The Social Network has little Value in a World of Flow

Fred Wilson recently wrote a post about how the flow of data is important versus the data itself. Primarily in response to the ongoing bushfire in the blogsphere about Facebook and Google Friend Connect and the larger context of data portability.

The conceptual point of flow versus data is important one to highlight.

It is very easy to confuse the two. To an extent this is an artifact of our language which emphasises objects (nouns) over flow (verbs). But it is also influenced by trying to use an existing frame-of-reference to discuss a new frame-of-reference that is only just beginning to come into focus. This is always going to make everything more difficult.

The web is moving into uncharted territory. Up to now we have been dealing with the conversion of existing real-world into an online equivalent. Now the web has reached the point that it is moving beyond the confines of being a real-world analogy. This is creating vast new opportunities, few of which are known to us now. Data portability discussion exits within this new framework.

To make headway understanding this new framework, we need to converse using language that properly describes this new framework. The language of flow will help us frame problems and hold conversations that enable solutions and new opportunities.

In Wither Social Networks, Arise Communities I pointed out that social networks are glorified contact books. A better way to look at social networks is that the merely describe a connection between two people. They are the pipes, wave-guides, tubes along which guide the flow. What happens at the end points is not part of the social network.

In addition to the guides, we have process points. The process points are where points along a flow something happens to the flow. Whether its received (such as email), or processed (such as Wesabe). A process point is not necessarily where the flow stops, merely where it undergoes some sort of processing.

Facebook's aim is to become the primary process point. They know (or suspect) that merely having a description of a flow network is not enough. They have to be a processing point, but here is their dilemma: Facebook was never designed with being a processing point in mind, merely a description of a flow network. So their strategy is to try and control of the description of flow networks by restricting access while they shift to being a processing point, Facebook Connect being an example.

Bear in mind that the flow network description has little intrinsic value. It is the flows along the network where the value lies. In this Robert Scoble is wrong. It is not the flow network where the value lies but flow along the guides that is important.

So is Facebook right or is Google right? How about neither? Facebook's move is entirely about trying provide themselves with time to become a processing point and less of a pure flow network. Google's aim is to get access to the flow network in order to get access to the processing points. Google looses out if it doesn't know about the processing points. Neither are taking the positions they are merely out of moral indignation. I do find Google's behaviour less obnoxious than Facebook as Google's move is about access where as Facebook's is about control. Not really surprising given Facebook's past behaviour and in the words Umair, evilness.

Ultimately, it is a meaningless argument. The web is shifting so fast that both companies actions will soon be lost in the momentum in the move to flow. The flow based web even looks like it will overtake the Data Portability movement. Rendering the broader discussion irrelevant as well.

Tags: Social Networks, Facebook, Data Portability, Google, Web Next, Web 2.0, Fred Wilson, Robert Scoble, Umair Haque, Web Services

Wither Social Networks, Arise Communities

A community is an assemblage of people around a common interest. What Hugh MacLeod calls a social object. Social Networks, like Facebook, are glorified contact books. And as Facebook is finding out, people get stroppy when you get between them and their contact books.

A community, on the other hand, behaves differently. The members of a community are there because of the shared interest or bond, the social object. Consider the rise of communities around particular diseases as highlighted in this week’s NewScientist (vol 198, issue 2656). These communities are generating a wealth of data about these diseases that would otherwise be expensive or impossible to obtain. Communities tend to generate data around the particular shared interest beyond simply demographics that you get in a Social Network.

The data is hugely important. As Tim O’Reilly is fond of saying, “data inside” is the new “Intel Inside” (between time point 2.15 to 3:20 in the presentation). The value of web companies is entirely determined by the data they can aggregate and turn into new knowledge. Communities generate large amounts of data by harnessing the network effect. As each member adds more data around the shared interest this creates a positive feedback loop encouraging more people to add more data and so on in a virtuous cycle. A good example of this principle in action is the company Wesabe (also discussed by Tim O’Reilly in his keynote at 2008 Web2.0 Expo).

Social Networks don’t have this positive feedback loop that generates great swathes of data. While they do have network effects this is merely increasing the size social network by members rather than adding large amounts of data. We are even seeing indications now of limits to how far network effects work in maintaining growth of membership. The amount of data in social networks is relatively limited and most of this information is limited to who knows who and simple demographic data.

