No Business in Social Networking

Opinion: David Coursey can't find the value in paying to find out who his friends know. So where's the business model for LinkedIn, Ryze and other business "social networking" sites ?

Social networks are a good thing. Everybody should have one--and everybody I know does, in some form or fashion. But whether you need an online social network and, particularly, whether you need one whose primary purpose is separating you from your money is another question entirely.

I am talking about the LinkedIns, Friendsters, and Orkuts of the world. All of them, presumably, plan to monetize their online communities by charging people for introductions to people they dont now. These things have become darlings of the get-rich-quick-on-the-Internet set, who talk about these services like theres really money to be made selling introductions wholesale.

Now, when a dating service like eHarmony, does this, I understand the pitch: Pay your money, find a mate (hopefully). But what about a business social network like LinkedIn—which seems to eventually want to charge you maybe $10 to introduce you to someone that a friend or friend of a friend of yours already knows?

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This may be an OK, even good deal for high-value introductions, like job placements (hiring or looking) or getting your business plan in front of some venture capitalist with more dollars than sense. But what else will you use it for? And if you cant afford to use it, how much effort will you put into managing your contacts?

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Already, Ive been so overrun with people I really dont know begging to be on my LinkedIn friend list that Ive stopped answering those requests, lest I inadvertently offend someone. On the other hand, a by-invitation service, like Googles Orkut (named after its founder, whose first name is Orkut) has a much better ratio of wheat to chaff. There are people whom I admire that actually asked to be on my Orkut list. (You have to be invited to join Orkut in the first place by another member, which is different from services anyone can just sign-up for).

Not that Orkut has really done me any good. I guess its nice to know I can presumably call on any of these friends for a favor, but I already knew that about three-quarters of the 50-ish people in my Orkut community.

Here are some semi-random thoughts on the overhyped social network phenomenon:

These are meant to be membership services that link people with like interests, which is what Yahoo Groups do quite nicely for free.

These things are really nothing new. Since the beginning of the Internet boom people have talked about making money by creating communities. Some have done it, but lots more have failed. For every AOL there are six to ten TalkCitys.

I dont believe people will pay lots of money for contacts. But, I can see a demand for the services to split their revenue with the people who actually own the contacts. For example, want an introduction to Rob Enderle? Hes a friend and if I asked him to meet with you, I bet he would. So dont pay LinkedIn, pay me. After all, LinkedIn is just a service, the contact is mine. But how legit is a paid introduction, do you really want your friends selling you to the highest bidder?

On the other hand, if people can find a use for these networks, theyd probably pay a $10 monthly fee to belong. But not more, unless these are high-value (i.e. sexual or whatever) relationships were creating.

This is another get-rich-quick-scheme that will disappear within a year or so. Someone will make a little money here, but…

I just dont see a very interesting business opportunity here. At least not for "legit" services. However, some vendors are like conferencing that support a better business model than paid introductions.

But by themselves, social networks are more a curiosity or parlor game or hobby than a real business. And when it comes to the expensive pay-per-contact type networks that "business-oriented" services hope to make their money off of, theyll need more than curiosity to attract the interest of venture money.

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