How Social Networks Are Changing Everything

Facebook and its ilk offer platforms to explore all the Web with one's relevant data in tow, and they're set to overtake the big portals

When we talk about "gateways" to the Web, most of us tick off the names of four Internet companies: Google (GOOG), Yahoo! (YHOO), Microsoft (MSFT)'s MSN, and Time Warner (TWX)'s AOL. Collectively (with Google in the lead) they account for or broker 90% of the gross dollars advertisers spend online. And they get huge amounts of traffic, in part because millions of users choose one of these four as their home page. Each of the sites continues to draw well over 100 million monthly unique visitors.

But a shift is under way--one that is ushering in the next stage in the battle for influence on the Web. Other players are becoming gateways, too, in a kind of evolutionary advance that will change the way we use the Internet--and alter advertisers' behavior.

The change is taking place on social networking sites, where new applications and cross-site partnerships are turning the likes of Facebook and MySpace into one-stop shops for hundreds of millions of users--platforms from which all the Web's offerings can be reached.

More important, in the next wave of development for such sites, new tools will allow members to take their social-media identities with them when they go to other Web sites. Once wedded to a single networking platform, a member's "social graph"--password, profile, list of friends--is becoming portable. In other words, as they surf the Web, users increasingly will be able to define themselves by their social network of origin.

That's big. It signals that Web companies are no longer in a race to build "destination sites" that attract vast numbers of users. Instead, social networking players are racing to extend their influence over the entire Web by exporting their social features to all sites.

Content, communications, commerce, and search have already ceased to be the unique province of the Big Four. Until recently, only "portals" offered free Web mail. Now MySpace, with its 300 million users, is gearing up to offer e-mail. It also has introduced a toolbar that lets members see "feeds" from friends--accounts of what they're seeing or buying on other Web sites. As for Facebook, having recently surpassed 200 million active users, it offers e-mail, instant messaging, photo posting, and video sharing. Members can also shop online without leaving the site and in some cases (with, for instance) communicate with "friends" from their social network about what they're buying. Consider it a social variation on the news feeds provided by Google, Yahoo, and MSN. According to technology blog TechCrunch, such features enabled Facebook to add 40 million users in February alone. It now has 276 million unique monthly visitors--double the traffic of any of the Big Four portals, including Google.

As usage shifts to these networks, a social overlay is spreading across the Web. To varying degrees, Facebook Connect and MySpaceID both allow members to explore the Web using their social-network passwords and, in some cases, to chat with "friends" they find on nonsocial sites. Portals are doing their best to catch up. Google has Friend Connect, and Microsoft has a similar feature in its new Windows Live package of online services. Even ailing AOL is trying to get into the game, with portable "lifestreaming" (real-time updates from friends) and chat.

All these technologies make a user's social context portable to all sites. And this promises to transform the Web experience. Users are already asking questions about the privacy and ownership of their social-media profiles. That debate is likely to heat up. Advertisers, meanwhile, may eventually stop buying specific ad space on the Web and go after users, wherever they pop up, based on their social profiles and networks. And Internet companies? As this social Web emerges, the players that own and harness social applications will be positioned to reshape the Web in ways we can only imagine today. Google's oft-cited mission has been "to organize the world's information." The new goal is to organize the world's people.

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