Social Networking Software: Consolidate and Fragment

(Feb 26, 2009) By now, you’re familiar with the fact that Facebook is growing at 1 kazillion percent per month; that MySpace is plateauing and that LinkedIn is struggling to feel like a community.. It’s easy to lose site of the nearly 1 million small social networks* on Ning (of course you know about 2008 was a year of explosive growth.

As the social network software industry grows and changes, it’s going to simultaneously consolidate and fragment. The big players will continue to need growth to execute their business models. That means that they will be buying anything that reaches a certain momentum and working to convert it into their brand, Watch for acquisitions when the growth line flattens. The paradoxical thing is that acquisition monies are likely to fuel explosive growth in small niches. For a while, it will  look like a perpetual motion machine.

At the same time, services like Ning make it likely that there will be a nearly infinite supply of social networks at the small end of the scale. Take a look at Ning’s most popular networks to get a sense of the variety. (Ning could use a better search engine). With a million sites, they are infiltrating classrooms, school systems, churches, professional organizations, little league teams, country clubs, local politics and National Politics. There even an active (65,000 member) Sarah Palin fan club. After home team RBC, I really enjoyed the fact that there’s an Irish Sourcers Network. The array is amazing:

The terrain will spread to cover every imaginable niche in every geography and language.

But, how one navigates membership in this variety of micro communities is anything but figured out. We’re just starting to be able to think about how to recruit. As of today, there isn’t even a useful directory of social networks (product idea).

Over the coming months and years, we’re going to see a lot of creative destruction. Tons of social networks will get formed and abandoned. Ning resemble a huge shanty-town from some perspectives. Lots of starts rotting on the vines. The early web was just like this.

Ultimately, there will be a stabilization. But, an overall consolidation into multiple large and exclusive winners is really unlikely.

In the meantime, cost advantages for people who need access to multiple productive social networks will be hard to find. The tools to manage access to these nests of opportunity are yet to be imagined.

* Actually, Marc Andresson (COB of Ning) claimed 1 Million Ning networks in this interview with Charlie Rose.

I’m on Twitter, Facebook, LinkedIn and Friendfeed. Catch up with me.


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