Ali Unlu

SAN FRANCISCO — Social networking is going corporate. The popular technology used by millions of people to share ideas and photos on MySpace, Facebook, LinkedIn and others is catching on at companies to improve productivity and communication among workers.

Private, internal social networks make sense as companies grapple with a slumping economy that has made travel cost-prohibitive even as workforces are spread out as never before, tech analysts say.

“Companies are asking, ‘How can we make our workforce more productive?’ ” says Kevin Martin, an analyst at market researcher Aberdeen Group.

Corporations increasingly are “exploring and experimenting” in the use of social networks to improve business operations, says Gina Bianchini,CEO of Ning, a social-networking site for businesses and consumers. It makes revenue from Google AdSenseand premium services.

“There’s been a definite shift the last two months,” she says. “There is a genuine interest now rather than a casual curiosity before.”
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It is hard to find projections for the blossoming market, Martin and others say. Martin estimates hundreds of companies worldwide — including Saturn and Smart Car, for example — use internal social networks, compared with a fraction of that a year ago.

“The spread of the workforce has put a premium on tech tools that let people collaborate, learn and share info from different parts of the world,” says Ross Mayfield, co-founder of business-software maker Socialtext. He cites studies that show 85% of all employees work on projects with colleagues in other offices.

The employee-only sites are an excellent format for large, geographically dispersed organizations to communicate internally and elicit ideas from workers, says Tom Beauchamp, chief information officer at Hot Topic, a retail chain of 690 stores for teens in all 50 states.

The chain is testing an internal site, powered by software from vendor Socialcast, that will let about 6,000 employees share data and create ideas when it launches later this year.

Cutting in-box clutter

Practically, corporate social networks also cut down on unnecessary e-mail and instant messages among co-workers, says Dan Nye, CEO of LinkedIn, a social network of more than 28 million people, most of them business professionals. Private social networks let “people choose what they want to read and discuss, based on their participation, without being intrusive and annoying,” he says.

LinkedIn’s new service, Company Groups, digitally gathers into a single, private Web forum all of a company’s employees. There, they can talk to one another, share ideas and ask company-related questions. So far, 1,000 companies have signed up for the service.

LinkedIn plans to generate revenue from the service through job listings, premium subscriptions and advertising.

Model N, a maker of business-efficiency software, uses the service so about 160 employees in North America, Europe and India can communicate and share market research reports, says Kamal Ahluwalia, vice president of corporate marketing at Model N. It also uses a Facebook service that lets people who share company e-mail addresses join the same group.

“It represents our culture very clearly,” says Dave Allen, director of insights and digital media at Nemo Design, a marketing company in Portland, Ore., whose clients include Nike and Hewlett-Packard. It uses a private network from vendor Ning to connect all of its 60 employees in Oregon.

By Andy Freeberg
http://www.usatoday.com

I blame David Hasselhoff.

Everything was going fine for the web — the financial world had been unwinding its overleveraged excesses for nearly a year without nary a ripple into Silicon Valley — until the launch of HoffSpace, a social network revolving around the oogachaka-ing, burger-wagging actor.

Some bloggers called it a bizarre nightmare. Others decried it as the end of social networks. They were probably joking. But they were right.

Hoffspace showed once and for all what the web sector had fought so hard to admit: These social networks had finally expanded a niche too far. No longer was it possible to argue that one day social networking sites would be anywhere near as good at making money as they were at expanding, fractal-like, into a grey goo of trivial matter.

Social networks spent too much time trying to build audiences without building a solid business model. The thinking was, let thousands of startups innovate in thousands of ways and one of them will stumble onto something big. The way eBay did with online auctions, or Google did with a better search engine.

But even the site voted most likely to succeed is still punting when it comes to financial success. Facebook CEO Mark Zuckerberg told a German paper this week that the site won’t have a business model for three years. “Growth is primary, revenue is secondary,” he said. On the face of it, that statement isn’t absurd. But coming last week, it sounded blindly out of touch. Facebook will surely survive, but smaller sites looking to it as a role model probably won’t.

This was the week when the Internet sector realized that not only are the good times over, but that much of the room we had for innovation is also gone. The time to experiment around with big, audacious ideas is passing. The invoice for that luxury is now due, and companies will have to either pay up or be so well-funded, like Facebook, that they can still afford tinker a bit. Money is what everyone is expecting from startups, simply because there is suddenly so much less of it around.

Of course, one thing that would help the sector would be if a major social networking company were to give enough of a peek into its books to show it has healthy cash flows, even a robust operating or net profit. But sites like Facebook and MySpace have been suspiciously shy about their financials so far, so that’s not likely to happen.

Many of these sites — focused on social networks or widgets or other mere embellishments to the web that emerged over the past few years — aren’t going to make it. Some with a smart focus, like LinkedIn, will muddle through. A few will be bought out cheap; others will live on as labors of love.

This is the destructive part of that celebrated and magical creative-destruction formula. A lot of areas in tech are probably going to find ways to keep growing, if more slowly: mobile advertising, perhaps, or cheaper, more efficient on-demand software.

Skeptics have been arguing for the past few years that social networking wasn’t a standalone business model, but a feature to enhance larger businesses with established business models. It seems that fate is finally happening. It just took a luminary like David Hasselhoff to make it real.

By KEVIN KELLEHER
Nytimes.com