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Why Social Networks Are Monopolistic By Nature?

December 12th, 2011 Leave a comment Go to comments

Social networking has been the hottest area after the dot.com burst. User base is still a critical factor and far more sticky than before. It’s the connections among these users that differentiate social networking from other types of Internet services.

A connection is formed from one user to another. They cannot be on two different web sites, even though theoretically they can. Technically we can define protocols to link users, even groups, together from different sites. But it is not efficient and may not be fast enough to sync up states and discover new connections. Even more issues on business side, not to mention privacy policies.

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So the reality is that once a site gets critical mass, there is no chance for others. Think about the competition between Facebook and MySpace. Intend it or not, monopoly is a natural result.

But it doesn’t mean there is no more chance. You got to think differently.

Unlike enterprise customers who prefer one vendor to take care of everything, individual users would like to divide their lives into different aspects and go with one site for each aspect. After all, no one wants one site to know everything.

With one aspect, however, you don’t like to deal with an extra site as long as the one in use is good enough. So there is no chance for latecomers unless the monopoly site makes a big mistake itself. Such a mistake could happen from time to time. That is why Google invests in its Google+, hoping one day Facebook will make a mistake and it will then take lead.

Now, I think it’s clear that new entrepreneurs who are interested in social networking business should look for new aspects, not compete with incumbents.

Update: Sam Johnston (@samj) sent me a link to his article Infographic: Diffusion of Social Networks — Facebook, Twitter, LinkedIn and Google+. Nice reading!

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