ZDNet social networking article misses the mark (and the facts)

Brad Howarth’s ZDNet Australia article, Social networking tools face uncertain future, completely misses the mark. It would be one thing if it were just another rant about the supposed lack of a business model for social networking sites, but this one is so chock full of inaccuracies as to be worthy of comment:

Inaccuracy #1: “To date only one company, Ryze has announced profitability.”

FALSE. Tickle.com, Ecademy and Contact Network Corporation are also profitable. Add to that online communities that technically don’t fall into the social networking category, but are closely related and have proven the model — Craigslist, eWomenNetwork, and many, many others.

Inaccuracy #2: “There is little evidence these companies will generate sufficient revenue from users to be profitable.”

FALSE. It’s simply too early to tell. Most haven’t even tried to start charging for the services, so there’s little evidence to say they won’t be able to, either. The purely social sites like Friendster are just now hitting the early mainstream part of the adoption curve. The business networking sites are still in the early adopter stage — they haven’t crossed the chasm yet, so there’s just no way to say.

Inaccuracy #3: “If social networking is another bubble, it is one that will most likely float right over Australia. Linked-In, boasts 700,000 users globally, but at the start of June had only 8124 in Australia.”

FALSE. Hmm… 8124 / 700,000 = 1.3%. Australia’s 13 million internet users divided by the world’s 945 million equals… 1.3%! Looks like Australia is right in step with the rest of the world when it comes to using LinkedIn. Your own numbers disprove your point.

Inaccuracy #4: “You end up with groups of people in two categories – those that really need introductions and need the service, and those that already have their own networks and don’t need the service. I’m not sure if the two meet”.

FALSE. There are two broad groups of social networking tools. One, the online communities with public interaction spaces, provide the opportunity to build new connections in large quantities. In them, the “social networking” features of tracking “friends of a friend” is really incidental to the group interaction in the discussion forums. I have multiple examples of people who have very strong networks, but by creating a group within one of these sites, have been able to build their audience more rapidly than with a website, and to monetize it as well. One woman started a network on Ryze, and within three months generated $5,000 in revenue from two teleclasses, only marketing them to that group.

The other group are what we call “social network visibility software”. This includes sites like LinkedIn, Spoke, Visible Path, and Contact Network. What these do is give visibility into your network beyond the first degree. No matter how strong your network is, you can still only see into it one degree. There is no way to go into your CRM system, or our Outlook Contacts, and figure out who can introduce you to a particular person. It simply can’t be done. That’s why LinkedIn HAS attracted many very senior people with lots of industry connections — Esther Dyson, Joi Ito, Flip Filipowski, and many, many more.

Inaccuracy #5: “finding examples of people who have profited from them is difficult”

FALSE. Where did you look?!? I took an informal survey of 125 Ryze users. Over 40% had done profitable deals with people they’d met on Ryze. The Ecademy Marketplace is full of people who are doing business on there every day — in the thousands of dollars. A simple survey in the right place would have found those examples.

How do you find out what’s working? Simple. Keep looking until you find one person who it’s working for, and then they’ll introduce you to more. Talk to the nay-sayers, and you’re only going to get introduced to more nay-sayers.