There is frequent talk recently of “monetizing” social networking and so-called Web 2.0 technologies like Facebook, Twitter et al. Essentially, the term monetizing means extracting a profit from something. While companies like Facebook have a market capitalization larger than that of Ford Motor Company, they are unable to turn a profit. Talking about making a profit is apparently oh-so Web -1.0, and using a euphuism like “monetizing” makes it sound like these companies are not actually bleeding cash like a drunken pirate.

One can’t help but look at social networking and the massive investments that have been made, and wonder where the money is going to come from. Many of the social networking sites have had phenomenal success in terms of gathering a huge user base, but aside from limited advertising revenue, few have seen the cash windfalls that have long been predicted. Many of these predictions rely on the law of big numbers. Basically this law assumes that given a massive number of people using your service, if just a tiny percentage spends a few bucks with you, you’ve hit pay dirt. Recall many of the business plans of the late 1990s that started with an incomprehensively large number of internet users, followed by a statement like “If only 0.00001% of all internet users…” The fatal flaw of this law is that people are not random bumper cars, which float around the internet dropping a few bucks on whatever they happen to bump into. A product or service with no perceived value is not going to make money no matter how many people bump into it.

The best analogy I can draw is to the massive investment in internet infrastructure that occurred in the 90′s. The logic was that all this traffic (a really big number) had to go over someone’s wires, so if you invested in the folks that owned the wires, you would need an armored car to haul your investment returns around. The fatal flaw in this logic was that the value of the internet was not in the wires and boxes connecting everything together, rather it was in the content and services that were delivered over those wires. Consumers found value in the Googles and Yahoos, not in the MCIs or Verios that own the copper and fiber.

Similarly, the value in Facebook or Myspace does not lie in the portal itself, rather it’s the people using the service and the content they generate. While these companies may contend that they are now unstoppable due to their sheer number of users, one only has to look at eBay, whose frequent price increases have alienated its core users and driven them to replacement services. While there is money to be made in social networking, it’s likely not going to be in the “pipes,” rather it will be found by capitalizing on the content generated by the service’s users.

What better way to begin a new blog than by predicting the end of blogging. Blogging is a good metaphor for much of what I am going to be covering here, perhaps what one would call “supernova technology.” It explodes on the scene with much sound and fury, only to collapse unto itself until a new, less remarkable entity appears.

The first universally experienced supernova technology was the web itself. Recall for a moment the heady days of the 1990s, where the web was a theurgic entity and everything in it was “cool,” even that grey site with the Times New Roman font your cousin the computer geek put together. Venture capitalists tripped over each other to fund E-everything, from sock puppet mascots to websites that would “revolutionize” the mundane: from grocery shopping to corporate purchasing.

These days the web is quite a bit more rational. Business ideas that don’t make sense in the real world are no longer entertained due solely to a web presence, and designers and graphic artists, the people that were successful in print media, rule the web rather than the HTML-savvy geek.

Blogging has followed a similar path. The banal that was once magical because it was on a blog is now ignored as more prosaic drivel. CEO blogs and other corporate blogs that promised better employee relations due to the “intimacy of blogging” have quietly closed down after legal censored and cleansed the blog to the point that it was just another piece of noncommittal garbage laced with meaningless corporate jargon.

Blogs are a medium like any other. Content and quality rule the day, versus pictures of one’s cat and some so-called Web 2.0 jargon. I hope to help you separate the helpful from the hype, and capitalize on the former while avoiding costly forays chasing the later.

Welcome to IT BS Watch!