One of the problems I've always had with Web 2.0 hype is that everyone seems convinced there's money in it simply because lots of people use it.
That's turning out not to be the case with social networking, according to the current issue of MIT Technology Review (registration required), which reports that while growth of social networking in terms of subscribers is skyrocketing beyond expectations that were already a bit inflated to begin with, that's not translating into proportionate growth of dollars. Facebook, for example, is expected to lose $100 million this year, even though its unique visitors in January 2008 was double a year earlier.
Of course, one problem is that social networking sites are banking on ads to make money, and the problem with that, in part, is that placing ads on a social networking site isn't like placing banners on a portal or sponsored links on a search engine. People go to Facebook to interact with friends and share content, and they don't want ads getting in the way. Targeted ads are a workaround, but as Facebook learned the hard way, just because user profiles are a goldmine of demographic info doesn't mean users like that info to be used for such purposes.
The optimists reckon a workable ad model will surface over time, but there's going to be a lot of trial-and-error between now and then, and success will hinge on the ability to understand the users themselves. That's a tall order, since most users themselves are still exploring the possibilities, moving from one cool place to the next, leaving a trail of abandoned user accounts in their wake. Talk about a moving target audience.
Elsewhere on the Web 2.0 front (and also via Technology Review), virtual worlds are apparently still alive, and are now looking for ways to go open-source and introduce avatar interoperability to the mix.
Linden Lab's newly launched Open Grid Beta, a program designed for developers to test new functionality, will allow users to move between a Second Life test grid and other non-Linden Lab grids running software from OpenSim, an independent open-source project to create a virtual-world server.
Why bother‾ For one thing, it could lead to the creation of a "3D Internet" where 2D web pages like this are replaced with an interactive 3D experience. From a business standpoint, it would also eliminate virtual world silos that currently require, say, Nokia to design and build separate virtual storefronts for every virtual world. Think "build once, import everywhere".
Not that virtual businesses have seen much success in SL (apart from Playboy, whose SL sim is reportedly doing better than its other online endeavors, including its mobile content business).
And not that virtual-world users are actually clamoring for avatar interoperability. One SL resident, Prokofy, says that such a move raises serious and unanswered questions regarding security and IPR issues.
Um "&brkbar; ka-ching‾