Social networking is at a major fork in the road. Down one road is adding more features to a walled garden and opening up just enough, so that users seldom need to leave. Most sites are going down this yellow brick road and the prize is clearly a big one. But they may end up back in Kansas. Down the other road, lies a future of being the primary repository for your connections (aka the social graph), but with this data available via open APIs to anybody who needs it. That is a utility type model, and as with any utility, it can be hugely valuable at scale.

Deciding which path to take is a real decision. A botched choice will likely end in failure, albeit via a long, slow decline.

The problem with the first road is that it relies upon a revenue model that is native to social media. What revenue model works for social media? The assumption is advertising, but CPM comes from traditional mass media and CPC is ideally suited to search. Where is the ad model that is native to social media? At the moment we are force-fitting CPM and CPC into social media for want of anything bett Read the full article