Analysis of Future and Current Directions of Social Networking - Research Paper Example

INTRODUCTION: The following is an analysis of future and current directions of social networking. An eye toward understanding where the future of social networking will be going, will be contrasted and analyzed with attention paid to the decline of Myspace and the rise of alternative sites such as Facebook, Linkedin, and Twitter. Two areas will be the focus of the discussion, the first will be the adoption of social networking in business practices and marketing, and second, the rise and recent emergence of open source social networking environments. It will be argued that these are the two new directions that social networking will take, and in turn, present some of the background information regarding both of these trends. BACKGROUND: Myspace has fallen on hard times [APPENDIX B], and it is arguably not because of anything they are or are not doing, but because of the contrasting growth of alternatives such as Linkedin, Facebook and Twitter. In February, News Corp., which bought Myspace and its parent company, Intermix, in 2005 for $580 million, started officially looking for a potential buyer at an asking price of $100 million, according to a person familiar with the sale process. Very recent trends have seen LinkedIn valued at $6.4 billion and Groupon rebuff a $6 billion takeover offer from Google, barely anyone wants to buy Myspace. On June 9 the News Corp.-owned tech blog AllThingsD.com reported that a group of investors led by Activision Blizzard were negotiating a deal to transfer Myspace to a new owner. While social networking is growing exponentially, both the market share and advertising revenues have made Myspace an organization in decline. It has both not realized expectations, and is also viewed largely as a service that is outdated and with a focus primarily on individuals who are marketing and distributing their own music. OPPORTUNITIES FOR ENTREPENEURS: Business Sector Adoption Practices. A New Market for Consulting. As mentioned in the introduction, the growth and expansion of social networking sites has been explosive. While Myspace was one of the earlier sites, it has fallen well behind the growth in recent years of Facebook, Linkedin, and Twitter in particular [APPENDIX A; APPENDIX B]. The growth of social networking has resulted in business taking notice, and beginning to adopt and utilize this medium for marketing purposes [Frost & Sullivan, 2010]. As such, there are new business opportunities such as consulting that can take advantage of this trend. More and more corporations are not viewing this as a potential waste of employees time, rather, some corporations are even encouraging their employees to join networks like Facebook. By creating networks for their employees, they are gaining free advertising but also increasing the chance that one of their employees is going to wind up bringing in more customers by their mere presence on a social networking website. Indeed, positive results in this regard have already been noticed [Frost & Sullivan, 2010]. Corporations are beginning to see that they can very cost effectively communicate, and indeed, interact with their customers in a way that is proving both beneficial in financial terms, but also in terms of refining products or services. Further, in terms of expanding outreach, it has been documented that social networking sites have also been positive for "customer retention" [Frost & Sullivan, 2010]. Much like the interactive elements discussed so far, customer retention has been improved and expanded precisely because of the empowerment felt by clients. The interactive nature of social networking, is breaking down some of the barriers that have conventionally prevented customers from increasing their interaction with business, and further, it is improving the quality of interaction and results have been noticed even in the short time that business has been adopting social networking and even in the relatively short time that social networking sites have been around. With greater interaction, comes greater feedback and therefore, greater opportunities to improve either the goods or services that the given organization markets. Likewise, for business, social networking is increasingly becoming viewed as a medium where project management can take place [Frost & Sullivan, 2010]. Virtual environments for the purposes of sharing documents and information, has increased over the past years and many of the Enterprise Resource and Project Management web-based applications that allow workers to interact, are both cumbersome and expensive. With applications like Facebook, the cost is free, and of course, there is also a built in familiarity with how it works. There is a cost-efficiency to be made both in terms of the fact that it is cost free, but also in areas such as training both given that it is quite simple along with a good deal of support, but also because so many individuals have already adopted this for personal use. This adoption for personal use, means that the barriers involved with areas such as corporate training are mitigated. This said, there remains a lot of room to improve the use and adoption of social networking by business. As is discussed in a study of business adoption [Frost & Sullivan, 2010], social networking as it is being used by business is still in its infancy. Few studies and little research has been focused on the business strategies and adoptions that are currently growing at an exponential rate. Much can be done toward both conducting market research into the area of social networks, but also, research focused on developing best practices for corporations. It is not necessarily clear who benefits from utilizing social networking, and in many instances, corporations are having a difficult time establishing whether or not they can benefit through a greater presence and use of social networking. OPPORTUNITIES FOR ENTREPENEURS: The Cost-efficiency of Open Source. One of the future directions of social networking, may involve a completely different format than the commercial or the for-profit. As mentioned, social networking tends not to charge customers, but gains revenue streams from things like advertising or in the case of Facebook, selling its personal data on its customers to the business and marketing sector. One of the new directions concerning social networking, involves the emergence of more and more open source social networking environments or web-based infrastructure. First, open source means that the computer code along with the languages that are used, are free of charge or non-proprietary. One such application is Project Diaspora [CNN, May 12, 2010]. This is a web-based application that mimics Facebook. What is important is that it is free. While it is free in