The Continous Commoditization of Social Networks

Plain vanilla social networks are commodities and their values are headed north. With a handful of exceptions, there is no magic left in the social networking game. Proof is Palo Alto-based Ning’s Series C funding, led by Legg Mason, a company more known for its mutual funds than for its social networking skills. (Never mind, the fun fact that mutual fund companies were among the late arrivals to the dot-com party as well.)

Netscape founder Marc Andreessen and Gina Bianchini‘s start-up just raised $44 million at a rumored valuation of $214 million. Ning has 71,531 social networks. Assuming the speculation on valuation is correct, then the (notional) value of a social network is just over $3000, figuratively speaking.

Just to clarify, this is not to say that Ning’s valuation is depending on the number of networks. Because, if Ning continues to grow more popular, i.e. people keep adding more social networks, the value per network is going to decrease. My point is that, it really shouldn’t be a concern for Ning, because they really provide infrastructure, whether it is a network for three people or three thousand. It also proved my long standing belief that social networks are going to become mere commodities.

There have been much smarter people than me who figured this out a long before I did. One of them, David RD Gratton recently channeling Thomas Vanderwal, recently wrote “Beyond communities of Interest, communities don’t exist.”

Ning is just giving those communities a platform, that hopefully will be more reliable and faster, two problems we have experienced as Ning platform users. Ning powers the NewTeeVee Pier Screenings Network for gratis, and that is one of the reasons we have not complained. No Pay, No Complain!

My biggest gripe with Ning is that once you set up a network on Ning, you are locked in, and you can’t move your users with you, basically handing over your community to the company. Hopefully they can address this issue in coming months.

Update: Ning folks emailed us and let us know that the lock-in charge is not true, and send us a link to a document that explains how to export your community/social network. (link)