Ad Age article on Tribe.net’s plan to sell classifieds with Knight Ridder and Washington Post Co.
Beyond the fact that Craigslist is an extremely old service that found purchase in the tech-dense Bay area, the article gets me wondering about the effects of commercializing social nets. I’ve noodled around with the social net concept— who hasn’t?—after all the play they’ve been getting. But no one’s really figured out how these networks are going to make money. Apparently, classifieds and dating are all anyone’s come up with. Kinda lame, and low potential as well. The dating game’s been covered, and newspapers aren’t making bank off classifieds, and while Craigslist is doing fine, it certainly isn’t what the VCs were imagining.
All I can think of is that the potential viral effects have investors excited. But the social network is a network connected through a very vague notion of trust—your friends. Most of us trust our friends, at least some of them, but do we trust the friends of our friends? Probably. The friends of our friend’s friends? Maybe, but I can’t see it going much further than that. This trust network tends to dilute itself quickly once you get a few degrees away from yourself, necessitating the kind of enforced, rules-based trust framework that has built Ebay into such a powerhouse. So the trust network is overrated in my opinion.
The reason most people rely on their close friends is that their friends know them and know the subject matter (say, restaurants). When the second party doesn’t know you personally, and you don’t know them, you’re more likely not to trust their opinion—not that you automatically discount it, but you’re going to add it to a database of results from other sources, say Zagat’s or local dining guides.
So everyone’s social network has a defined horizon beyond which the social network effect is eclipsed by other forms of trust. I think we can agree that in general, that horizon is going to more or less surround that person’s effective local area—that being the area in which the individual spends most of their time. Could be San Francisco, could be split between Miami and New York.
Now, this local social network is interesting in its ability to connect, or re-connect, you to your community in a way you’re more likely to respond to than the local giveaway newspaper that’s dropped unwanted on your steps each week. This is exactly what makes Craigslist so compelling. It’s a different view into San Francisco/Bay Area life. It’s also a great resource for housing and jobs and stuff—for me at least.
But the trust that’s built up in Craigslist has taken years to accumulate through the hard work of user experience and word of mouth. The service’s reputation is now extremely good and transactions take place with that trust implicit between the parties. It’s a local thing, much the same as the loyalty that springs up for the Raiders or other local sports teams. My big question is: can you bottle that?
The network effects of social networks are localized by both trust and reality (geographies and population densities). So I think in building a social net, you have to be extremely careful to target the correct markets or be doomed to repeat the mistakes of Webvan and Kozmo, companies that entered low-density markets. Plus, you have to concede that Citysearch, in commercializing local markets, was scraping the bottom of the barrel and did nothing to build consumer loyalty.
Given the rapid pace of technological development on the Web, it’s probably safe to say that within a year, the technology that powers social nets will be commodified, not unlike blogging tech, allowing us all to create our own social nets with their own applications and focuses, and connect them to whatever other social nets we desire. Social nets are in many ways a natural evolution of P2P, so it makes sense that they would build off that tech.
What makes social nets important is that we, the nodes, are in control. Our contributions are what powers the network. Once you give that power up to a central authority by commercializing the network, you’ve polluted the stream. If I trust the network, do I trust the commercial interests who are now inserting their paid listings into the datastream? If I like contributing answers, helping people, will I tolerate my advice being mixed in with sponsored links and ad space?