New Role for Social Networks

A faltering economy presents opportunities for social networks to become moneymakers.

There are social networks, and then there is the real world. Where the two meet is the next emerging technology business.

The problem with social networks such as Facebook and MySpace is twofold: They rely solely on advertising for revenues, and the larger the network grows, the less attractive the network becomes as spammers, schemers and assorted weirdos pile in. As one recent posting on TechCrunch called it under the entry title of "Facebook Fatigue?": "FB began to lose its appeal when these kids' parents joined up and started getting involved in their kids' stuff."

The second reason has to do with the economy. When the economy is robust and people are thinking real estate prices will march ever higher, social network users feel better about wasting their time on the networks rather than doing something beneficial such as figuring out how to pay the mortgage.

But the economy is faltering, and according to recent job loss data, the economy is in recession. With the stumbling economy, I think there is opportunity for the social networks to move from being time wasters to money savers. I've been convinced of this for a while, but three developments had to take place in order to set the stage.

First, social networks needed to be created. Second, previously unconnected parts of the business and home infrastructure needed to be digitized and made accessible via familiar computer interfaces. Third, you needed a financial squeeze to make consumers and business execs feel the money saved would be worth the effort expended.

As far as the first requirement goes, there is no lack of social networks. So far, Ning has done the best job of creating a network that is flexible and scalable and allows the network creator to build a brand without handing over too much control to Ning. But even if you are not a Ning fan, there are hundreds, probably thousands, of networks from which to choose.

For the second requirement, I would point you to the recent announcement Microsoft made in Germany with a company (EnBW Energie Baden-W??rttemberg) that makes small smart power meters. For now, home owners monitor and manage their own power consumption. It does not require a great leap of understanding to see how a group of consumers could form a social network to monitor their power and ask for a better deal from the utility.

It further does not take a great leap to see how business executives could greatly benefit from being able to measure and monitor their energy and materials use in real time and share that information via a closed social network within their own company.

As the economy hits a bumpy phase, it is time for the social networks to punch in and go to work.