This is a continuation in the series on “The Social Web Economy“

As I said in the last part of this series, “for the most part, developers are not businesspeople.” As such the social web economy turns to entrepreneurs to be the leaders. Just as in the general economy, they are the individuals driving the social web economy forward. They are frequently jacks-of-all-trades and they are willing to do pretty much anything to build a business.

I have the utmost respect for entrepreneurs (possibly because I am one myself). Entrepreneurs are involved in pretty much all the activities that start-ups participate in. They make day-to-day business decisions, secure funding, build partnerships and alliances, determine a company’s strategy and are the ones accountable when a company succeeds or fails (failing is what happens most often).

I should make a distinction between generic “entrepreneurs” and “entrepreneur leaders”. All members of a start-up are theoretically entrepreneurs. They too are taking a risk by joining a start-up but the entrepreneur leaders are the ones held accountable for the businesses. All members of the social web economy are taking a risk but the largest risk takers are frequently the “entrepreneur leaders”.

I’d equate these people to the philosopher kings that Plato speaks of in his book “The Republic”. While there isn’t really one “ruler” per say in this economy, I’d suggest that this could be the most important role. Then again, no single role in any economy is most important.

Next post in series “The Social Web Economy: Advertising Professionals“

Over the past few years there has been a rapidly emerging industry around events catering to the technology space. When the first bubble burst, the industry was left with a big void. No more lavish parties that were partially to blame for the Web 1.0 hype. As industry professionals young and old have begun to adopt social technologies it has become easier than ever to promote an event and attract hundreds and occasionally thousands of people.

The Internet Helps Connect People Offline

Following the collapse of the bubble, many were left to reflect what had happened and what should be done differently this time around. There was also a fear present that the internet was going to pull people apart and create disjointed communities instead of bringing people together. Around this time (2002) Meetup.com was founded and there was a resurgence in locally oriented events (there were other sites that were used as well, Meetup.com was one of the primary sites at the time).

It was surprising for many people that the internet would actually be used as a way to help people connect offline. Around the same time, a new type of media began to emerge: blogs. If you view the Wikipedia article on blogs as an accurate source of the history of blogs, 2002 was the year that blogs began to attract mainstream attention. This is due to “coverage for their role in breaking, shaping, and spinning news stories”.

The mainstream press began to realize that many blogs were relevant and could be used as a tool for spreading information. This would ultimately be a turning point for many of the mainstream media outlets but that’s for another article. What’s important is that soon enough there was the emergence of extremely powerful blogs that would soon begin leveraging that power to help congregate people.

A New Wave of Events Arrives

Prior to the rise of new media, there were a large number of event focused organizations that were used to spread information within industries. For example there was (and remain to be) a plethora of trade organizations that helped people stay in the loop on what’s taking place in an industry and help connect the people in those industries. The new media organizations (primarily blogs in the tech industry) are replacing what were once referred to as “trade organizations”.

I would argue that many of the popular blogs are becoming a new type of trade organizations. They help people stay up to date on what’s going on in the industry and they are also helping people connect offline through events. There is also another reason that the influential blogs get involved in events: they have a much higher margin.

While well read blogs can attract high advertising rates (typically measured by “Cost per Thousand Impressions” or CPM), it is still hard to run a large media company based solely on website ad revenue today. Just look at the large news organizations (Washington Post, New York Times, etc), they are all struggling to survive in the current environment. Many even wonder if they will survive (see Adage Special Report on Newspapers Future).

As a result of the challenges facing these new media companies, we are witnessing blogs large and small enter the events business.

Tension Emerges

Over the past year, technology events hosted by both blogs as well as strictly events production companies have become ubiquitous. Some events, like SXSW and CES, now attract thousands of attendees, while other events are targeted toward hundreds. The events also range from happy hour networking events like Tech Cocktail to Twiistup to full scale conferences like SNAP Summit, Graphing Social Patterns and our own Social Ad Summit.