Social advertising is the “next big thing” in advertising. However, achieving this on a social network has not been easy. An outcome that is not surprising. The effectiveness of advertising comes down to two things: attention and intent. Attention being what is the person doing at the moment. Intent being why are they doing what they are doing at this time. The more closely you can determine the attention and intent of the user the better the advertising can be made to be of interest to the user.

Social Networks do not offer great data to determine attention and intent. Just because you are a 46 year-old climate researcher, does that determine why you are looking for a holiday? An advertiser could assume you are looking for a holiday for yourself but there is no evidence for this. Nor can a social network really say whether you are looking for holiday in the first place. There is little data to indicate attention and intent. Communities on the other hand do offer good data for determining attention and intent. Consider the climate researcher. He joins a community around travel and holidays and asks the question of the community “what is a good holiday as a birthday present for my 16 year old daughter?” Now we know attention (searching for a holiday) and intent (as a present for his 16 year old daughter). Having this data allows the advertiser to very accurately target with information about holidays suitable for a 16-year old girl.

People like being part of a community. We are tribal at heart. A social network is a mathematical abstraction that merely indicates a connection. The tribe will always win over the maths. Communities will win over social networks.

Tags: Tim O'Reilly, Social Networks, Hugh Macleod, Social Object, Community, Data Inside, Attention and Intent, Facebook, Wesabe

The Best Regulation is Information

With the recent upheavals in the world financial markets there has already been calls to regulate. Arguably these calls are not wrong. The question, rather than should we regulate, is how and what do we regulate?

The financial crisis is one of market failure due to the lack of accurate and timely information about risk. The regulation needs to focus on correcting the issue of the markets providing accurate and timely information about risk.

The regulation needs to ensure that everyone involved in the market has knowledge of the real risk that various instruments and securities have. This will require the regulation of the ratings agencies as they failed to properly provide information on the risk involved in various securities. Or the rating of securities is handled by an independent body charged only with ensuring the risk of a security is accurately measured and information provided to the market.

The second bit of information is where the risk is. Here the accounting rules need to be change to ensure that risk cannot be shifted off-balance sheet so the risk "disappears". Essentially, if there is control and/or liability those risks need to show up on the balance sheet.

Mobilty, Facebook, Twitter and Social Cohesion

The Economist has an interesting article about mobility and its effect on society. In particular one anecdote of a plumber and a sociologist had a strong resonance.

"Richard Ling, a sociologist at Telenor, the largest Norwegian telephone company, and author of “New Tech, New Ties: How Mobile Communication Is Reshaping Social Cohesion”, was standing on his porch in Oslo one day, saying farewell to a few guests, when a plumber walked around the corner, talking on his mobile phone to what appeared to be his wife. Mr Ling, who had a leak in the kitchen, was expecting him. But the plumber took Mr Ling and his guests aback by walking right past them and into the house, where he took off his shoes and headed for the kitchen, chattering into his handset all the while."

The article goes on to talk about weak and strong social interactions. In this case the plumbers weak social interaction with the sociologist was overcome by the stronger interaction between the plumber and his wife. Or it could easily be the girl at the checkout counter chatting away to someone on their mobile phone while barely paying attention to the task of paying for their shopping. The anecdotes are there and very strong.

Now that strong social interactions are rarely limited by distance, they are easily overwhelming weak social interactions. But is this a problem? I think so. The weak social interactions are often with random people in every day life - bus drivers, commuters, shop assistants, doctors, police, people on the street, customers in a cafe - rather than with people we've selected as being a part of our "tribe". They are unlikely to be similar to us and this variety of social interaction helps us be less insular. In reading the article I was strongly reminded of one of my favourite quotes from Terry Pratchett.

"Individuals aren’t naturally paid-up members of the human race, except biologically. They need to be bounced around by the Brownian motion of society, which is a mechanism by which human beings constantly remind one another that they are... well....human beings."

The dominance of the stronger ties reduces the "Brownian" motion needed to make us human. This loss is what is disturbing about the "mobility" society. We are rapidly shutting out random acts of chance, of serendipity. Nor is it simply mobile phones. Social Networks such as Facebook also produce the same effect. Anything that promotes strong social interactions at the expense of weak ones are culpable.

Services such as Twitter and FriendFeed go towards promoting weak social interactions as a tweeter will not always "know" or have a previous strong social interaction with a follower. I do wonder, however, whether these virtual weak social interactions will again come to dominate over the face-to-face weak social interactions of every day lives.

