Among all the discussion of the opening of the social web, one thing continues to be a sticky issue for social networks: the lack of a revenue model. While there is advertising revenue being generated on social networks, it is still a fraction of the amount being generated on sites like Yahoo! and Google. Om Malik points out that the lack of a solid revenue model comes with continued signs that the social networking space is slowing domestically.

While there is continued growth abroad, it is much harder to monetize foreign inventory. As such, the social networking industry is in an interesting position. Social platforms have helped generate more inventory but it has also made it more challenging to monetize that inventory. There are people that have developed creative ad campaigns but unfortunately that’s not filling their entire inventory for an extended period of time.

While Facebook and MySpace have been working on targeted ad solutions to help increase their effective revenue generated per active user, there is still too much inventory and extremely low CPMs for the majority. Either social network inventory will continue to attract cheaper advertising or a new advertising model will be developed to increase the effective CPM.

Other variations of advertise include attempts at monetizing “engagement” but really nothing has been developed to increase returns. Among all the buzz, the limited domestic social network growth means that it’s time to start focusing on new solutions for revenue generation. Do you think the industry will find any new solutions or will social networks continue to generate less valuable inventory?

How do you get people to join a brand new social network? Make it uber exclusive and target the leaders of an industry. That’s why when I was stealthily approached and introduced to the brand new social networking service I realized how secretive it really is. Do you want to become a member and get invited to the super selective crowd? You can go enter your email on their site but it won’t guarantee you admission.

We might have some invites available at Social Times but if we did, we couldn’t tell you about it because that’s how selective this site is. Early reports suggest that the site has already embraced OpenSocial, has a mobile client, has a number of geek thought leaders as a members and is revolutionizing the social web. This is all taking place behind the closed doors of the extremely secretive new site.

Last night was the launch party of Pheltup in San Francisco but the venue was changed at the last minute. No photos were allowed out of the party on Flickr but insiders were able to access the photos via http://www.pheltup.com/pheltup-launch-party. If you want to know why people were invited, you could find out from within the site since it is tagged as “The first social network that not only tells you WHO is doing WHAT; but also WHY.”

The social network is poised to explode when it opens up but you are going to have to stick out your “pheelers” to have any chance of getting into the site early on. Good luck getting in my fellow sleuths! Be sure to let me know once you do!

Sarah Perez has started a great conversation about whether or not social network should be regulated. I’m excited to see the conversation at least started as I have mentioned this before. Sarah quotes an article in today’s Guardian which states that, “Nine out of 10 people think there should be tighter regulation of information on social networking websites” and “89% of those surveyed by the Press Complaints Commission said there should be a set of widely accepted rules to help prevent personal information - such as private photographs - being abused.”

The bottom line is that people believe there should be regulations but in this country at least, very little regulation (if any) has been focused on social networks aside from privacy policies and the creation of policies to protect children. One of the most substantial problems is that people are not aware how their information is being used and how public it really is when they post it online.

Theoretically a similar argument could be made for just about any online service that doesn’t have bank-like security. Can you blame the ignorance of the user for information being publicly displayed? While there is legislation on the table in the European Union and there has been proposed legislation in the United States, nothing has happened so far.

With the recent breach of privacy of Paris Hilton and Lindsay Lohan on MySpace being blamed on a failed Yahoo! API, the issue of user privacy and protection is back at the forefront. The question is: should there be laws that protect the users online when interacting with social networks?

Yesterday I called social networks “virtual playgrounds.” Honestly, I thought that I would have received more comments. Either people have already accepted the fact that social applications are not about utility or people were instead angered by the post. Last night I read Jeff Atwood’s post about Clay Shirky’s new book and the topic arose again. One quote from Clay’s book stood out:

“Social software” is about making it easy for people to do other things that make them happy: meeting, communicating, and hooking up.

He also suggests that when we develop social software we should think of a 22 year-old college student in his dorm room and using the application to get laid (and hence the title of this post). I don’t want to reiterate a lot of what I wrote about yesterday but the bottom line is clear: social applications are about helping people communicate and connect. As I think more about the lack of social utilities on social networking sites/platforms, I begin to wonder if the main hurdle facing these applications is not their lack of utility, design or anything else. I think the main hurdle is simply that they are on the parent social networking site.

