What do the Tour de France and a Victoria sponge have in common with your social networking web site?

This weekend sees the Tour de France start in London. It will be the biggest sporting event in the capital before the 2012 Olympics with nearly 200 competitors and tens of thousands of spectators expected. But the Tour takes place amid continued rumblings about drug doping of some participants in professional cycling.

Meanwhile, over in the village of Wimblington in Cambridgeshire, people are agog with the news that grandmother Jenny Brown won 2nd Prize in a cake making contest – even though she was the only competitor..! To cap that, one of the organisers of the competition had won 3rd Prize in previous scone making contest and she too was the only entrant.

Strange as it may seem, the Wimblington controversy has a connection to the drugs in cycling issue – and they both have an important meaning for social networking on the Internet. In both these cases, the controversy arises from the differences between “in group” and “out group” psychology.

In cycling, the “in group” of professional cyclists who take drugs realises that to do well you simply have to accept doping. Within this “in group” of people who find drug taking necessary there will be pressure to conform – if you are a professional cyclist and your don’t take drugs you are “nothing” will be the thought process. To those of us in the “out group” who believe that drug taking in sport is dangerous and cheating we can’t understand this viewpoint.

Similarly, to people in the “out group” for Wimblington – those of us who are not cake judges – we can’t understand how someone can get 2nd Prise and they are the only entrant. But as the organiser Julie Dent said, the judges “had an expectation”. In other words, the “in group” of judges perceive things differently to the rest of us.

When you are in the “in group” you help formulate that group’s rules and accepted standards. When you are in the “out group” you may not like those rules, you may find them distasteful or you may even protest against them. But the “in group” can’t understand what all the fuss is about.

On social networking sites it is the same. For instance the “rules” for taking part in MySpace or any other social networking site will be set by the community – the “in group”. People who don’t use MySpace will find it difficult to comprehend the rules because they are in the “out group”.

Social groupings always “police” themselves. What is acceptable within that social group may not be acceptable outside it. Within the judges of a cake making contest it is acceptable not to give a 1st Prize to the only entrant, but to those of us outside the world of cake judging this doesn’t seem fair. Similarly within professional cycling those who take drugs find it right and proper, whereas spectators disagree.

Online people will join and leave social networking groups as they discover the “rules” are appropriate to them. If you run a social networking site it means no matter how much you try to set the rules, it will be the users who decide what the “in group” thinking should be for your site.

Hardly anyone is social networking

People all over the world are logging onto to social networks. At least that’s what you would believe if you looked at the media coverage of things like MySpace and Facebook. However, new research from Nielsen NetRatings suggests something altogether different.

According to their latest analysis less than one in ten people who use the Internet are actually visiting any of the social networking sites. Even though the number of visitors is growing, it still represents a minority of web users. In other words the “fuss” about social networking does not represent the degree of usage.

While MySpace and Facebook battle it out for being the “top dog” in social networking, the rest of the world is happily going about its business without even bothering with either of them. Meanwhile “behind the scenes” of the big push of such general social networking sites, smaller, more specific social networking sites are being built. Social networking sites for instance like Bounty, for new mums which appears to attract a significant slice of mums-to-be. What might be called “vertical market” social networking is gaining more audience share than general sites like MySpace.

Rupert Murdoch may have sunk tons of cash into MySpace and, for all we know, may be making a return on his investment. However, it is more likely from these figures that more profit will be made from niche networks, rather than general ones. People rarely connect generally – there is always some common interest they share. Owning a collection of niche social networking sites will be more profitable for a big company than owning one general site.

On the other hand – you could always start your own social networking site for your own niche. Several pieces of software now exist to enable you to do this relatively easily. Ning is proving to be highly popular and so too is KickApps – both worth a look.

Social networking set to boom worldwide

Readers of the Financial Times are a canny lot. After all, you don’t get to be concerned with the financing of the country unless you know a thing or two. So it was interesting to read in yesterday’s newspaper that the City believes that social networking on the Internet is at least as important as the dot com boom of the late 1990s.

