Social Networking and the Network Economy

Social networking is a tool of communicating, information gathering, and information sharing that has rapidly and fundamentally changed the way we interact with one another. Beyond that, social networking has had a profound impact on business, and by extension the economy. In Darin Barney’s, “Network Economy,” he discusses network technologies and their impact on our global economy, and questions whether these technologies have in fact created a new economy. Network technologies, and more specifically, social networking, have become as Barney puts it, “instrumental to our global economy.”

At the beginning of 2011 it was announced that Goldman Sachs invested $500 million into Facebook, raising Facebook’s estimated valuation to $50 billion. Facebook generates some revenue from advertising, but a majority of their valuation comes from the wealth of information they have on their consumers. This information, and gathering of said information, has helped reshape and redefine our global economy. In order for a brand to remain globally competitive they have to put resources into maintaining a Facebook page and an overall online presence. Failure to do so will result in their failure to stay relevant.

Facebook’s success is a prime example of how network technologies have changed our economy, and helped shape a new economy of information. Information, demographics, statistics, etc, are at the core of advertising and Facebook’s collection of information is remarkably valuable. So valuable in fact, that in a Time Magazine’s Person of the Year profile of Mark Zuckerberg they talk about the Director of the FBI dropping by the offices to say hi. The reality though is that Facebook has such a deep and complete database of information that the FBI is trying to find a way to utilize it.

The success of social networking sites like Facebook and Twitter are examples that our global economy can no longer be measured monetarily. In this day, with our growing network economy, the importance and value of information is just as imperative as money.