Social networking sites like MySpace are reshaping cyberspace–and the business world

Craig Cox | October 2006 issue
Social networking sites like MySpace are reshaping cyberspace—and business
Next time you’re feeling a bit annoyed by your teenager’s obsession with MySpace, consider this: She and 72 million of her close friends may be shaping the future of business.
That may sound like an overblown description of the role MySpace, YouTube, flickr and del.icio.us play in the ever-evolving world of the Web, but there’s ample evidence that business leaders are catching on to the ways this sort of “social software” can help them tap new markets, monitor customer behaviour and create strong and vibrant networks.
“Companies, whether they sell software, movies or dog food, are changing the way they communicate, make decisions and develop and market products, all because of the exponential rise of new tools that allow people to express themselves more easily online—and on the streets,” writes Anya Kamenetz in Fast Company (June 2006).
How powerful are these social-networking tools? Kamenetz highlights two recent examples: In March 2006, a small group of Mexican-American activists in Los Angeles organized a high-school walkout over immigration issues that attracted some 40,000 students by spreading the word online. Thousands more walked out later in the week in California, Texas and Florida.
And in April, a 24-year-old British singer-songwriter named Sandi Thom inked a major recording contract with RCA/Sony BMG without ever playing a live gig. She did, however, attract an audience that approached 100,000 on her Web site, which captured 21 straight nights of her performances—from her London basement.
This is the next generation of the Internet, and the primary relationship is no longer between the user and his or her computer; it’s between the user and other users. That transforms the screen into a massive networking tool.
“It’s hard to overstate the coming impact of these new network technologies on business,” writes Kamenetz. “They hatch trends and build immense waves of interest in specific products. They serve giant, targeted audiences to advertisers. They edge out old media with the loving labour of amateurs. They effortlessly provide hyper-detailed data to marketers. They provide an authentic, peer-to-peer channel of communication that is far more credible than any corporate flackery. And all this after only four years or so in development.”
OpenBC, sort of a MySpace for business people, allows members to view detailed profiles of other members and share information and leads with one another, which ideally leads to new business opportunities. “If I need a caterer for our Hyderabad office, all I need to do is post a request on the site,” Sandhya Advani, a manager for Sitel India, told the India Times (April 30, 2006). “It reduces my costs and ensures I get someone I can trust.”
Like openBC, LinkedIn, Ecademy, Spoke, Ryze and Zaadz, and other social-software sites are essentially returning to traditional business practises, which allowed commerce to emerge naturally from the first-hand recommendations of trustworthy peers. LinkedIn and Ecademy focus on business networking; Spoke delivers sales leads; Ryze is a more general networking site; and Zaadz, which is still in its beta stage, offers what founders call “social networking with a purpose, a community of seekers and conscious entrepreneurs circulating wisdom and inspiration and wealth.”
As LinkedIn co-founder Konstantin Guericke noted in Business Week (April 10, 2006), social software is becoming more popular as traditional media become noisier and less credible. “People are relying more than ever on recommendations from people they know, [not from] machines or editors who don’t know you,” he explained. “The Internet made things more efficient. Now we have information overload. The next stage of the Web is to integrate people and trust and personalization back into the Web.”
The development of these networking tools is no coincidence. In a 2006 survey of opinion leaders conducted by Edelman, the international PR giant, 68 percent of those polled said “a person like yourself or your peer” was the most credible spokesperson for a company. That number has tripled since 2003.
“Networked consumers are not passive participants in the consumption process,” Kamenetz notes. “It’s easier than ever for them to ferret out unbiased, independent information about companies, products, or brands—and to post in turn their own highly biased opinions about the same.”
But as much as a site like LinkedIn or Spoke can help members connect with their peers, it’s the potential of social software to describe its users down to the most intimate details of their consuming behaviour that has marketers licking their chops.
Perhaps the most provocative example of this next generation of online networks is TagWorld, a site based in Santa Monica, California, that has been called the “MySpace killer” for its powerful range of services and its ability to gather real-time information about its users.
TagWorld combines all the services currently available on the most popular online social networks: blogging, a music player (for your own or other’s tunes) and classifieds, along with the ability to share photos, videos and bookmarks. But the site also lets members know who is reading their blogs or listening to their garage-band tune or watching their latest quirky video.
“It’s really the way business will be conducted going forward,’ TagWorld co-founder Evan Rifkin told Fast Company. “Businesses can have a lot of data without putting the work into it. Let’s say you are sitting on your computer listening to Bloc Party and automatically that info is posted on your website. You’ve generated content by the act of doing something for yourself. That information will automatically get pushed to me, as a marketer, and I get a list at the end of every day.”
That information, of course, could be used to fire an endless series of direct marketing salvos toward the unfortunate Bloc Party fan, but that wouldn’t be the best use of the technology, says online activist Alexandra Samuel of the progressive Web firm Social Signal, based in Vancouver, British Columbia. Because the millions of people now connected via social software represent a increasingly powerful voice in the market (witness Chevrolet’s disastrous attempt last spring to invite consumers to create an ad for its new gas-guzzling Tahoe), business must take a more collaborative, rather than manipulative, approach to marketing. “The name of the game now,” says Samuel, “is to engage the user in creating value.”
After all, they don’t call it MySpace for nothing.