Each type of event has different goals and targets a different group of people but within a short period of time there was the emergence of technology events hosted in cities around the world. Why has this happened? I would argue that there are three primary factors contributing to this boom:

1. Social Technology - If it weren’t for social technology, event promoters would have to rely on traditional techniques to attract attendees to events. Now thanks to Facebook, Meetup, Upcoming.org and other online event services, it has become easier than ever before for individuals to set up an event in minutes.
2. Increase in Self-Promoters - Generation Y and the tail-end of Generation X have realized the power of self-promotion. Whether it’s the books or blogs we read, seeing self-promoters become national celebrities who also attract wealth has encouraged many to become ruthless self-promoters. Call them narcissistic, call them egoists, call them conceited. Whatever you call them, we now live in a world filled with them. Perhaps the absolute number hasn’t increased, it’s just that social technology has made this group more apparent.
3. Sound Business Model - Events make money! Yes, event promotion can generate significant revenue. Whether local networking events or large conferences, all have their own model of generating money.

These three things have combined to create a boom in events. Whether it’s an unconference or a “real conference”, a happy hour or a networking event, everywhere you look now there is an event. This is beginning to generate some tension among the ranks on a local level as well as a national level. Just yesterday we saw this result in Mike Arrington’s public lashing of DEMO for false accusations.

On a local level we are seeing the emergence of competing events. While I was in New York City this weekend I learned that there is now two Facebook Developer events: one is officially “sanctioned” by Facebook, the other is a spin-off. Both attract a lot of people.

Bubble’s Growing, Will it Burst?

As the tension emerges, the only question that remains is what’s the end result? Will we have thousands of competing events locally and nationally? Probably. Will they all experience windfall profits? Probably not. In my opinion, all this means is that we have a healthy market. The people are the ones that will decide who succeeds, not the event promoters.

My guess is that we are going to start seeing a large number of event promoters that begin to overextend themselves. This will result in a loss of money for some and occasionally a loss of hope. There’s risk involved in business, so if you plan on hosting that next event, just keep in mind that there’s no guarantee about anything.

One thing that’s perfectly clear: the internet is not going to isolate humans, it’s going to bring us together, online as well as offline.

According to a study out today by comScore, social networking growth is beginning to level off. In comparison to the average worldwide growth in social networks of 25 percent, North America is growing at only 9 percent. This may also suggest that the huge shifts we saw of users from Friendster to MySpace and finally to Facebook may also begin to slow as users begin to settle into their favorite sites.

The largest source of growth abroad appears to be the Middle East and Africa which grew at a rate of 66 percent over the past year, growing from 18 to approximately 30 million users in June. Facebook also continued to expand its dominant position, growing 153 percent over the past year to attract over 132 million users in comparison to MySpace which attracted only 117 million users.

Another interesting statistic revealed by comScore’s release of June statistics is that Facebook has been growing phenomenally abroad. In Latin America the site has grown over 1,000 percent over the past year. The site has also grown more than 300, 400 and 458 percent in Europe, the Middle East and Asia respectively. Facebook is on the fast track to becoming the global social networking leader by a significant margin.

MySpace was only able to 3 percent worldwide growth over the past year. These statistics highlight the ongoing global competition for social network audiences. The discussion of monetization may still be premature for many as the battle for global leadership is ongoing.

This is a continuation in the series on “The Social Web Economy“

“Developers, Developers, Developers!” This is probably one of the best known quotes of Steve Ballmer, CEO of Microsoft. Many people may find him crazy for the way he speaks about developers in the video that I’ve included below, but he’s right. Not just in the social web economy but in the digital economy, developers are some of the most important people. They produce the products and services that consumers use on the web.

When the social web was transformed overnight by the launch of the Facebook platform last year, many developers had mini-empires practically overnight. Whether it was individual developers or small teams of developers, these individuals now had businesses with relatively sizable revenue that they had to run. At f8 a couple weeks ago you could walk around the room and see how the passing of one year had impacted many of these developers.

