Online social networks: Everywhere and nowhere

Social networking will become a ubiquitous feature of online life. That does not mean it is a businessA large but long-in-the-tooth technology company hoping to become a bigger force in online advertising buys a small start-up in a sector that everybody agrees is the next big thing. A decade ago, this was Microsoft buying Hotmail — the firm that established web-based e-mail as a must-have service for internet users, and promised to drive up page views, and thus advertising inventory, on the software giant’s websites. This month it was AOL, a struggling web portal that is part of Time Warner, an old-media giant, buying Bebo, a small but up-and-coming online social network, for $850m.Both deals, in their respective decades, illustrate a great paradox of the internet in that the premise underlying them is precisely half right and half wrong. The correct half is that a next big thing — web-mail then, social networking now — can indeed quickly become something that consumers expect from their favourite web portal. The non sequitur is to assume that the new service will be a revenue-generating business in its own right.
http://www.economist.com/business/displaystory.cfm?story_id=10880936

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