This Friday I am giving the sophomore business clusters and orientation to business research and resources, as I do at the beginning of every quarter. Some of the research topics are easier than others for a librarian to teach. In general, the larger the industry (automobile, airlines, retail, music) the easier it is to use business databases to find the necessary information. Likewise, it’s generally easier to teach the students how to use the necessary databases if they have topics that will actually work with them.
This quarter, the first project is the social networking industry. Needless to say, you can’t exactly find company financials for Facebook in Hoover’s since it is a private company, and the most appropriate NAICS classification for the industry is “Internet Content Providers.” I’ve got a few ideas of places to go for articles, but I thought I would ask other experts in social networking (my fellow librarians) where they might look for information. The project description is below, and I would love to show my students how librarians used a social software (this blog) to do research on the social networking industry. Please leave a comment below if you’d like to help out. This will also be cross-posted on my Business Blog.
Your team is to conduct extensive research on the history, current condition, and future of the social networking industry. You are expected to make extensive use of library as well as internet resources for this study. PLEASE REMEMBER: It is always our expectation that you back up your findings with the data found in your research, and that you make EXPLICIT REFERENCE to numbers where necessary.
In particular, you will answer the following questions:
1. How do social networking firms make money?
2. Two of the main competitors in this field are facebook.com and myspace.com. Which one stands the best chance of winning this competitive battle?
3. Other than the threat they pose to each other, what is the biggest threat these two organizations face?
Each observation or recommendation you make must be substantiated by the research you conduct, with clear justifications provided in all cases.
I probably wouldn’t have the time to perform the research. However, I would say that social networking site make money off of advertising based on the new Attention Economy. The more popular the site, the more people clicking on the ads. (That is how it is sold to advertisers, we have 10,000 people a day on our site, they all can be looking at your banner!).
Myspace has more ads (not sure if they have more users). It is cluttered to the point of being a spam page on almost every page. Facebook is more subtle and has more functionality than myspace. I would bet Myspace would make more money because they have more ads. Plus, they can inflate that with the many spambots that probably crawl all over the sites.
The biggest threat is analytics. A recent study showed that the advertising click-rate was inflated and much lower than what was really thought. It is the Achilles heel to these sites. If everybody is watching, but nobody is clicking, it puts a big hole in the theory.