The road to social networking may be paved with good intentions but it can lead straight to…wherever Facebook is going. The recent ruction over the betrayal of user’s privacy at the social networking giant Facebook has not only raised many an eyebrow (and not a few voices) but has also raised questions about the business model of the company. An excellent piece in the Harvard Business Review by Bruce Nussbaum captures the issue succinctly, here’s a sample:

Ownership in the social media world of networks is different from selling products and services in the traditional marketplace. Understanding the underlying cultural context of “free,” “gift,” and “creation” is important to businesses, including and perhaps especially high tech companies. It is not impossible to monetize that which is free. Apple did that with 99 cent songs on iTunes. But it is difficult.

Giving economic value to social networks is the new holy grail in advertising and the media. An army of economists and mathematicians are at work on this task. To date, most of the work has focused on metrics — how many friends, how many linkages, how much influence. Facebook’s problems with privacy highlight the need to understand culture as well.

[Source: Harvard Business Review]