There can be only one

One-time internet pace-setters AOL have announced that they are getting out of the social networking business. They have put Bebo, which they paid $185 million for just two years ago, on the market, though no one seems to think there will be any takers. If no sale goes through the service may be closed down as soon as the end of May.

The management at AOL have hardly covered themselves in glory in recent years – the Time-Warner/AOL merger is often cited as the worst deal of all time – but one has to feel a bit sorry for them, as back in 2008 it wasn’t clear that Facebook would come to dominate the market to the degree it has. In 2007 people were still writing papers identifying FB as a service for the upper classes, and youth-orientated Bebo must have looked like a reasonable bet.

I think the demise of Bebo is further evidence that, for Web 2.0, value lies in the network, not in any particular interface. Underlying the story is a much older lesson though; in a maturing consumer market the middle ground tends to disappear, and to survive an enterprise must either be dominatingly large, or serve a specialised niche. If I were running Second Life I’d be tempted to follow the latter strategy.

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