Some had been acquired, others continued to go it alone. Those that decided to go it alone are now being pushed to their limits and realizing the challenges of trying to grow a small business on a global scale. The key takeaway is that developers for the most part are not businesspeople. While they may have the entrepreneurial spirit that burns in many of us, they are best suited at building the programs that we all have grown to love (or sometimes hate).

What is the source of developer tension? While developers have tension resulting from numerous sources (bugs in their applications, tight deadlines, etc), in the social web economy, the primary source of developer tension is the platforms. When a platform decides to revamp their entire system, or make sudden changes resulting from user feedback or malevolent actions by another developer, the rest of developers are impacted. On the Facebook platform the result was developers waking up at 3 am to fix their no longer functioning applications. Occasionally teams of developers worked around the clock in response to complaints from Facebook about terms of service violations.

While mature platforms don’t impact the developers as significantly, there will always be tension between the two parties.

Next post in series: “The Social Web Economy: Entrepreneur Leaders”

The MySpace platform has long-been a secondary platform for application developers. The primary reason is that most MySpace applications fail to attract as many users as they do on Facebook. Unfortunately there is no longer any way to determine the total number of users that have ever installed an application on Facebook and as such it will no longer be possible to do an effective comparison of what sites are more effective based on public data.

All we have left to go on is the last total install data that Adonomics provides on their site. According to Adonomics the top MySpace application has over 6.7 million installs whereas the top application on Facebook has more than 46 million. This is the last we’ll ever know about the top number of users a Facebook application has but it’s clear that MySpace is still a fraction of Facebook when it comes to application installs.

How about when it comes to Facebook monetization? According to Alley Insider, Offerpal Media (who is also a sponsor of Social Ad Summit) has been paying developers around $75 per 1,000 daily active users on MySpace and Facebook and $150-$200 for “higher engagement” applications. MySpace is generating about the same amount. So how much does this break down to for CPMs?

No idea because there is no measure of what “high engagement” amounts to on Facebook or MySpace. Both sites are known for having an extremely high number of pageviews and as such this could amount to $0.75 or $75 CPMs. Chances are good that it’s much closer to the former estimate. While some developers are rumored to be generating over $1 million a month on Facebook, the majority are not generating that much off of a single application.

It’s great to see that applications across multiple platforms are monetizing equally, but overall the industry needs to figure out a way to increase the overall CPMs.

Within our individual lives there is currently a division between the activities we do online and the activities we do when we aren’t connected. Just as online privacy is beginning to fade away we will soon witness the destruction of offline privacy. Last night I was speaking with a friend of mine from Webster Hall in New York City when an idea clicked.

If all of your general activities at an event could be tracked back through Facebook (or alternative social media services), there would be a huge advertising potential. Imagine reading your Facebook News Feed and seeing a story that says “Nick and 3 of your friends just entered the Smirnoff Vodka booth at the Everclear concert.” With the power of Facebook connect and competing services, we will soon see these types of activities become public.

Rather than just accepting a terms of service and privacy policy when you register for a site, you will begin to do the same thing when you register for events. How will this work? Through leveraging readily accessible technologies you can track the locations of people attending an event. This means that ads being displayed to them can be targeted and it also means you will soon be able to target those ads toward their friends.

Some of these concepts begin to sound like those out of recent science fiction movies. Malls for instance will soon become entire branded experiences. The moment you enter a store, your friends on Facebook and other social platforms will immediately see that you’ve entered. There are clear privacy issues with these forms of broadcast advertising. There are also questionable business practices at hand.

Should individuals be paid for this new form of referral-based advertising? Also, shouldn’t the consumer be able to opt-in to the public display of this information? The concept of the “social web” eventually begins to fade away as all of our offline and online activities become merged. We are only months into the launching of Facebook Connect, MySpace Data Availability and Google Friend Connect.

