March 25th, 2008

Decommoditizing Social Networks By Connecting User Profiles Via OpenSocial

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Why isn’t Facebook a founding member of the OpenSocial Foundation, along with Google, Yahoo, and MySpace? Because Facebook is threatened by OpenSocial’s ultimate aim of connecting user profiles and enabling users to easily manage and port their data across any social network.

Facebook is worried that this will enable groups of friends to easily pick up and move their social activity en masse to another network — or, even worse, that you won’t have to join Facebook to connect with friends on Facebook.

Why does Facebook fear this so much? Because Facebook’s social networking features are a commodity.

Even Facebook’s third-party applications will effectively become a commodity of sorts, in that developers will be able to use OpenSocial to make applications available on any social network. So the applications themselves aren’t commodities — but a social network having the application will cease to be a differentiator.

Facebook fears the openness of OpenSocial because it doesn’t really have a differentiated product. All that differentiates Facebook for an individual user is the presence of that users friend’s on Facebook — which forces them to use Facebook to connect with them.

But if OpenSocial makes it possible for user profiles to communicate across networks, then Facebook becomes just another set of generic social networking features, supplemented by third-party applications also available on any other network.

So why did MySpace join? Well, for one thing, they don’t have a $15 billion valuation to support, so they can afford to bet on the evolution of social networking.

And what is the evolution of social networking?

I think it will be the decommification of social networks, which will increasingly offer features customized to particular users, which complement, rather than compete with other social networks a user may belong to.

If two social networks target the same definable groups of users with unique features and value propositions, OpenSocial makes all the sense in the world. OpenSocial connections can enhance the user experience (heaven forbid we put users first) by integrating the experience across networks and making it easy for users to manage multiple profiles.

For the social network itself, creating an OpenSocial connection with a complementary network can be a form of co-marketing/co-registration. Even better, if there are active read/write connections between networks, data created in one network can enhance the other network its connected to — and vice verse.

Only a social network like Facebook that has no unique value proposition and depends instead on a traditional customer lock-in and monopoly control strategy need fear OpenSocial.

And even then, I think resistance will ultimately prove to be futile. (I’m tempted to quote Eric Schmidt’s “don’t bet against the Internet,” but realize what a cliche that would be — oops, I guess I just did.)

The web advantages companies like Google that can harness network effects and profit from liquidity in the system. That’s what OpenSocial will do for social networking.

Of course, none of this means there won’t be a market for standardized social networking features — but the big player in that market may turn out to be Ning, whose white-labeled social networks are able to differentiate themselves based on their brand identity. Ning social networks can have a unique purpose, i.e. the REASON why people connect — compared to Facebook, where the reason for joining is generic, and even the reason for “friending” someone is generic.

Not surprisingly, Ning has embraced OpenSocial for applications, and I wouldn’t be surprised to see them enable OpenSocial connections among their networks and with third-party networks.

If Facebook builds its business around a closed, undifferentiated, generic network, it will quickly become an old mass media company.

Comments (17 Responses so far)

  1. I disagree that “Facebook’s social networking features are a commodity”

    The secret sauce for Facebook is the “newsfeed”. The newsfeed algo’ calculates what I would like to see and shows me only the most interesting portion of my friends’ activity (compare this to the flood of dumb info aggegators like Friendfeed and jaiku pus at you).

    Friendfeed is responsible for the usefulness and stickiness of Facebook. The newsfeed is also responsible for the viral adoption of applications.

    So just like Google’s search application is a commodity, with differentiation from Pagerank, Facebook’s social service is a commodity, with differentiation from the intelligent newsfeed

  2. Hashim,

    Good point about Facebook news feed, but it actually puts even more pressure on Facebook to open up, especially as services like FriendFeed.com aim to aggregate across services.

    What happens when you can have a news feed of your friend’s activity across every social network except Facebook? Following activity of people on only one closed network will soon start to seem pretty limited.

    In fact, I bet services like FriendFeed.com are specifically aiming to eat Facebook’s lunch, which they could much more easily do if Facebook’s news feed data were made accessible via OpenSocial.

  3. Thanks, Scott.

    Let me quote from Nick O’Neill to add to your point:

    “While I argued that the “opening of the newsfeed” was in fact most likely the public launch of Beacon, the implications are still the same. As soon as Facebook enables the tracking of user activity on external sites, FriendFeed will prove less useful. Why am I going to go add all of my friends on FriendFeed yet again? Eric Eldon suggests that FriendFeed differentiates itself by only tracking those friends that you care about. I argue that Facebook can resolve that issue with a more effective newsfeed algorithm.”

  4. Hashim,

    Ah, but that assumes Facebook is keeping the social graph in your user profile under lock and key. What Facebook will increasingly be pressured to do is let me port my friends over to a service like FriendFeed via OpenSocial.

    With OpenSocial, I can decide I want to manage my social networking identity on a special interest Ning network, follow my friends’ activity on FriendFeed, and then I never really need to go to Facebook.

    You may very well be right that there will be a battle of the news feed algorithms — but Facebook won’t be able to handicap itself long term by staying closed.

