I've focused a number of posts on the value (and sometimes, price) of individual users of a social networking platform. Most recently, for example, I pointed out that eBay's $2.6b bid for Skype amounts for $48.15 for each of its 54 million users. That rate per user might actually turn out to rise as high as $75.93 if performance-based incentives force the acquisition price upwards to $4.1b. And, certainly, it seems legitimate to consider that eBay has "purchased" these users. But they might not have paid quite so much if Skype's user base had plateaued. So perhaps it's also valuable to note that Skype tends to grow by about 150,000 users every day -- that's about 90 per month for every thousand users. It makes sense that eBay has its eyes on those new users too.
In fact, innovations often spread along social lines. Eric Abrahamson and Lori Rosenkopf have done some compelling empirical simulations to this effect, discussed at length in their essay Social Network Effects on the Extent of Innovation Diffusion, which is well worth a look. The point is fairly intuitive in social networking, where network effects transcend to become a big part of the essential value proposition. It's also observable, and here I'm going to take a cue from one of our readers' intuition. Below is a two-year graph of daily page views on TheFaceBook, courtesy of Alexa, which demonstrates a clear exponential upward trend.
Someone once commented to me that TheFaceBook has achieved success by fostering critical mass at Harvard, spreading next throughout the Ivies and further continuing to "roll that boulder down the mountain." That trend seems strongly in evidence here. (Perhaps that sharp downward spike near August means that many users take summer breaks from TheFaceBook too. Notice that traffic is right back on track.)
As Friendster will tell you, however, and as Doug has pointed out, a strong head-start and wealth of profiles aren't always enough to guarantee the lasting success of a social networking platform. Here's a graph for that same two-year period that shows daily pageviews on once-powerful Friendster , and another one that compares it with those of MySpace, today's $580m leader in profile quantity and pageviews:
Almost as staggering as the scale of MySpace pageviews that dwarves those of Friendster (or TheFaceBook, by the way) is the notable stunt in Friendster upward trend that accompanies MySpace's reach for the stars. Now, Doug says that social networkers aren't "fickle." Friendster's healthy head-start and substantial lead in profiles and pageviews don't seem to have been enough to protect its user base, however.
If we consider profiles to be the "gold" behind social networking, and even hope to use them as "distribution currency" in future consolidation, it's important to understand the factors that govern user adoption, sticking and switching. I'm going to pay a great deal more attention to them in future weeks.
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