The recent “Congressional scrutiny over the intrusiveness of online advertising and behavioral targeting” that Erick Schonfeld points out will become increasingly important as the technologies transform advertising. So when has advertising gone to far? While many of those focused on monetizing the “social web” are willing to try anything to increase ad revenue, consumer interests may become a secondary concern.

Is there a line to be drawn when it comes to new advertising techniques? Will Congress be able to stop many of these activities prior to a multi-billion dollar industry being built around this?

This is a continuation in the series on “The Social Web Economy“

Web 1.0 was the only official internet bubble that we’ve lived through. That period was marked by hype and speculation resulting in the overvaluing of tons of publicly traded companies.  Following the bust, a new series of companies began to emerge that were eventually classified as “Web 2.0″ start-ups.  Web 2.0 is a complex thing to describe.  If you’d like what’s now considered the “official” description of Web 2.0, check out the Wikipedia article which thoroughly covers the topic.

What was most important in this phase (which started somewhere between 2000 and 2002) is that you didn’t have as many ridiculous early-stage investments.  If there were early stage investments, none of the companies were going public and even today we see the continuation of that trend.  While there were bubbling centers of entrepreneurship (cities with a high density of members of the “creative class”), there was a lot of unrealized potential as people searched for ways that frequently would make them a lot of money quickly or at least rapidly generate a sustainable business via the web.

Many of these people were trying out new things on the general web but getting the attention of users was pretty challenging.  Then in May of 2008 a fair amount of this unrealized potential became realized via the Facebook platform.  A new channel opened that provided developers and entrepreneurs with a new channel to gain rapid exposure to users that would either immediately accept or reject their product or service.  All of these applications were initially launched by one or two people that had an idea and stayed up overnight. Eventually  millions of users were bitten in the neck, smacked in the face or sent a free gift.

While there were a few large, well-funded companies participating in the beginning of the platform, it was mostly built by individuals.  These individuals were rapidly snapped up and wrapped into newly built and newly funded companies.  As this mini-industry has sprouted up I continue seeking out companies and people that are adding value to the ecosystem. That’s because where there is value, there is money and money is required for an economy to grow.

In the process, I’ve identified the following participants that help make this ecosystem a reality:

• Developers
• Entrepreneur Leaders
• Advertisers
• Business Development and Sales People
• Analysts & Journalists
• Consumers

As the series continues I’ll highlight how each of these participants fit into the ecosystem as well as the following types of companies that they are building:

• Product Companies
• Distribution/Platform Companies
• Social Web Agencies
• Ad Networks & Sales Teams
• Analytics Companies
• Media Companies

Next post in series: “The Social Web Economy: Developers“.

I’m not paranoid, I just ask questions. In this industry (the web industry) it is frequently difficult to understand how revenue is being generated and exactly where the money is flowing. As my life has become increasingly reliant on the good health of the “social web economy”, I’ve thought more and more about how the money is flowing. When the Facebook platform launched, many suggested that it was simply venture capitalists paying money to other venture capitalists as a large application install economy ensued.

While that was how things were in the beginning, within a short amount of time large brands and advertisers started investing resources toward social applications. The social web does not just exist on Facebook but the social web economy got a significant boost when the Facebook platform launched last year. This is why I tend to reference it so frequently.

As the social web continues to grow, I think it is important to occasionally step back and see where we’re at. Over the weekend I have been thinking heavily about all the parties involved in the social web economy: the people and the companies. I’ve compiled a list of each of them, who their competition is and how they interact with other participants in the economy. The post started as a short overview but it has since ballooned into an 8 page overview of what I consider to be the social web economy.

I wanted to deliver this initially as one post but there is simply no way to deliver 8 pages (and what could easily become more) as a single blog post. As such, I’ve decided to create a series of posts about the “Social Web Economy”. I’ll cover the primary individual participants and roles as well as the types of companies that exist. Since just in a weekend this turned into a larger than expected piece, I’m going to build this out as a series.