Back then companies invested millions of pounds in business ideas, only a few of which worked online. Now, the likes of YouTube, MySpace and so on are racing around the globe in a bid to set up localised versions of their successful US sites. Everyone it seems from the companies themselves, their investors and the FT believes that social networking is the holy grail of Internet money making.

We have been here before, of course. Ten years ago everyone knew that dot com businesses would make millions – only to have their fingers burned. This could be the same story all over again.

Social networking is a significant step in the online world. It is an important development because it starts to replicate online what we have offline. It therefore means that from a psychological perspective the Internet starts to appear more like our “real” world.

However, it doesn’t mean that big business is going to win. The FT may be confident that the global chase being made by YouTube and MySpace is the way ahead, but history tells us otherwise. The real winners of the dot com boom were the solo entrepreneurs. Thousands of them have made multimillion pound fortunes by doing what the big dot co companies failed to do – niche.

The same will be true for social networking. General social networking sites will eventually lose out to niche social networking sites. In the “real world” we don’t have a single social group. Instead we belong to several social groupings that serve different purposes – neighbours, work colleagues, sports fans, people at the gym and so on. We don’t mix them up into one big group. Hence MySpace and its like do not completely replicate what we do offline.

As the solo entrepreneurs capitalise on social networking and start creating niche social networking sites, the big companies will lose out – just as they did in the dot com bust that followed the boom. Don’t put your money in MySpace just yet!

Social networking power not yet established

Business owners have still to capitalise on the power that social networking provides. At the moment companies and Internet marketers are largely using social networking sites to advertise their products and services. Some businesses are using social networks to help communicate with customers and colleagues, but that’s about all.

However, online social networking has a huge advantage compared with offline social networks. The activities of the network are visible and trackable by anyone. This is not the case with offline networks. For example, across the world there are people in bars, restaurants and at dinner parties chatting about their favourite film, for instance. However, Hollywood producers don’t know what they are saying. The world over, people could be saying nice things about a movie, or nasty things.

Online, of course, what they say is there for all to see. So, Hollywood producers could track what’s going on in social networks to find out what people think of their latest film. This could guide them to produce the next blockbuster. Equally it could guide them towards legal action against the negative comments.

Other businesses could do the same. Social networks provide a huge opportunity for market research. They also open up the floodgates for lawyers to take actions which previously they could not have done as the damaging comments said in offline public settings are not easily identifiable.

Business analysts in Australia expect automatic tracking software to be available in the next couple of years. In the meantime, if you are an Internet marketer you can use social networks to find out what the latest trends are, what people are discussing and use that information to help you decide what products and services you can roll out in the future.

Manage projects using social networking sites

Business professionals are increasingly using social networking sites to connect with their existing colleagues, rather than find new opportunities. That’s one of the conclusions you can draw from the latest survey on social networking by the Institute for Corporate Productivity.

The study showed that over half of all businesses who use social networking sites do so in order to keep existing colleagues connected and updated. This is an interesting development because the focus on social networking as a concept has been on finding new friends and contacts, rather than keeping in touch with those you already know.

However, it points to an alternative use for social networking sites – project management. For instance, say you are organising a meeting – you need to co-ordinate speakers, topics, venue information, catering and so on. All of the people involved could be working in different locations and so you could connect using a private area of a social networking site. Within MySpace, for instance, you could achieve this by adjusting the privacy settings so non-one could see your profile or connect to you unless you had previously agreed to it. Equally within Ecademy you could set up a private “club” to connect the people involved.

Project management in this way means you could share information using the blogging and messaging facilities of the social network. Plus you could make sure that everyone knows what’s going on by being able to follow the threads of the discussions. That wouldn’t be easy to organise if you did everything via email. True, you could set this kind of thing up yourself using forum software. But why do that when the facilities are already available within a range of social networks?