When eBay shelled out $4.1 billion for Skype, it paid about $52 per user. In July 2005, News Corp. purchased the parent of MySpace for $580 million. At the time, MySpace had about 21 million users, costing $27.62 per user. Bebo sold to AOL for $850 million and has about 40 million users, costing $21.25 per user. It is entirely conceivable that social networking, like web-mail, will never make tons of money. Because lofty valuations require each site maximizing its page views, they are focused on getting users to keep coming back to the site. They are all closed, walled-in gardens.
AOL tried this, but it didn’t work. So did Compuserve and Prodigy. It didn’t work for them either. And despite some of the sites pleas for outside developers to make fun software for their sites, (like Facebook, MyspaceTV, Googles Open Social and Friendster), each site still requires us to come back. And that begins to become a bore. Its been argued that the ultimate ‘social’ network is email. Why? Because with email, you have your address book, photo’s are mailed, dates are made and placed in a calendar indicating certain personal social ‘activities’. In other words, your email knows more about what you do than ANY social network can.
“We will look back to 2008 and think it archaic and quaint that we had to go to a destination like Facebook or LinkedIn to be social,” says Charlene Li at Forrester Research, a consultancy. Future social networks, she thinks, “will be like air. They will be anywhere and everywhere we need and want them to be.” No more logging on to Facebook just to see the “news feed” of updates from your friends; instead it will come straight to your e-mail inbox, RSS reader or instant messenger. No need to upload photos to Facebook to show them to friends, since those with privacy permissions in your electronic address book can automatically get them. Personal referrals and word-of-mouth still and will always be more effective than advertising. This ‘essence’ of personal suggestions from friends permeates every single email we get in our inbox. In theory, email knows everything about us. And email is decades old. There maybe more money in knowing what we like to do, than in delivering banner ads on a web page. That is, more money can be made by simply knowing my habits, spending and otherwise and then interacting and crossing those habits with services I use on the internet. Its not the ads I see but ultimately, but what I end up doing that results in my purchasing of a service (buying movie tickets online) or renting a car on weekends if I live in a big city where transportation (NYC) isn’t an issue (for example, renting a car to get away to the Hamptons in the summer). When I plan a weekend away in the Hamptons with my friends, I’ll need to rent a car. With one email to my friends about this, I’m a potential car rental customer. And my email knew it before anyone else did.