If I’m running a mid-sized company and I want to use a conference room to dial up a few internal employees, logging into Facebook just doesn’t seem like the way to do it. If there was a screen built into the phone that I could navigate to find the individuals and add them to the call, that would make a lot of sense however. Integration of Facebook into that phone seems like a feasible solution.

At some point there is a division between our professional and social lives. While that division is becoming blurred it will never totally disappear. Facebook, MySpace, Bebo and other social networking sites have been successful at attracting people that want to use the sites to enhance their social lives. This was the way that Facebook was initially used (and still is used today).

Honestly, I think Facebook is going to have some serious challenges trying to convince their users that the site is not just for fun. That’s a whole other story though. The bottom line is this: the success of a social application is based on the ease of use and simplicity, the environment that the application exists in, its ability to solve problems facing users in those environments and its ability to facilitate collaboration and conversation.

I also think that the failure of applications can be attributed to those same factors. So what are the problems facing most Facebook users? Well given their primary demographic being 18-30 year olds, dating is a serious issue. Social network sites help facilitate dating especially among college students and as such dating applications are extremely successful on the site.

Social interaction among friends is also a need of the users so games that help the users facilitate a dialogue with their friends have been extremely successful. I’d like to write a follow-up post with more analysis on the factors most important to the success of social applications but for now I’ll leave you with a couple questions. What factors do you think are most important for the success of social applications? Do you think Facebook will be successful at getting a large portion of users to use utility focused applications?

Have you been plotting the next productive application that would transform the way people work together via social networks? If so, you might want to give up on it. I’ve spent the past few hours browsing through the MySpace application directory and Facebook application directory and I simply can’t seem to find a single productive application with a lot of users.

This is why gaming applications are some of the most popular apps on Facebook. These sites are what humans connected to the internet use when they want to go waste some time. While there are a number of other sites that have found ways to attract your attention and waste your time, social network sites appear to be the leading source of poor time management on the web.

It caters to the same sort of escapism that we seek when we spend time watching the television. While we occasionally use these mediums to transmit important information the majority of it appears to be conversation centric. While the medium has transformed the way that we interact in the virtual world, I’m beginning to think that most public social network sites are simply virtual playgrounds.

Facebook has been trying to avoid such categorizations for the longest time and emphasizing their existence as a social utility. Unfortunately it appears that most of the users do not want to use it for much more than entertainment purposes and it is rapidly becoming a media entity similar to MySpace. While I believe that there can be social utility (as found through sites such as Intellipedia), much of the business-centric utility is lost in public facing social network sites.

Do you see long-term utility based value coming from the larger social network sites? Do you think the new external facing platforms will help solve this or will it simply amplify it?

Remember the days when it meant you were a drug dealer if you were young and wearing a pager? The same thing went for cell phones at one point. Eventually everyone had one or the other and it became a normal thing to have. Email came about and at one point it became “uncool” to not have an email address. At this point it is no longer cool or uncool, you must have an email address if you are going to get a job.

I would argue that the same thing now goes for social network profiles. I stumbled across an article entitled “Attention Boomers: Generation Y Expects to Find You on Social Networks.” As a member of Generation Y I can definitely say that I agree with this. Whenever I touch base with a new contact, the first thing I do is look them up on Facebook and LinkedIn.

Having access to that individual’s profile helps me to learn more about them and helps me learn a little more about their personality. It also provides more of a human element. The only excuse for your company to not have your employees on Facebook or other social networks is if you are in intelligence and keeping information classified is of utmost importance.

The argument against employees having social network profiles is that new recruits should be able to interact with employees in a completely professional environment. While I agree with that, I think that it is possible to have a professional interaction over a social network. I for one do so on a daily basis. Do you think everyone in the company should have a social network profile? Do most people in your company have one?

I recently held a poll on Social Times about whether or not users believed that social networking sites would eventually become “like air” as Charlene Li of Forrester Research has previously asserted. Most people didn’t believe it but after seeing the new Facebook profile design, I’m pretty confident that social networking sites are dead in the way they currently exist.

The idea that I need to go to another website to see what my friends are up to is absolutely ridiculous. Why do I need to go to Facebook to get updates on the relationship statuses of my friends or to find out that my friend John recently uploaded a photo of his trip to Hawaii. FriendFeed already accomplishes some of these things but the idea that I need to do all of this from one website is ridiculous.

