Second, any new company requires participation on the part of its customers as much as a strong business plan and execution. It’s a question of “If you build it, will they come?” Without the participation of people, these so-called social-networking companies would have nothing to network with. Ipso facto there would be no business.

Third, if companies do not recognize the role that those early adopters played in the early days to make the company what it is today (without placing judgement on which form is “better”), then I question whether this will eventually give those early adopters pause the next time they are confronted with Yet Another Social Network. In effect, these early adopters are giving away their free labor to make millions/billions for the people who provide the infrastructure. My assertion is that these early adopters are just as critical to the success of the business as the original founders.

I suppose this is the case in any capitalistic economic system (bridge tolls, for example, in which a few people exert some effort and reap the rewards) but the difference in Web 2.0 land is that user-participation is optional yet simultaneously critical for the success of the business. There’s nothing to prevent or encourage my participation (unlike, say, a river blocking my travels), so I’m not compelled to do anything. There is a value proposition that attracts early adopters to a service, but people are fickle, and without their continued support and proselytization and compliments and complaining, as much as your dangling carrots in the form of service features and pretty GUI design, your business will tank. Thus my point about co-dependency when it comes to user-participation: without your customers, you are nothing.

The nagging feeling I have is that teh intarwebs have merely amplified the stakes in economic systems rather than made them more equitable. Sure, anyone can start a social-networking business now, but in all likelihood your success will rely on exploiting free labor from those who participate in your social network. The more free labor, the more real money you stand to make. In effect, considering the relatively low barriers to entry that the internet presents compared to, say, a steel mill, you are in a race to exploit everyone else before you yourself are exploited.

It just strikes me as a pyramid scheme. It’s one thing if you’re an Apple or Microsoft which still required the paid labor of others to achieve your current station in life, but I find myself looking askance at the likes of YouTube which rode to riches on the backs of millions of hours of what amounts to donated content.

Just because you’re all rich and famous now doesn’t mean you should forget where you came from.

PS: Obviously I understand the value in aggregation, just as I realize there is value in doing things. People wonder why it’s so “cheap” to start Web 2.0-ish companies. It’s likely because they’re getting a boost from free labor. But that labor isn’t cheap, and it certainly isn’t free. So the question again, are these the salad days of social networking?

YouTube offers a similar service, they just try to make money through ads rather than user fees. And, in fact, they recently offered a plan to share advertising revenue with the creator of a video (conveniently spinning their plans to begin showing ads within videos, but revenue-sharing nonetheless).

In both cases, if you don’t like how these sites treat you, don’t use them. I don’t see how this is any different from the whining that always accompanies changes to any long-established and well-loved enterprise, whether coffee-shop or used book store. Running any business is about making compromises, and often the vocal “old skool” die-hards obscure and obstruct the desires of the vast majority of customers. Which is not to say that businesses never make the wrong decisions or always treat their customers respectfully, but it is to point out that this likely represents not some ominous “dark-side” of social networking sites but rather yet another minor incident in the long history of companies trying to find a balance between making money and making their customers happy.