giant real-estate transaction, the buying of the right to serve ads to a place where millions of teens hang out. And it was certainly that. But News Corp. clearly sees a bigger upside: Social networking, after all, is a new channel for media, Murdoch's core business. Not only will the site generate simple ad revenue, but it's also a gold mine of new ideas and tastes, a buzz-building machine for brands, and a vast pool of new talent and content for outlets such as the newly formed MySpace Records or even, says News Corp., TV. Over the years, those opportunities might be worth a hell of a lot more than ads. Similarly, Yahoo has bought Flickr and Del.icio.us, and it's sharing metrics on its half-billion users with researchers such as Boyd, simply to learn more about how and why people interact on the Web and to give them more reasons to do so.

"Social networking isn't a product or, God forbid, a company, but a feature that lives in service of some other mission," says Bradley Horowitz, head of technology development for Yahoo. "The spirit of social computing is the concept of leaving value in your wake." That value starts with expression. Users of social-networking sites are producing and freely sharing a whole universe of content for others to consume. Some of it approaches journalism in quality, some approaches art, or advertising, and a great deal of it is more fun and appealing to the 18-to-34 target demographic than whatever is on TV. Why watch fake "reality" shows when you can connect with actual reality? In Boyd's analysis, networks such as MySpace and Flickr are amplifying and speeding up what the hippest kids on the street always did: incubate trends, nurture subcultures, and remix styles. For media and Web-portal companies, then (and really, what's the difference these days?), the new social gadgets can look like a magic money machine. Rather than exhaust yourself producing what you think the kids might want, you sit back and let them show off for one another. "Our core asset is the audience and community that exist on our site," Horowitz says.

How that community can feed--or destroy--an existing business is fast becoming the most important analytical challenge in the marketplace. Rock stars, long expert at connecting intimately with crowds of thousands, have been the prototypical new-Web marketing geniuses. Musical Cinderella stories such as Sandi Thom, emo kids Fall Out Boy, and Britain's Arctic Monkeys--all pop-culture phenoms made online--are only a few examples of how the network can manifest itself in the nonvirtual world. So is the movie Snakes on a Plane, starring Samuel L. Jackson. The absurdist title alone made the thriller a cult hit online, though it won't be released until August. New Line Cinema and director David Ellis heeded the first tenet of life online--respond to what people are saying--by reshooting for five days, cranking the film up from a PG-13 rating to a solid R. Then New Line teamed up with TagWorld, a next-generation social network, to offer a songwriting contest: People submitted their tunes, TagWorld members picked the finalists, the filmmakers are choosing the winner, and that song is slated for the movie's soundtrack.

How much bigger could this stuff get? Well, one out of three South Koreans already has a "minihompy" (mini homepage) on Cyworld, a social-networking site coming to America later this year. But it is TagWorld, a startup based in Santa Monica, California, that represents the most ambitious vision yet of what online communities could be. Bloggers are calling TagWorld the "MySpace killer" for its deep menu of services, which integrates features from seemingly every successful network out there: blogging, of course, plus a multipage site; a gigabyte of storage; a music player that serves up your own tunes (as well as those pulled down via a Music Discovery Engine); classifieds; and photo-, video-, and bookmark-sharing. As the name indicates, all of these bits of data can be tagged with short, descriptive names ("Dave's party," say) for easy search and retrieval by other users.