- The creation of a successful status game is so mysterious that it often smacks of alchemy. For that reason, entrepreneurs who succeed in this space are thought of us a sort of shaman, perhaps because most investors are middle-aged white men who are already so high status they haven't the first idea why people would seek virtual status (more on that later).
With the rise of Instagram, with its focus on photos and filters, and Snapchat, with its ephemeral messaging, and Vine, with its 6-second video limit, for a while there was a thought that new social networks would be built on some new modality of communications. That's a piece of it, but it's not the complete picture, and not for the reasons many people think, which is why we have seen a whole bunch of strange failed experiments in just about every odd combinations of features and filters and artificial constraints in how we communicate with each other through our phones. Remember Facebook's Snapchat competitor Slingshot, in which you had to unlock any messages you received by responding with a message? It felt like product design by mad libs.
When modeling how successful social networks create a status game worth playing, a useful metaphor is one of the trendiest technologies: cryptocurrency.
Social Networks as ICO's
How is a new social network analogous to an ICO?...
Art is making something out of nothing and selling it.
-Frank Zappa
This is 20,000 words of wrong-headedness. It's ludicrious to claim that nobody has studied capital in social networks; the entire phenomenon of influencers is an illustration of the economics of social capital.
Arguing about the internal value of any social network without arguing about the external value is like discussing the wealth of Zimbabweans without discussing an exchange rate. Klout tried to build an entire business model on judging whether this person or that was worth listening to; that Unilever link up there basically indicates that as soon as anyone of consequence cared, the discussion became dollars, CPM, and the metrics that non-social networks have been using since KDKA went on the air a hundred years ago.
My ability to get your attention inside a network is utterly and completely irrelevant unless you compare my ability to get your attention outside a network. The author admits this without paying more than lip service to it, though:
- [An aside about exogenous social capital: you might complain that your tweets are more interesting and grammatical than those of, say, Donald Trump (you're probably right!). Or that your photos are better composed and more interesting at a deep level of photographic craft than those of Kim Kardashian. The difference is, they bring a massive supply of exogenous pre-existing social capital from another status game, the fame game, to every table, and some forms of social capital transfer quite well across platforms. Generalized fame is one of them. More specific forms of fame or talent might not retain their value as easily: you might follow Paul Krugman on Twitter, for example, but not have any interest in his Instagram account. I don't know if he has one, but I probably wouldn't follow it if he did, sorry Paul, it’s nothing personal.]
Everyone else on the planet is interested only in "social capital transfer." That's it. That's the whole game. This is why you can buy Instagram followers by the 10k, Twitter followers by the 100k, Reddit accounts by the $1 but Instagram accounts by the $1k: it's what you can do with it. Paul Krugman's Instagram account is only useful to Paul Krugman. "Humans of Late Capitalism" or "Diet Prada" is worth money to anyone attempting to reach cynics or fashion snarkers. The metrics are dollars and value is governed by utility.