Thinking the Unthinkable About Online Social Networks

A few weeks ago, Clay Shirky wrote a thoughtful reflection on how the newspaper industry is failing largely because they avoided thinking the unthinkable about their old business model and what the future held for it.

A few days ago, Katya brought this startling article to my attention on the rapidly falling revenues from Internet advertising by Eric Clemens on Tech Crunch. Eric writes, “Traditional advertising simply cannot be carried over to the internet, replacing full-page ads on the back of The New York Times or 30-second spots on the Super Bowl broadcast with pop-ups, banners, click-throughs on side bars.”  His discussion focuses largely on sites that generate news and services.

I was noodling this around when I saw this tweet from Steve Case:

RT @NateVanLoon: Twitter is becoming new Facebook, which was new MySpace, which was new AOL (sorry @SteveCase). Except AOL makes $$$.
To translate for non-Tweet speakers, Steve is passing along a message he saw by Nate Van Loon, wiht a smile, about the fact that the new social networking sites are built on the premise of AOL but that only AOL has made money.

And that made me think of a recent post I had seen on Tech Crunch about paying for “suggested user” slots as a way for Twitter to monetize it’s efforts. These kinds of payments are completely antithetical to the DNA  of Twitter and what has made it so popular; meaning the easy, unfettered access to  lots of people famous and not and the leveling affect of the site.  Essentially it’s “freeness” in every aspect of that word that I just made up.

Let’s put the pieces together.

1. Thinking the unthinkable. This is really a way of saying that we need to challenge the assumptions that we make in any business or program model. This is what the “smartest guys in the room” failed to do with the housing market models; they made the incorrect assumption that housing prices would always continue to go up, and, well, we know that wasn’t true. It is the essence of program evaluation which is the art of testing your assumptions that the array of services you provide will lead to the outcomes you are hoping for.

2. The assumption that lots of advertising will automatically follow lots of eyeballs to particular sites.

3. The fastest growing social networking sites have yet to make any money in spite of their repeated, flailing around trying to do so (how many apologies are we up to on Facebook for trying to monetize the site?)

The unthinkable assumption about social networking sites is that they attract so many people because of their “freeness” meaning their easy access, no cost, public commons aspects which are antithetical to existing revenue models. (for an amazing array of thoughtful papers on this, see danah boyd’s site.)  These online commons are often compared to ways that we used to meet in open, public spaces where we live. However, what most people don’t think about on is that those free, open spaces that we value in our on land communities are actually paid for by our tax dollars – they aren’t actually free.  What happens when the News Corp and Google give up on these sites after years of investing millions, maybe even billions, down the drain and repeated attempts to monetize them fail?  Most importantly from a social change perspective, will these online commons continue to generate awareness, organize and raise funds for large numbers of great causes if they need to be monetized, or can they be protected as open, common online spaces like parks and playgrounds? One thing to throw into the mix is that the online social networking sites aren’t valuable for their software innovations (Twitter and innovative software definitely don’t mix!) but for their vast crowds. Maybe one answer is that like free flowing liquid, the crowds will follow the least restricted pathway and continue to move to the freest online commons and avoid the monetized places.

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