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From time to time, I’ll give an overview of one broad MediaShift topic, annotated with online resources and plenty of tips. The idea is to help you understand the topic, learn the jargon, and take action. I’ve already covered blogging, citizen journalism, widgets and various other topics. This week I’ll look at the social networking phenomenon.

Background

Social networking websites help people connect with others who share their interests, build online profiles and share media such as photos, music and videos. The idea of social networks has been studied by sociologists for decades as they analyze the ties between people in families, organizations and even in towns or countries. According to Wikipedia,: “Research in a number of academic fields has shown that social networks operate on many levels, from families up to the level of nations, and play a critical role in determining the way problems are solved, organizations are run, and the degree to which individuals succeed in achieving their goals.”

Early Internet applications such as Usenet and bulletin board systems allowed people to communicate and network, often in closed systems. But with the advent of the web in the mid-‘90s, people could connect in more visually appealing and public ways. Classmates.com let people connect with old classmates online, and SixDegrees.com offered a way to meet “friends of friends” — with its name referring to the six degrees of separation between everyone in the world.

After the dot-com bust in 2000, SixDegrees was shut down and eventually Friendster became the leader in social networking sites. A common feature of these services was the list of “friends” or contacts that each user maintained, driving usage of the site by people inviting more friends, who invited more friends, and so on and so on… Even though Friendster eventually collected millions of users, the service was plagued by technical issues and was strict about fake profiles known as “Fakesters,” which it deleted en masse.

Social researcher danah boyd explains what went wrong for Friendster in her 2006 online essay:

Freaks, geeks and queers all invaded Friendster in the early days and they made certain that all of their friends were there. They did so organically in clusters. This was very successful, until they felt alienated from the site. There is a tipping point to get on and a tipping point to get off. Once mass departure began with a few pissed-off folks, it spiraled quickly…Friendster was beginning to get mainstream American 20/30-somethings when it got bogged down by dreadfully slow servers…The slow servers made it very difficult (if not impossible) for mainstream users to engage. Frustrated, many lost interest before they really engaged.

The Rise of MySpace and Facebook

After Friendster started losing members in the U.S. and became popular in the Philippines, many people started moving over to newer services such as MySpace, which launched in 2003. MySpace founder Tom Anderson came across as a friendly presence, welcoming and “friending” each new member of the site. Bands and teens helped drive MySpace’s traffic through the roof, eventually hitting 115 million users worldwide.

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Despite the garish look of MySpace profiles, the service was popular because it let people customize their pages, embed music and share videos with other friends. The popularity of MySpace led its parent company to sell the site to media giant News Corp. for $580 million in 2005. Not long afterward, a backlash started against MySpace, with analysts questioning the strength of the audience’s loyalty to the site and reports of sexual predators and safety issues flooding the media.

“Certainly there are a large amount of people spending a large amount of time on this site,” Jupiter analyst Nate Elliot told ABCNews.com in early 2006. “But when you look at the huge numbers they throw out there — 50 [million], 60 million registered users — those are a mirage…the simple fact is that only a fraction of the registered users ever go back. And only a fraction of them use the site on any kind of regular basis.”

The issue of teen safety on MySpace and other social networking sites such as Xanga led to many sites tightening their privacy policies and issuing safety guidelines.

“There are only a small number of cases where something bad has actually happened,” researcher danah boyd told me for a story on MediaShift about MySpace. “Remember: Most of what you are hearing in the press turns out to not be associated with MySpace at all. Just because teens do something stupid/bad and they have a MySpace account does not mean that they did it because of MySpace. Teens are more likely to be abducted at school than on MySpace. Teens are more likely to die in their parents’ cars than be killed because of MySpace.”

The year 2007 has been marked by the booming growth of MySpace rival Facebook, which started life in 2004 as a closed network for college students, and later high school students. Facebook made two important business decisions that led to its recent rise: 1) opening the site to all comers, and 2) letting people create mini-applications or widgets for the site. Facebook went from 8.9 million registered users in September 2006 to more than 37 million users now, with a higher growth rate than bigger rival MySpace. Whether those users will continue to come back — and just how many of them are “regular” users — remains an open question.

Business Networking and Business Models

Meanwhile, another trend paralleled the rise of the big social networking sites: smaller, more focused business social networking sites. The first one was Ryze, launched by entrepreneur Adrian Scott in 2001 to help him remember all his business contacts. Later came the more popular LinkedIn, which allows you to post your career trajectory and ask “connections” for jobs or business introductions. Both services bring in revenues by running advertising and selling premium services for power users.

Along with the business networking sites, there have also been niche sites that cater to specific groups of people — or even pets. MyChurch is a social networking sites for church-goers, BlackPlanet is for African-Americans, and Dogster is for dogs, or, uh, dog owners who think their dogs should be socially networked. Plus, specialized services such as Ning have cropped up to let anyone create their own social networking site for friends or associates.

American-based social networking sites such as Orkut (owned by Google), Hi5 and Friendster have also become popular in other countries, with Orkut catching fire in Brazil and India, Hi5 making waves in Europe and South America, and Friendster taking Southeast Asia by storm. Other services have had varying success overseas. (For more on this topic, see a separate in-depth report on MediaShift.)

Despite the recent boom in popularity for social networking sites, there remains one sticky conundrum: How can these sites become consistently profitable? The problem is that people are used to getting these services for free, so very few sites charge people money to participate. And advertisers worry that their brand image will be tarnished by having ads running alongside questionable user-generated content. Facebook recently lost advertisers in the U.K. when they found their ads running on a Facebook group page dedicated to a far right-wing political group. The site later announced it would let advertisers limit the places on the site that its messages would run.

