Saturday, November 03, 2007

OpenSocial - the end of new social networks?

The End of New Social Networks
Social websites are still popping up and gaining traction. Their continual rise and expansion has created a land-grab game between the major online property holders including Google, Yahoo and Microsoft and several 2nd tier organizations .

Google has already heavily invested in social clubs including MySpace for $900MM, YouTube for $1.65B among others. Their only intent is to simply lock in the advertising distribution on these sites.

While Google has established online dominance, Microsoft has got a big leg in by picking up Facebook ($240MM investment and advertising deal). While these sites are fighting it out, will there ever be an end to the next best social network taking gaining equity to the tune of millions of dollars? It's as if new ocean front property was developed in front your existing million dollar estates.

OpenSocial: What Is It?
In response, Google launched OpenSocial, a product standard that allows web programmers to incorporate 3rd party information tools and share their own content. Website owners will embrace the technology since it allows them to expand to the oer 250MM users in the OpenSocial network.

OpenSocial Reinforces Googles Market Dominance
On the surface OpenSocial is seen merely a response to the Facebook API. However the larger implication of OpenSocial is that is minimizes the possibility that a new or upcoming website could overtake a larger property in the OpenSocial network. The OpenSocial network partners will fortify their relative positions rather than be concerned about being displaced by competition.

This is good news for Google since they already has a monopoly of the advertising on the OpenSocial parter websites, so they've locked in revenue stability and allowed them to be less concerned about the "next best thing".

Of course the jury is not out yet as the OpenSocial standard has yet to take root and Facebook could be a hold out for adopting it. Nevertheless, with big names like MySpace, LinkedIn, Ning and others, the writing is on the wall.

Don't expect to see many more social networks popping up to a $10B valuation. Even if a new niche is found, it will likely be assimilated into the OpenSocial fabric and merely be embedded feature into myLinkedSpaceBook profile.


Alvin said...

It's pretty Google-with-everyone-except-facebook vs facebook-with-microsoft.

FaceBook needs to brew something better or be knock-out

David Rodecker said...

Google/MySpace vs. MSFT/Facebook is the staged fight, but I doubt anyone will lead to knocked out. If anything, this should fortify the positions for all the major social networks.

Makes it tougher for MSFT/Yahoo who are eagerly looking to find the next best thing.