When it came to the news headlines, it was a terrific year for social networks. Mostly.
True, the security holes and safety concerns are far from gone, and likely won't go anywhere any time soon. Nor will the existing copyright and trademark issues, like the whole Scrabulous debacle. But the likes of Facebook, MySpace, Twitter, and Digg were riding high on one big victory: Barack Obama, whose presidential campaign rocketed to victory on many of the social-media tools that were still getting denounced as fads just a year ago.
Facebook and MySpace, the world's two biggest social networks, launched elaborate voter outreach initiatives. Digg's traffic soared as political news reached a fever pitch. An official Twitter account for Obama became the microblogging site's most popular. Widget development companies, which rose to fame in 2007 when Facebook kickstarted the social platform craze, were getting contracts left and right to create election apps.
Credit: Caroline McCarthy/CNET News
President-elect Barack Obama, who amassed
a strong online following during the campaign,
was enthusiastically received in February as
he addressed a MySpace-MTV event.
It all provided some uplifting news for social-media sites as the economy began to crumble in September. But now that Obama is poised to take office, the election party's over and it's back to reality. As buzzworthy as it remains, the social-media industry still hasn't proven itself in the business viability department. This was a concern in Silicon Valley even before the financial downturn began to grow truly alarming: Twitter has not yet produced a business model. Facebook and Digg are not yet profitable. MySpace appears to be doing better, likely due to the fact that it's been owned by News Corp. since 2005 and has big-media advertising connections at its disposal.
Perhaps because of the financial climate, or perhaps because the era of Web 2.0 was drawing to a close anyway, there were no truly splashy new entrants into social media--no nascent company created the kind of sensation that a Facebook, or even a Twitter or Digg, had in previous years. Location-based mobile social networks didn't create the sensation that many had expected. And indeed, the recession's effects first hit the second and third tiers of social media, with companies like Imeem and Buzznet announcing layoffs. Pownce, a would-be Twitter rival, closed up shop entirely and sold its assets to blog software company Six Apart (which had itself gone through a round of layoffs). The beleaguered Yahoo shuttered its social-networking experiment, Mash.
On the bright side, there were some acquisitions: AOL bought Socialthing and Goowy--and in a whopping $850 million deal, acquired Bebo, a social network that counts most of its popularity in the U.K. and Ireland. Also, Twitter bought Summize, Comcast bought Plaxo, and social-app companies like the Social Gaming Network started amassing portfolios of widgets purchased from independent developers.
Facebook, meanwhile, tied up a few of 2007's loose threads. Putting the Beacon advertising snafu behind it and filling its executive ranks with former Googlers and Washington insiders, the company announced Facebook Connect in May and unveiled Engagement Ads in August. ConnectU, the onetime start-up that sued Facebook for code theft, received some sort of settlement--and two of its founders, Cameron and Tyler Winklevoss, placed sixth in an Olympic rowing event shortly thereafter.
Late in the year, a few of the data-portability and "universal log-in" initiatives that had been announced earlier in the year actually launched: Facebook Connect went live, as did Google Friend Connect and Viacom's Flux, and MySpace began its "Data Availability" project by helping to develop an extension that manages the OpenID universal log-in standard for the Flock browser.
But as with so much else, the year 2008 in social networking ends on a fairly low note. The recession recently stalled Facebook's plan to allow some of its employees to cash out stock options. MySpace CEO Chris DeWolfe has expressed concern about his company's ability to continue growing its ad-revenue footprint. Twitter and Digg, along with other players in the market like RockYou, Meebo, Yelp, LinkedIn, and Ning, have filled their coffers with venture funding and are hoping to keep growing while they wait out the storm.
As Facebook and MySpace keep scrambling for the top spot in social media, it's clear that this is no fad. The profitability issue, however, will be a sobering one in '09.Original here
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