Despite those problems, the big daddies of social networking, MySpace and Facebook, have started to figure out ways to bring in revenues. In early August, News Corp. reported that its Fox Interactive Media division (including MySpace) had turned a $10 million profit for the fiscal year ending June 30, with revenues of $550 million. News Corp. expects the division to bring in nearly $1 billion in revenues in the next fiscal year. Plus, Facebook projected it would take in $125 million in ad revenues this year, and planned to launch a targeted-ad solution that lets advertisers reach people based on their user profiles and interests, USA Today reported.

The dilemma for social networking sites is that by the time they reach a critical mass for advertisers, they might also be seen as less innovative and edgy by early adopters, who could leave in droves. Plus, any attempt to use targeted advertising based on user profiles could trigger an exodus of people who don’t want their private information exploited for commercial purposes.

Social Media and Big Media

While social networking sites continued to evolve, they also inspired a swath of “social media” sites that let people share news, reviews, personal experiences and website favorites with others. The social news site Digg, which launched in December 2004, lets people nominate interesting news stories or blog posts, which are then voted on — or “Dugg” — by other users to get more prominent placement on the site. Regular users of Digg have their own profiles, and gain currency by getting stories featured on the site. A number of similar services such as Reddit and the revamped Netscape have also sprung up, with Netscape’s former general manager Jason Calacanis famously offering money to top Diggers to join Netscape as paid “anchors.”

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Digg founder Kevin Rose

Social media sites go beyond just rating news stories. Photo-sharing site Flickr, now owned by Yahoo, lets people comment on others’ photos, join groups and add friends. Video-sharing site YouTube, now owned by Google, also became a huge phenomenon partly because it let people create user profiles, comment on videos and collect “subscribers” for their videos. Even a seemingly musty community built around an online encyclopedia, Wikipedia, has fostered loyalty with profiles, groups and discussion boards that let people, known as “Wikipedians,” bond through raging arguments and collaborations.

Because of the viral growth of social media and networking sites, Big Media has taken notice. Hearst bought teen social networking site eCrush, Sony bought social video site Grouper, and Disney bought teen virtual world Club Penguin, to name just a few. Plus, USAToday.com relaunched its site last March in a radical move toward social networking, letting anyone start an online profile and “vote” on recommending stories. While many users complained about the new look, USAToday said that it has helped spike traffic, which was up 20% in July 2007 over July 2006 traffic levels (though some question the numbers).

Other newspaper and traditional media sites have added social networking-type features, letting people upload and share photos, comment on stories, and build their own customized news pages.

But there comes a point of social networking saturation, where people just don’t have the time and energy to join yet one more site, create yet another profile and make even more “friends.” While social networking sites obviously serve a purpose in helping people connect, there’s only so many networks each of us can join — and only so many that will end up being profitable businesses.

Terminology

Here are some common terms used in the social networking world:

Add: Noun and verb used on social networking sites around being added as a friend. For example: “Thanks for the add.”

Avatar: Graphical representation of a user in a virtual world.

Facebooking: Any act of using features on Facebook.

Fakesters: Fictional profiles created on Friendster by users. Fakesters can be anything from celebrities to cities to inanimate objects.

Orkuteiros: Brazilian Orkut aficionados. Orkut is a social network owned by Google that later became popular in Brazil and India.

Profile pimping: Customizing MySpace profiles with designs and widgets that reflect a user’s personal style.

Scraps: Public messages left on an Orkut user’s profile by other members.

Widgets: Mini-applications or HTML code that people can embed onto social networking pages.

Resources

Check out these news articles, blog posts and resources to learn more about social networking:

A Brief History of Social Networking Sites at NFi Studios

Big Media’s Crush on Social Networking at New York Times

Call It MyNewspaperSpace at AdAge

Friendster frenzy has analysts puzzled from Reuters

Getting Past the Echoes by Jon Lebkowsky at WorldChanging blog

List of social networking sites at Wikipedia

Profiting from Social Networking at BusinessWeek

Social Network Ad Spending Keeps Rising

Social network service entry at Wikipedia

Social Network Sites: Definition and Conception by danah boyd and Nicole Ellison

Social networking sites enjoy internet advertising boost at DirectTraffic.org

Social Network Sites: My Definition by danah boyd

Social-networking sites tempt investors by Hollywood Reporter

Traditional Marketing Failing on Social Networks at VNUnet

YASNS wiki with timeline of social networking history by danah boyd

What do you think about social networking sites and social media? Which ones do you use and why? What other valuable resources do you know of online about social networking? Share your thoughts in the comments below.

Additional reporting for this guide was done by Jennifer Woodard Maderazo.

Photo of Kevin Rose by Scott Beale.

UPDATE: One pioneering site I failed to mention was LiveJournal, a blogging platform that also has strong social networking features. MediaShift reader KayJay explains the draw in the comments:

LJ allows you to build community on your terms, not the site’s terms. I now have friends all over the world whom I have actually even visited, going out of the country for the first time in my 40+ years of life. We get interested in each other’s lives, go through births, marriages, illnesses, deaths, graduations, relocations, career changes…over the course of time. I don’t have 37 million ‘friends,’ nor do I want them. What I do have is quality of interaction, from a site that encourages creativity, individuality, and community, with a clean interface that isn’t garish or juvenile, and without underestimating the intelligence of its user base and their ability to make a ‘home’ out of their LiveJournal.

It’s not all about the networking. It’s about the social.

UPDATE 2: Many people in the comments have mentioned that I’ve been lax in including international use of social networking sites. I’ve updated the post with a paragraph explaining the international success of some American-born social networking sites, with a link to Jennifer Woodard Maderazo’s excellent take on this subject previously on MediaShift.