Thursday, December 13, 2007

But what if I don't want Coke to be my friend?

This is old news by now, but I wanted to explore it anyway.

A couple of years ago a younger relative, then still in college, showed me Facebook. At the time I didn't really get the concept, but I figured there was probably something to it since my relative thought it was pretty cool. On the other hand, my first instinct was to wonder about privacy.

At the risk of dating myself (but then, I do give my age in my profile), I cut my social net.teeth on BBSs and Usenet. On BBS's, people almost universally went by handles and not by their real names, a practice that almost certainly traces back to CB culture. On Usenet, you went by your email address and .sig, which could be revealing ( or concealing ( or even according to your choice and what you could get your local admins to go along with.

In either case you were faceless (at least at the time) and there was at least a good possibility if not an outright expectation that your name would be made-up. Coming from that perspective, and knowing that every single post to alt.stuff.hairy.hairy.hairy and rec.pigeon-fanciers is preserved in amber for all time, I was somewhat taken aback by the idea of a site that not only showed your real name, but your picture and whatever other personal information you chose to put up.

Why would people do this, I thought? Well first, not everyone's as camera-shy as I am. From talking to people, there also seems to be the perception that if you're doing something on you computer in the privacy of your room, you're doing it in your room and not in the net. Finally, though, I suspect that, even though the information is readily available, people may not fully appreciate the distinction between one's friends (a human-sized hand-picked list) and one's network (a city-sized collection of people you mostly wouldn't know from Adam).

As an aside, there's some interesting graph theory to be explored in modeling social networks. Your PhD awaits ...

Where this all comes to a head is the economics of identity. I've argued already that anonymity services must be understood in economic terms, particularly regarding the value each party places on anonymity. Conversely, a service like Facebook, MySpace or LinkedIn is a veritable mother lode of marketing data, much of it apparently available for free.

I say "apparently" because if this data is really free, it's almost certainly mispriced. Mispricing means arbitrage opportunity, and arbitrage opportunity means new, fair price. At a first guess, the value of belonging to a social network is something like
  • Convenience of being able to keep in touch with your friends and vice versa
  • Minus hassle of being in touch with people you'd rather not be in touch with
  • Plus joy of discovering interesting things about other people
  • Minus embarrassment of realizing that your prospective employer can see those pictures of you doing jello shots which seemed like such a good idea to post
  • Plus value of learning about cool new stuff advertised on the site
  • Minus pain of advertisements you don't want
Users can manage the first two by tweaking their friend lists. People appear to be growing more savvy about divulging personal information. One source tells me that juniors are now advised to scrub their Facebook sites a good year in advance of graduating and entering the job market.

The last two are, as I understand it, going through an interesting period of adjustment. One method of adjustment is for users to vote with their feet and stop using the service (or stop using it as much). This makes the site as a whole and advertising on it in particular less valuable. Presumably, really cool advertisements could make a service more attractive, with the reverse effect.

I haven't really investigated any of this in detail, other than reading a couple of articles in the popular press, and I'd be particularly interested in comments.

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