Monetizing social networks

An enormous explosion of social networking sites (such as Linkedin, Orkut and Facebook) is the first step in unlocking hidden value from the dispersed social capital in our society. I say first step because firms are ignoring significant opportunities in this domain. A premium membership for social networking sites or a paid access to the site are not the answers to the search for an appropriate business model in social networking - there is something much bigger waiting to happen.

An opportunity exists in a business model that can appropriately monetize social capital. Such monetization of social capital would lead to significant value creation for firms that undertake it as well as for participants in the social network. Such monetization would require a currency for social capital that is not only valued but also fungible with monetary equivalents. Currently, the social capital currency is the number of network contacts without any monetary equivalents. A monetized social capital would mean something more than mere number of contacts and would also have a monetary value (the way frequent flyer miles have a value).

Consider the significant social capital existing within a group of medical professionals. Currently, opportunities chase social capital in this domain (there is no efficient social networking ecosystem for this group yet). As a result, only a small number of potential opportunities of social capital arbitrage actually see the light of the day.

If there was a currency for social capital that is funded by pharmaceutical companies, it would unlock significant value. Consider the impact on information exchange, expertise retrieval, academia - industry connection, marketing efforts of pharmaceutical companies and a whole host of other opportunities.
In a useful end state of monetized social capital for this community, a doctor would be able to accumulate such currency by lending expertise, visiting pharmaceutical company talks, giving talks, or attending a webinar for new drug launch.
Of course there are issues around such monetization as the above example itself shows. How would regulatory agencies view such currency? How ethical concerns would be handled? What is the nonmonetary equivalent of social capital and so on. The point is not that such monetization would be hassle free but that it is worth more thought.

The business models in the social networking domains are waiting for a transformation.