Social networks not yet compelling

by Goutam Das, originally printed in Deccan Chronicle

Bengaluru, Sept. 10: The Facebook ‘junkie’ would vouch for it but there are an equally large number of people who feel social networking sites are garbage. They don’t understand what it is; don’t know what to do with it, and often struggle to understand if they are useful at all.

In fact, online social networks have been confounding scientists as well. Research in this area is at least a decade old but understanding is still "primitive", principal research scientist with Yahoo! Research Duncan Watts believes.

The lack of understanding may be one reason why firms have not been able to monetize social networking properties effectively —most sites have been burning cash in bandwidth and servers while the return on investment has thus far been paltry. User acquisition has ensured high market valuations but there are question marks on sustaining profitability.

"Web2.0 applications are just trying out things — they are listening to users, trying to figure out what works and what doesn’t. May be, if we have a better scientific understanding of social networks, we can monetise better. Because we have such a primitive understanding of social networks, we are some distance away from being able to say that we have a formula which can be applied to generate revenues," Watts says.

At Yahoo!, Watts has been anchoring the Human Social Dynamics group, trying to find answers to difficult questions: the relationship between the network and an user’s behaviour on it, how networks influence behaviour, how they help people solve problems.

Making sense of these issues would take time because social networks are complicated structures. They change constantly as people make new friends, drop old ones, activate some ties, categorise friends. Data from the network, then, may appear to be an enormous tangle of dots and lines.

Besides understanding, part of the problem with monetisation may be a network’s utility value. We cannot do without Web search and e-mail since it has become a very integral part of our everyday task solving routine. However, social networking hasn’t reached that level of essential functionality, Watts feels. "It is entertaining and intriguing. But you don’t have to use them. They haven’t provided a compelling value for a ration person to say ‘I need that’. The problem is many social networking services were built in an adhoc experimental way," he says.

That is also why many of these sites went out of circulation. The first to attempt an online network was a Website called sixdegrees.com in 1998. "People were fascinated but after a point of time asked what could they do with it? There wasn’t an answer and the Website went out of business," he tells.

Then came Friendster in 2003. By this time the bandwidth had increased, helping people upload photographs. But it still wasn’t clear what one could do with all of this. "They looked like it would be useful for something but it never became clear what that something was. I would say that is still somewhat true," the researcher holds.

However, he believes Facebook may have slightly changed the game by heralding in two innovations — news feeds and the developer platform, which added a bit of functionality to the otherwise boring network.

"News feeds gave people a new way of communicating. Rather than sending direct messages back and forth, you could now message a group and people could decide what to do with that information. The developer’s platform was an intriguing platform because it opened up the space to thousands of people building applications. Most of them are silly but some like scrabbles are popular. It is not inconceivable that someone will develop the killer apps some day," Watts hopes.

Meanwhile, the wait will be on for "real benefits". Whether social networking can one day play a bigger role in post disaster reconstruction or even marketing is still speculative. "Word of mouth marketing is trendy and one reason why it is popular is because people think of it as free lunch. However, if you understood how individuals influence each other as well as the structure of those networks, you may be able to identify people who could generate very large multiplier effects," he explains.

Now, that’s an appealing idea.