What If Social Networks Just Aren’t Profitable?

I think this basic idea is flawed - social networks can be profitable because social networks have been profitable. The vast majority of social networks have not been profitable because the vast majority of startups never reach profitability!

Perhaps a better question (and a more interesting debate) is whether a social network can ever keep up with users and their changing tastes. Myspace was once dominant, but Facebook quickly destroyed it. Digg was once dominant, but Reddit supplanted it. Looking back at the history of the web, there seems to be a point where social networks either fall out of relevance (or muck up a good thing).

Not sure what the answer is to that question...If you look at Myspace, you could argue they died because they failed to change. If you look at Digg, you could just as easily argue that they died because they changed. So, I'd argue that social networks need to stay half a step ahead of their users' tastes to stay profitable. I'm not sure that's possible, so social networks need to diversify (likely away from pure social networking) to stay profitable.

The other factor is non-profit open source social networks.

A lot of people like me are determined to popularize open/p2p, distributed or decentralized social networks.

Technically, we're lunch cutting the for-profit networks. But I think both can coexist. However, if open/free networks come to dominate, closed platforms will diminish in popularity.

Search: "Diaspora", "distributed social network"

The core conceit here is the idea that what we've seen so far (facebook, g+) represents the apotheosis of social network services. It only takes a few minutes of thinking about that to realize how silly the idea is. Social software is here to stay and it's going to have a big impact on society. But how it works will surely change a great deal over time, to a degree where what exists in 2020 may be completely unrecognizable to us today.

Is social software fundamentally unprofitable? I think the answer has to be no. Even the clumsy monetization of facebook today shows a healthy profit, even if it is orders of magnitude below the fevered expectations of the market. More so, as running high user count services becomes cheaper due to advances in technology social software will merely become easier and easier to profit from.

then facebook's investor's are screwed