the sense of being able to join it, more importantly, as an application it is free. That means that anyone or any organization can download it and start their own social networking site. This could have a significant impact on social networking as a whole, and as with many open source projects, it will just continue to grow and become refined over time, and likewise, it is very probable that more open source packages like this one will emerge in the coming future. For entrepeneurs, this is an opportunity to both market their own organization through social networking or to facilitate others for doing the same. In terms of the implications of this web-based open source software package, there are implications that can or might have a very notable impact. Social networking could take on a very specialized form with the free and available infrastructure to create whole sites by merely installing a software on a web-server. One can imagine that groups can become more specialized leading to a type of market fragmentation in the future. For instance, it is very conceivable that organizations like the National Rifle Association, Alcoholics Anonymous, or any conceivable organization with employees or members, will very cost-efficiently launch their own social networking sites. And, this is not to say that they cannot be integrated with other sites of a similar nature as well. As many or most organizations are already trying to engage their members or market through Facebook and Twitter, it follows that there is already a growing and open acknowledgment that there is cost-for-value in taking this direction. It follows that if this trend continues, the technology and its accessibility will catch up with this trend. Further, the existing social networking sites like Facebook are continually being dogged by problems concerning "privacy" [CNN, May 12, 2010; Dwyer, May 11, 2010]. Customers are unquestionably concerned about online privacy and problems such as identity theft or having their information to sold to third party firms that will in turn, distribute or re-sell personal information and so forth. The emergence and probable expansion of free and open source social networking sites will challenge this problem and provide in turn, a greater deal of control over personal information. For instance, while Project Diaspora is giving away the software for the creation of social networking sites, it is also marketing itself as the "anti-Facebook" [Dwyer, May 11, 2010]. The growth and media attention of this particular problem, along with its ability to raise money solely through donations has been tremendous, and if this trend continues along with the increase of criticism of existing sites like Facebook, it will lead to a greater diversity of sites in the market place and in turn, capitalize on the specified market interest. Fragmentation and diversity can be said to be one of the principle future directions of social networking. CONCLUSIONS: These analysis has presented two future directions for social networking, and in turn, focused on those elements that represent business opportunities for entrrepeneurs. While this analysis has been focused on two recent notable trends, it should also be remarked that there is another overall trend in general. As the internet expands, as it has exponentially, it can be inferred that increasingly more and more individuals will be using social networking sites. By expansion, this is implied both in terms of the adoption of internet technologies in geographical locations that have previously been under-served, but also with demographics within existing markets that are expanding. For instance, more and more seniors are using the internet and this is a trend that has so far been not a significant factor. Thus, in general, a solid inference can be made that the exponential growth of social networking [APPENDIX A] will continue. Finally, aside from the general trend, this analysis has identified two current trends that are likely going to be areas of growth opportunities for organizations like Myspace. It has been argued that there will be a steady increase of the business adoption of social networking both for internal purposes like project management, but also for the purpose of customer outreach and retention. Finally, this analysis has pointed to the rise of alternative and free environments that are likely going to cause market segmentation into more specialized networks. It is now basically the cost of hosting a site and the time it takes to install the very infrastructure of for a social network. As this technology gets adopted, there will be an increase in specialized applications for specific organizations and interests. Likewise, there will increasingly be free and privacy protected alternatives to the existing social networking systems. While the most popular, Facebook has also been very controversial and in particular, with the sale of the personal information of its users. Environments where such data is protected also represents a growth opportunity, and open source alternatives to Facebook will continue with the growth and market penetration that they have already so far experienced. APPENDIX A Facebook ■ 300 million active users ■ 50% log on everyday ■ fastest growing demographic—over 35 years old ■ supports 69 languages ■ 70% of users —outside the United States Twitter ■ 50 million tweets/day ■ 75 million users ■ 20% contain product or brand references LinkedIn ■ 48 million over 200 countries; 1 joins each second ■ 50% of members—outside the United States ■ executives from all Fortune 500 companies are members [Source: Frost & Sullivan Consultants. 2010. "Social Networking for Customer Contact. Market Overview". Web Page: http://www.frost.com/prod/servlet/cpo/209496536 Last Accessed: August 05, 2011. APPENDIX B: MARKET PEAK: December 2008 75.9 million monthly unique visitors in the U.S. according to ComScore. May 2011: 34.8 million In 2009 the site brought in $470 million in advertising dollars, according to EMarketer In 2011, its projected to generate $184 million Works Cited: CNN. 2010. "Meet Diaspora, the anti-Facebook". CNN News. May 12. Web Page: http://scitech.blogs.cnn.com/2010/05/12/meet-diaspora-the-anti-facebook/ . Last Accessed: August 04, 2011. Dwyer, Jim. 2010. "Four Nerds and a Cry to Arms Against Facebook". The New York Times. May 11. Web Page: http://www.nytimes.com/2010/05/12/nyregion/12about.html?dbk . Last Accessed: August 05, 2011. Frost & Sullivan Consultants. 2010. "Social Networking for Customer Contact. Market Overview". Web Page: http://www.frost.com/prod/servlet/cpo/209496536 Last Accessed: August 05, 2011. Gillette, Felix 2011. "The Rise and Inglorious Fall of Myspace". Bloomberg Businessweek, 6/27/2011, Issue 4235. THE DECLINE OF MYSPACE AND FUTURE DIRECTIONS FOR SOCIAL NETWORKING Read More