Banning mobile phones, Facebook and Twitter is not an answer. These services and devices serve a strong purpose of facilitating communication and strengthening social ties. What we need to be aware of is the here and now. To recognise that at certain points the here and now of weak social interactions out weights strong social interactions.

Tags: Social Interactions, Mobile, The Economist, Facebook, Twitter, FriendFeed

Amazon to buy a CDN?

Amazon is beefing up its AWS offerings. In the end making the menu of services much more enticing. Amazon's has reached a point that a whole startup can be cheaply and easily hosted with robust and reliable services. But that isn't the point of the post.

With S3 video startup's can store and transmit their video. Which if you take off like YouTube quickly becomes costly (for both Amazon and the startup). So how to address this issue? One method would be to use a CDN like system to distribute content to the edge. Amazon has several options 1) build its own, 2) buy an existing CDN or 3) partner with CDNs.

The structure of Amazon's computation infrastructure (particularly with the Zoning) could already allow for CDN like behaviour. The question is whether this is enough. I expect that it would require more development to get a proper CDN like behaviour working.

The second option buy an existing CDN would allow Amazon to avoid having to complicate S3 storage to give it behaviour like a CDN. Rather Amazon would like S3 to the CDN's existing infrastructure. Here I think Akamai is probably the best target for purchase. Allthough Limelight Networks is a possibility as well.

The third option partnerting with CDNs would provide AWS customers with the most choice. They get to choose which CDN they use and AWS makes the link between the S3 and the CDN very straight forward.

Dealing with the video/rich content distribution to the masses is something that Amazon is going to have to work on. It will be interesting to see the finial solution Amazon chooses to pursue.

Tags: Amazon, Amazon Web Services, CDN, Akamai, Limelight Networks

Google App Engine is final leg of the strategy to disrupt social networks

With the announcement of Google App Engine and the resulting symphony (or cacophony) of conversation a lot has been said about cloud computing and Amazon's Web Services. For all the conversation not much has looked at the Facebook angel in detail.

Google App Engine strikes me less as a competitor to Amazon Web Services and more as the finial piece in the puzzle for creating a web-spanning social network. Google App Engine provides a place for applications to be built and hosted external to any social network. Coupled with Google's APIs for a users social network (the contact API), an identity mechanism (Google Accounts) and the OpenSocial APIs, everything that can be done in Facebook or any other social network can now be done by any application without having to be internal to any social network.

It is an innovative way of dealing with the issues of social networks by explicitly turning the web into a giant social network without walls.

Of course this will mean the very act of surfing could see you have a sheep tossed at you!

Tags: Google, Facebook, Google App Engine, Amazon,Amazon Web Services, Social Network, OpenSocial

Web2 Finance, Mobiles and Two Factor Authentication

A friend has just had problems with fraud and it got me thinking about two factor authentication and how web2 finance sites such as Mint.com and Wesabe can play a role in making online fraud harder.

The Web2 Financial sites could Email and sms the individual whenever a payment or transaction is done to confirm the transaction before it is committed. Essentially the mobile phone (or email) becomes the second factor of authentication. No need to carry around a separate dongle or bit of hardware in order to make a transaction.

Implementation of this would require the companies to partner with the banks or online payment processors to get the realtime-ness need for the second means of authentication to be effective.

Banks and the payment processors could also do this as well and probably should. I would like to be able to receive an SMS to authorise ATM transactions or when paying by card at a shop prior to being the money being handed over. Not the ultimate solution to card cloning and pin card issues but it would certainly put a crimp in that type of fraud.

Web2 financial services have an advantage over the banks, credit cards and payment processors for the following reasons:

• Online banking sites suck - badly
• People often have many bank accounts, credit cards and setting them all up is likely to miss something. As the financial sites already aggregate this information they can act as single point for passing transactions through to authenticate
• Many online payment processors are merchant focused and never have a relationship with user so can't really send an SMS or email
• The financial sites are focused on the user while banks, credit cards and payment processors lack this focus
  

In the end the more services that offer this type of two factor authentication the better for reducing fraud. It isn't going to make it go away (phone and wallet stolen etc) but it can be reduced without having to roll out great numbers of bits of hardware.

Tags: Mint.com, Wesabe, Two Factor Authentication, Mobile, Fraud, Online Payments, Web2