If you believe the accepted wisdom, the best way to find a wife, boyfriend or job is to get set up by a friend. That might explain the latest dotcom craze of uploading your entire contact database of friends and colleagues onto the web, and encouraging them to do the same. Something must be working, because millions of people are now happily chatting, mixing and swapping photos of themselves on an emerging multitude of social networking websites. Whatever you are looking for, the only thing you can’t easily find on one of these sites is a clear business model. So far it seems that social networks have been more successful in raising money than making any of their own.
That age old divide between business and pleasure also generally applies to networking sites. Linkedin, Ryze, OpenBC and Spoke are all examples of networks designed to help business professionals close deals, find jobs and increase their connections in their field. Despite similar technology and approach, sites such as Orkut, Tribe, and Friendster are more focused on helping users find friends, chat about hobbies or invariably, get lucky. You could be forgiven for thinking it all sounds like a new economy variant on Amway. Quasi pyramid selling it may be, but you can’t deny the numbers. Linkedin now claims over 2.5 million users, and Friendster north of 7 million.
Consumer enthusiasm has brought a coterie of high profile and cashed up Valley VCs to the table including Kleiner Perkins, Sequoia Capital and Greylock Partners. And now, cognisant of the value of bandwagon jumping, all kinds of websites from recruitment (Monster), to dating (Match.com, Tickle, eHarmony), and even auctions (Overstock) are also adding networking features to spice up their story. That’s all well and good, but so far no one has really cracked how to make money out of networking tools. Ryze has a subscription model, which although tipping them into the black, is likely to limit their user growth. Linkedin are experimenting with the Craigslist approach of charging for job ads and also offering a Yellow Pages style professional services search. Most others are making do on affiliate fees and banner ads – which as we well know, is so 1999.
In this respect, there are some parallels with the early days of free webmail. For a while a plethora of Hotmail clones abounded, which then rationalised to a few key players anchored to a major portal. Companies such as MSN, Yahoo and Google have an ongoing interest in offering a variety of applications to keep people hanging around long enough to watch ads and click on sponsor links. At the moment, Yahoo 360 is probably the best example of an integrated communications platform which allows people to share photos, create blogs, send instant messages, and meet other like minded people. It won’t be long before MSN and Google follow suit with their own integration strategies. But there are interesting variations. Myspace in the US and Cyworld in Korea both combine weblog style personal content tools with social network smarts, to allow users to essentially co-author material.
Professionals, however, have a very different set of needs to your average boy and blog mad sixteen year old. One of the looming problems in the recruitment industry is the difficulty of finding and retaining quality talent in a candidate short market. Traditional job boards, whilst delivering a high volume of applications, also tend to yield a high proportion of irrelevant and unsuitable candidates. This is driving corporate HR managers and headhunters to passive sourcing and referral networks to secure their top people. If you consider that a company will pay up to 15% of annual salary in commissions for a successful placement, or potentially lose far more as a result of a poor hiring decision – there is considerable scope to commercialise an effective networking tool.
The core stumbling block at the moment is market liquidity and fragmentation. There are simply not enough high profile professionals currently using one or two of these services to make it worthwhile for recruiters. On the other hand, there are too many sites to make registering and uploading your contacts to each and every one worthwhile for candidates. That will change. Already work is being done on the FOAF standard (friend of a friend) creating an open protocol for social networks which will allow people to port their profile between multiple services.
Thinking long term, web users will ultimately maintain a single online identity, which will contain both personal and professional content. Users will then decide what types of people see that information, and connect with other like minded users through multiple pools of online liquidity – whether hosted by professional associations, clubs, or corporate recruitment programs. This will ultimately allow the creation of a people focused search engine. Forget recruitment classifieds. The future is not candidates searching job ads, but companies seeking talent - and finding people.
There will be a shift once the current younger junior management move to senior management or c-level - thoroughly comfortable with the collusive nature of the net and online social networks move.
Current Senior and C-level management (over 40's group) makes limited use of these online networking facilities.
They often already have contacts and cannot be bothered to look for others via a web interface - they just pick up the phone.
The younger generation still needs and wants to make its mark and is in the process of growing their network, hence tools like OpenBC, LinkedIN etc can help them grow this network.
Pay-for-service will increase once people really started to receive a perceived benefit from the service.
Most likely model will be the Hotmail model where basis service is free, added functionality oompf comes at a cost which is already being adopted by some of the online networking platforms.
Posted by: Hans de Kraker | May 18, 2005 at 10:13 AM
OpenSkills is very much in the space you describe.
We are a global member-funded non-profit association of individuals. We exist to promote the skills of our members.
Our members identify themselves though the OpenPGP trust network. OpenPGP keys can be used to handle encrypted and signed email, and to sign the keys of others to confirm thier identity. This network forms a trust substrate that OpenSkills builds upon, and which maps to the "single online identity" you talk about.
The OpenSkills SkillsBase is directly aimed at the "companies seeking talent" model you describe. Members can import *and* export their resume in HR-XML format, and control what aspects of their resume is visible to searchers.
Posted by: Bruce Badger | May 19, 2005 at 12:24 PM
Don't forget community dating sites like RSVP.com. They've managed to map a real-world social model - buying a drink for someone in a bar that you'd like to meet - into the online world - where one party (eg. boy) purchases 'stamps' [required to send an e-mail to another] and transfers them to someone they like (eg. girl) enabling that person to then return the compliment and send an unmediated e-mail directly. RSVP 'stamps' cost around $89 for 24 - not cheap!
Surely that kind of transactional approach offers one viable model.
Posted by: Tim Parsons | May 19, 2005 at 07:58 PM
The article above assumes that in future people register one identity. However, if we look at real life identities we have several. Personally I am husband, father, cyclist, entrepreneur (http://www.fotoinsight.com) and a postgraduate student. Depending on the type of network / socialization I will assume any such role and you probably do the same. For this reason academici (http://www.academici.ac) is launching.
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