If you find anything to be inaccurate or incomplete please let me know and I’ll be sure to update the posts involved. Next post in series: “The Social Web Economy: Who Are These People?“

Today MySpace will be announcing a formal partnership with the Commission on Presidential Debates (CPD), to launch MyDebates.org, a site which will interactive tools for users to engage in the upcoming Presidential and Vice Presidential debates. This is the first time in history that the Presidential debates will be streamed live online. The site will also provide a forum for viewers to post feedback live.

This is a monumental announcement for MySpace who expects this site to transform the Presidential election process. MySpace has been extremely active in the political process, previously announcing the launch of Decision ‘08 back in June. As I pointed out in June, one participant who has been surprisingly less active is Facebook. Back in January, Facebook partnered with ABC for the New Hampshire debates. Nothing has been announced since.

The debates will begin in September and will be broadcasted live on television as well as on MySpace. Currently MyDebates.org redirects to a MySpace landing page which has left me a bit confused on the logistics of this new site but wherever the site is located it will provide: an application which embeds the debates, on-demand playback functionality, polling opportunities and the ability to share the videos across the web.

This is a huge announcement for MySpace and it highlights the increasing integration of politics and the web. There is no doubt that this trend will continue, this announcement simply being one landmark in the process toward complete digital integration with the political process.

Over the past couple years, we saw an upward trend of profile aggregator start-ups hit the market. As we registered for one site after the other, we quickly realized that there was a serious problem with not having a central identity. As a result, thousands of people have tried to release services that help solve the problem. Some of those solutions came under a commercial organization while others were set up as organizations that were run by the collective (e.g. OpenID) and weren’t for profit.

This morning Corvida at Read/Write/Web wrote about one of those profile aggregators that rather than trying to be the destination serves as a control panel for users. It makes a lot sense in theory except for one problem: this is what Facebook Connect, MySpace Data Availability and Google Friend Connect are trying to accomplish.

The Battle for Our Identities vs Center of Communication

While the few hundred thousand people reading Read/Write/Web, Techcrunch and similar sites will now know about this service (and a small portion will end up using it), the mainstream user will never know about this site. I don’t want to be the pessimist but I think when it comes to the center of identity, the large social networks and potentially the large email providers (GMail, AOL, Yahoo, etc) will become the center of our identities.

In addition the battle for our identities is another battle taking place: the center for our communication. Currently the most likely winners for the center of our communication are the same people winning the battle for our center of identity. There are some new players though as a new form of communication has become ubiquitous: status updates. Suddenly a large group of users are communicating via short-form messages via profile statuses and “micro-blogging” tools.

Statuses have been around for a long time but only recently did we begin to think of those status updates as a two-way conversation. The current platforms winning in this space are Twitter, Facebook statuses (with commenting) and FriendFeed. AOL Instant Messenger (AIM) also has status updates but for now it’s still not a two-way communication. That’s because most people sent instant messages as a follow-up to a status on AIM.

As statuses have become available across a number of platforms we are seeing the launch of status pinging tools such as Ping.fm. While all of these tools are great for communication, it still begs the question: how are these companies going to make money?

Are These Businesses?

So Twitter, FriendFeed, Ping.fm, Atomkeep (the tool covered by Corvida this morning) are all useful tools but how on earth are these going to make money? Many of the companies (such as Twitter), will say that they don’t need to make money, they just need to build critical mass and then figure it out. That makes a lot of sense but what happens when Facebook and MySpace adapt and create what is nothing more than a feature change?

On the web, trying to analyze any company’s business model is a relatively mundane task because for the most part there is no model aside from advertising. So why don’t these sites just slap up some ads and start making money? Honestly, I have no idea! Whether or not their future could be doomed by changes that Facebook and MySpace make, they should try to make money while they have the traffic.

Do you think that these companies can generate legitimate business models? Do you think their existence lays in the hands of Facebook and MySpace?