Within the next two years we are going to witness the proliferation of desktop social control panels which leverage various networks the same way that IM clients like Digsby and Gabtastik currently let users leverage any of their chat systems. There will soon be a social protocol developed for updating your social data via Facebook and eventually other sites including MySpace, Bebo, etc.

Think I’m crazy? You have a right to think so but this is my blog so I can make any assertion that I want! This isn’t that crazy of an idea when you think about it though. There’s already FriendFeed support within Twhirl, we are only a few steps away from Facebook support. Can you think of any other ways to extend social networking features to the desktop? While I don’t think that social networking is dead by any means, I think that the existence of stand alone sites will soon be passé.

Plaxo.com, the company acquired last week by Comcast for a rumored $160 million, was launched back in 2001. The company faced heavy criticism for aggressive spam techniques which used user contact lists to send out false invites to users. Reunion.com has decided to leverage a similar tactic in hopes of rapidly expanding their user base.

While the tactics have appeared to work (based on Alexa statistics), this strategy is not a long-term solution and is a quick way to lose users faster than you gain them. Take a look at the screenshot below from a search for “Reunion.com” on Summize. The majority of comments are from angry people complaining about how Reunion.com abused users’ trust.

Only one of the users thought it was a genuine email but chose not to respond to it because he prefers to communicate via Facebook and Twitter. Screw using Facebook to spread your website or application virally, you can import peoples’ Gmail contact list and spam the hell out of them! Honestly, this has to be one of the most misleading tactics for a website to leverage.

Following stagnant growth through February it appears that the site decided to take drastic measures. Unfortunately those measures are going to end up backfiring. Reunion.com staff: drop the spam tactics or witness a mass exodus from your site. Then again I’d guess that the exodus has already begun taking place as users move to Facebook.

Have you received these emails? Do you see any benefit of using these tactics?

Sample Email 1

Sample Email 2

Twitter Search Screenshot

I learned a little bit about human behavior today when rumors started flying about the Facebook stalking tool that I posted about this afternoon. Everybody that I asked had a story and now there is a ton of buzz about what this really is. I’ve checked it out and for myself it is somewhat accurate. For other people it has also turned out to be accurate for the most part.

Within hours, Facebook took down the tool and now you can no longer see who was most relevant to you based on Facebook’s private algorithm. Honestly, Facebook needs to make a more robust stalking system that enables users to track who is “most relevant” to them based on profile views, searches, date and other factors. The bottom line is that all users on Facebook are spending a ton of time stalking their friends and others that they are closely tied to.

The most interesting part is that everybody has a story about stalking people on Facebook. Stalking has the potential to be of the most sticky component of social network sites. That’s why the Trakzor application on Facebook happened to be so popular. A bunch of other anti-stalker applications showed up on Facebook but were immediately shut down because they were a violation of Facebook’s terms of service.

Enabling people to see who has been viewing their profiles is highly controversial but for people spending hours a day on social networking sites, being able to see which friends’ profiles they are viewing most frequently makes a lot of sense. It also may help reveal the truth about our actual desires. Do you have any interesting stalking stories? Were you able to use the Facebook stalker tool while it was up?

Looking to network with Russian billionaires? Chances are you won’t be able to unless you get invited to the new social network being launched by the Russian billionaire, Mikhail Prokhorov. According to Mark O’Neill, Prokhorov is in the process of launching Snob.ru. Yes, he went ahead and called the social network “Snob.” Not only is he launching a website though, the billionaire has plans of launching a television show as well as a magazine.

The intro (which you can view via Snob.ru), is mostly in Russian so I have no idea what the site says (let me know if you can convert it for us!). No word on if this site will support OpenID though. Chances are good that Mr. Prokhorov doesn’t know much about portable identities but then again, nobody in this network need to worry about that since network comes with its very own membership card. The demo also displays a touch screen which is moved around with the same technology used with the iPhone.

You can then pick out people in various locations and their photo shows up in a holographic format. Well maybe not, but they try to make everything look really slick on their website. So slick that they may slightly overdo it. This network requires that you have two members invite you to get in, one more than the relatively exclusive Small World community.

Thankfully we got the hook up and have invites for the next 50 people meaning you will only need one more to confirm you. O.k., not really but if you want to get it to the network … well let’s face it, if you are reading this post, chances are you won’t. Tough luck!