I was recently invited by Jason Calacanis to A Small World, the uber-exclusive social network (don’t ask for invitations, it’s a privilege I haven’t been granted since I’m a newcomer there). This has prompted me to think about a number of issues relating to social networks in general. In this entry, I will try to look at why social networks fail. Subsequent entries will focus on why they succeed and what opportunities they create.

So without further ado, here are five reasons why social networks fail:

5. Privacy concerns

The first reason I would highlight, and part of the reason why social networks have not really gained much traction outside of a self-selected group of people is the amount of privacy concerns that exist within certain age groups. Younger people are generally more immune to those but older people tend to worry about what the social networks in question do with their data and are worried that they will either be data mined or that they will suffer from identity theft. This anxiety has largely been driven by media emphasis on how your data on the Internet is unsafe and how there are “nefarious characters” running around the net.

4. No real reward or penalty system

Most social networks are putting a heavy emphasis on how many connection a user have. A user’s worth is based on his/her number of connection, not on the quality of those connections. This tends to drive a lot of people to try to connect to as many people as they can. Mary Hodder likens this effort to collecting baseball cards, an apt metaphor since the number of connections you have is no guarantee of the value of those connections.

However, few of the social networking sites are doing anything to gate the amount of connection. One of the nice thing on asmallworld is that it actually penalizes people for sending out invitations that were declined. I believe this is a good thing as it makes people rethink whether they want to attempt a connection or not.

The other question is the reward in social networking: what do I get for sharing my contacts? We know what the companies get but it’s sometimes fuzzier to see what extra value one gets from a social network. Some have done a good job at showing a sense of mission, whether it is job-related and expertise-related connectivity like connections LinkedIn or dating like… well, this is where it gets trickier.

3. Not granular enough

Context is generally missing from most social networks. For example, I may know Bob in a social context as a friend but I have no idea of how good an employee he is. Or I may know Joe in a work context but not realize that he’s not dating material for my friends. The lack of granularity as to the types of relationships is another current failure of most social networking sites.

The other thing that is missing from social network is a more fine-tuned approach to ranking relationships. Relationships are not binary. It’s not either someone is my friend or not. The truth of the matter is that relationships are very granular in nature: I may be a close friend to John, whom I’ve known for 20 years and hang out with on a daily basis and I may have been a friend with Peter in the past but haven’t seem him in 10 years. Yet, to a social network, if I added both of them as friends, we have the same types of relationships.

Similarly, there seems to be a trigger missing for evolving relationships: what if my relationship with Peter has been slowly degrading over time. Do I kick him out as a friend (an option few networks allow) or do I keep him on my list. This granularity is missing and it is odd that it doesn’t exist as it would be relatively easy to capture this data.

Situational relevance is another factor that is largely ignored by social networks today: in what context does that network function. It’s something that needs to be more granularly defined than the catch-all approach of existing implementations.

2. Not integrated with other apps

Should social networks be standalone apps or is social networking just a feature? There is really little value in knowing people just for the sake of knowing people. However, there is value in interfacing with those people, whether it is to find a job, get some information from a subject matter expert, find money, or get a new date.

I believe the real value of social network sites to the end user will eventually be discovered when they start integrating with other components like email and IM. Presence (is the person online or not), location services (where in the physical world is the person right now) and communication (can I phone/IM/email/page them now) would add greatly to the value of social networks.

However, at the current time, few efforts have been made to integrate the social networks with other apps. Which brings me to the biggest reason why social networks fail:

1. Walled Gardens

At the end of the day, social networking sites are walled gardens. They do not want to share information with others for fear that it will dilute their power as THE central hub for all relationships. This lack of interoperability is the primary problem with social networking sites and, I believe, one of the reason why their growth is impeded. A network that would be willing to open up could see better integration with other tools and could benefit from other sites connecting to it and creating more specialized sub-networks. For example, a large social networking site could become a large repository of a number of relationships with smaller sites looking at it to specialize across horizontal uses (for example, creating a site focused on dating or job search) or vertical ones (for example, a site focused on information exchange between subject matter experts within one particular domain)

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