Is Facebook One Social Network Or An Aggregator Of Social Networks?

Last week The Economist took Facebook and other social networks to task, questioning their real value and their potential to scale. Is Facebook headed for a brick wall?
Last week The Economist took Facebook and other social networks to task, questioning their real value and their potential to scale. Is Facebook headed for a brick wall?Here is a look at the issue facing Facebook:

But unlike other networks, social networks lose value once they go beyond a certain size. "The value of a social network is defined not only by who's on it, but by who's excluded," says Paul Saffo, a Silicon Valley forecaster. Despite their name, therefore, they do not benefit from the network effect. Already, social networks such as "aSmallWorld", an exclusive site for the rich and famous, are proliferating. Such networks recognize that people want to hobnob with a chosen few, not to be spammed by random friend-requests.

This suggests that the future of social networking will not be one big social graph but instead myriad small communities on the Internet to replicate the millions that exist offline. No single company, therefore, can capture the social graph. Ning, a fast-growing company with offices directly across the street from Facebook in Palo Alto, Calif., is built around this idea. It lets users build their own social networks for each circle of friends.

And more on this line of thought from blogger Scott Karp:

Well, sure, just like you could hang up on all those telemarketers who used to call during dinner time, before the Do Not Call list, when we discovered that everyone having a telephone actually reaches a point of diminishing returns, i.e. an inverse of Metcalfe's law.

I still find a great deal of cognitive dissonance around the idea the one social network can serve the needs of EVERY group -- shouldn't the Web as platform lead to MORE customization and more verticalization, simply because it's cheap and easy to tailor applications to individual users' needs?

I agree that the future of social networking will be in niche networks. And that these networks will be more customized. Most critics, like the two above, point this out and then use it as a club with which to beat Facebook over the head. What the critics miss is that Facebook already is a collection of niche social networks. Each of the college networks, for example, is a self-contained social circle. Plus each of them is gated and exclusive.

Facebook is an aggregator of networks. While the totality of its users may form one big social network -- and right now the company is using that mega-network to drive growth -- the core of the platform is designed to house all kinds of closed, niche networks. All Facebook really needs to do is to give users more ability to customize each of these niche networks. Do you think Facebook isn't working on this?

I also think that Facebook has the potential to become a self-contained OS, or as I blogged a few months ago, the remote control for the Web. With this added functionality, Facebook can be even more than either a social network or the aggregator of social networks.

What do you think? Can Facebook overcome this so-called inverse of Metcalfe's law? Or is there a big brick wall waiting out there?

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Mary E. Shacklett, President of Transworld Data
James M. Connolly, Contributing Editor and Writer