Sunday, May 28, 2006

Churn, Attention, and Shackles

Very interesting chatter on bubblegen around valuations and churn. The churn discussion gets interesting in the comments, where people explore the nature of networks and highlight how the qualities of social networks may be distinguished from other networks.

Basically, social networks may be expected to behave in many respects like a night club. Change and migration is inevitable because people change. Economically-founded social networks, like eBay, have more a solid basis as a maket of sorts. People establish reputations based on transaction history: switching costs are too high to establish new networks (re-establishing these reputations).

The web2.0 rantings crop up around who should really own the value of these established reputations. In web1.0, companies like eBay use this value to trap people into (aka add value to) its network. In web2.0, the people own their own value.... or at least that's the rallying cry.

I don't believe that this actually the case. If these social networks could find a way to raise switching costs they would. And I think they already try. You can share photos, but can you make a bulk transfer? doubt it. Try moving an entire blog from one system to another... or even your links.

Freedom to publish, and republish, and chunk and mash and all that hype is great. Its also truely unique and innovation inspiring. But it has its limits. Each of these networks needs its nodes. It is nothing without them. The economics drive each service to limit its scope to reinforce the values of service retention among its users.

... but this does raise an interesting potential opportunity. If this is truely the mentality among the building mass of peer-consumers, then the central service of value will be reputation portability. Its a natural extension of preference portability ("my" portal pages), opinion distribution (blogs), link portability (delicious) and photo poprtability (flickr)... There probably is a market for qualified reputation tagging and service migration facilitation.


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