Social networks—future portal or fad?
future portal or fad? — LAGUNA BEACH, Calif.—Social networks like MySpace and Facebook are the zeitgeist for online executives and investors, just as they are for millions of young people. — But attendees at the Piper Jaffray Global Internet Summit here still can't decide …
Context & Ripple Effects
By mid-2006 the question hanging over every internet conference is whether MySpace and Facebook are the next front door to the web or this cycle's overhyped detour. The groundwork was laid earlier in the year: reporting in January 2006 already described MySpace as the default daily hangout for American teens and twentysomethings, and Facebook's founder had begun building a public profile on the speaker circuit, including a Stanford entrepreneurship session in October 2005.
At the Piper Jaffray Global Internet Summit in Laguna Beach, that ambiguity is now explicit — attendees remain genuinely split between the 'portal' thesis and the 'fad' thesis. With a single syndicated pickup beyond CNET's own writeup, the debate is still confined to the investor-and-executive circuit rather than the broader press.
First-order effects
- Executives and investors weighing advertising budgets and valuations around MySpace and Facebook have no consensus framework to price them — audience reach is proven, durability is not.
Second-order effects
- Incumbent web destinations face pressure to decide whether to treat social networks as rivals for users' homepage habit or as acquisition targets and traffic partners, since the 'portal' outcome directly threatens their role as the web's entry point.
Third-order effects
- If the portal thesis holds, the industry shifts from search- and directory-mediated navigation toward identity- and network-mediated navigation, making ownership of user social graphs the scarce strategic asset; if the fad thesis holds, today's valuations reprice sharply — the split among summit attendees is precisely a bet on which structure wins.
The trend: Investor opinion is consolidating into a single binary bet on whether social networks displace incumbent portals as the web's default entry point or fade like prior youth-driven web crazes.