  5. Another way of looking at this [discussion in the comments] is that Facebook, by swallowing up all my interactions and not enabling other services to interface with them, INCREASES my cost of interaction.

    (much as all the spam/advertising has increased the costs of interaction (i.e. communication) on MySpace)

    Online/wireless social nets are best for lowering barriers to communication (easier to meet people, stay connected to ones you already know, etc)

    Strategies that increase the cost of communication are going to have to be compensated for magnificently (e.g. usability, etc) in order to be defensible.

    My $0.02

    Nice one, Scott…great points, too, Hashim

  6. Scott, you’ve overlooked University networks. I graduated last summer, but I still know useful the University specific networks are. They are anything but generic, and are far more useful than anything Ning currently hosts – at least to a twenty-something whose every peer is on FB.

    On Facebook, people ‘friend’ each other for generic reasons because the popularity of the service affords it. But Facebook was once very specific to educational institutes (and in many ways it still is), so the generic social networking interactions have grown from a very stable foundation in highly targeted networks. Those foundations are still there – they’re just overlooked.

  7. the open social network is the web.

  8. Scott:

    I think you misunderstand what OpenSocial is in the same way that I originally misunderstood what OpenSocial was. Such misunderstanding is easy because the name invokes something that is obvious except that that “obvious” is in fact not what OpenSocial is.

    Instead of being a way to manage and port one’s own data OpenSocial is instead a spec for creating widgets (OpenSocial API) and a spec for discovering one’s social graph at other websites (Social Graph API). I was more than a little disappointed when I learned that.

    What I think you were really talking about in terms of functionality is DataPortability.net whose mission is to cultivate end-to-end data portability across social networks. Now THAT is what I had hoped OpenSocial was.

    With that bit out of the way, I think your analysis of Facebook and its motivations and positioning are otherwise 100% spot-on.

    BTW, I think what we’ll see is an evolution to where their are millions of social networks and a few will be big because of brand alone (like maybe Facebook and MySpace.) The rest will be small networks in little niches that struggle to monetize which is exactly the same problem that you write about that newspapers have today.

    As you know, when we commoditize the techonology and the means then everyone rushes in, we have a bubble, then a shakeout, and then statis. In that latter state its very difficult to “get rich quick” or even grow quickly, and doing business once again becomes about executing better than the next guy. JWTCW.

  9. Mike,

    What you see with OpenSocial is likely just the tip of the iceberg. Google knew they had to take it one step at a time, and starting with widgets was the low hanging fruit.

    But you can be sure Google wants to see complete data liquidity in the system. It’s just a matter of time as the market comes to terms with the inveitable.

  10. you know how with iGoogle you can assemble your own page with modules (similar to MyYahoo and i guess with blogs and social nets). well, how about a service where you can assemble your own mashup of apps from wherever — Facebook, widgets, gadgets, RSS feeds, etc — onto one page THAT IS PUBLICLY SHARE-ABLE AND ACCESSIBLE WITHOUT A LOGIN.

    anybody seen anything like that?

  11. [...] Just a quick mention of a couple of articles I’ve picked up on today.  The first over at E-commerce Times talking about the fact that traditional advertising isn’t really working and the other from Publishing 2.0 about the decommoditisation of social networks. [...]

  12. @Scott: What you see with OpenSocial is likely just the tip of the iceberg…. But you can be sure Google wants to see complete data liquidity in the system.

    True, but the reason I commented is because when I first read about OpenSocial I made plans to use the portabile data aspect immediately, only to rudely find out that it wasn’t there and (how long has it been?) is *still* not there.

    So even though you have faith in Google getting to that point (as do I) your post might leave people with the impression that OpenSocial is about data portability and that data portability spec is available today, of which neither are the case.

    Hey, I’ve finally got faith that American’s won’t be foolish enough to vote in another Republican after 8 years of Bush II, but the election hasn’t happened yet so I’m not gonna bank on it and I’m gonna keep volunteering and making donations until we know it to be fact.

    All that said, I *did* say that I otherwise agree 100% with your analysis… :-)

  13. [...] Decommoditizing Social Networks By Connecting User Profiles Via OpenSocial – Publishing 2.0 Article on Facebook’s thread from Open Social (tags: facebook opensocial) [...]

  14. Personally I don’t feel that Facebook is scared of Google, or Open Social. I am not sure that Open Social has any impact on Facebook, as Facebook (and My Space) are firmly entrenched as THE social destinations on the web. A site or sites deciding to embrace the Open Social standard may be able to leverage some of the data from other sites that are sharing data, but they won’t detract people from using Facebook.

    It comes down to what people are used to. Most of my family uses My Space for their social networking. Facebook is superior in almost every way, and even they acknowledge that fact, but My Space is where all of THEIR friends live.

  15. [...] pressure isn’t just on Facebook to open the flow of data — it’s on every web service and every [...]

  16. [...] OpenSocial promises to allow web users the ability to “easily manage and port their data across any social network” or web [...]

  17. [...] Decommoditizing Social Networks By Connecting User Profiles Via OpenSocial [...]

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