The value of networks
JR posted in Uncategorized on May 16th, 2008
It has long been an Internet truism that there are very strong “network effects” present on the Internet. They have been playing out prior to and since the creation of the Internet itself.
By network effects, I’m speaking about the exponential increase in value that a communications medium gains as more people use it. We saw this very clearly in the pre-commercial Internet era with the multiple separate e-mail services like Compuserve, The Source and even BBS services like Exec-PC and The Well. Each allowed you to easily communicate with other users on the service. Communicating outside that service was initially impossible, and then became merely very difficult.
It was when the interconnections became trivial with the commoditization of the Internet that e-mail became a valuable business (and personal) tool and usage exploded.
This repeats over and over again. Part of AOL’s longevity and success was the “all my friends are there” argument from family members.
The current battles between differing social networks like MySpace, Facebook and a host of other small fry are just another echo of this continuing process. Just like with AOL before it, much of the attraction of one service over another are your own friends that are already present on one system or another. Not that you can’t communicate across the borders between them, but like with the early e-mail, it is more difficult and more limited in what can be exchanged.
The latest element of the competition is about how you can get some of that information out of a service and allow it to appear elsewhere. Projects and services to enable this are are going by a number of different names. Data Availabilit (from MySpace), Facebook Connect and Friend Connect (from Google). Each is claiming to be more open than the other, but all are ultimately about keeping users inside their “walled garden” so the company can keep harvesting more information about you and selling access to you as their real product (they are, after all ‘advertising supported’).
Mike Arrington at Techchrunch, has a good opinion piece about the questions revolving around Data Portability. Mostly he is responding to a post from Robert Scoble about Google’s ability to get that data from their Facebook to their own system. Mike makes a strong case that your information (postings, addresses, friends lists, etc.) on those social network sites should be under your own control and you should be free to allow it to go to other sites (apologies if that is a horrible simplification of his position).
Robert replied making the point that someone’s friends list isn’t just their own, but the joint possession of the individual participants. A consideration should be that members of your friends list may not want to appear elsewhere. He further points out that there is an inherent conflict in what Mike was wanting. Mike wants to take information with him, but it conflicts with the desire of others to keep control of their own information.
All the conversation and argument are really talking about the network effect and ways to make it better without losing control of the information that is shared. In many ways, both Mike and Robert are correct. The real value is in controlling the sharing of the information. We ultimately want the user to be in control of that information. Whether this is by some federated system that neutrally distributes this information or by some other means, the network value will greatly increase for the company that figures out how to do this without placing a burden on their users.