Yesterday the CEO at Ning, Jason Rosenthal announced some major changes at Ning. Cutting the staff with 40% and putting an end to the free Ning product.

What is Ning?

Ning is basically a platform on which you can build your own social network and until yesterday, everyone could build their own niche or large scale social network for free.

With more than 1.9 million Ning networks and 40 million registered users, every day millions of people every day come together across Ning to explore and express their interests, discover new passions, and meet new people around shared pursuits.

The Palo Alto based company was founded in 2004 by Gina Bianchini and the legend Marc Andreassen – the guy who invented Mosaic and later Netscape. People refer to him as the one that made the world wide web possible to use by ordinary people with his navigating browser tools.

Is this a bubble burst or maturation of online social based tools?

Some might claim a bubble burst for the whole free spirit of sharing your inventions for free with a bunch of people and basing it on a revenue stream from ads or premium products. The announcement from Jason Rosenthal does certainly look like a kick in the face.

In the book called “Viral Loop”, Adam L. Pennenberg describes one of the reasons for success behind social tools like Ning with the idea that they have build viral loops within their products. And in the case of Ning, it actually has a double viral loop, securing a viral spread of the product.

For Ning the double viral loop is based on the fact that if you created a network on Ning, you would invite your friends to join that network and hereby also introduce them to Ning. If your friends like the network you build, they will invite their friends an so on – that’s on viral loop.

Some of the friends you invited will not only invite friends to your network, they will also create their own Ning network and start inviting a bunch of new people to their own network – that’s a second viral loop and makes it a double.

And why is this relevant – no doubt that this has been the success of Ning, and by removing the free product – they have probably removed one and a half viral loop.

With all this said, my opinion is that it’s not all bad. I actually think it’s more of a maturation than a burst for Ning. The idea of Ning is widespread, and yes, a whole lot of people is going to be pissed when they have to start paying for their network or close it down. But Ning does have a simple-to-use and great product and affordable product – both for the hobby collecting stamp enthusiast and for a whole lot of small and large companies. For them, Ning makes the organisation more social – it creates value through better ways to share knowledge. Co-creating your organisation with your organisation or your product with the users of your products is the future and “own branded” or internal organisation social networks are a big part of this future.

Online social tools, services and products need a business plan and so does your business when using them

Well it’s not rocket science, it’s something everyone has been talking about for a long time. It’s not enough to have the coolest product on the earth if you can’t pay your bills. I think that this set-back for Ning will in general be a set-back for the innovation of online social tools, services and products. A set-back in innovation is never good, but it just doesn’t make sense to build a product without a revenue plan in the business plan, so I see it as a part of the natural evolution in the online environment.

This also calls for a well thought through plan by your business before starting using tools like Ning.  Do your strategic work: what values do you want to create and what resources are you ready to put into it. Stop thinking that you can create value for your company by jumping into the use of online social tools, media etc without calculating that it will have a cost. There are great values to be made for your company, and compared to a lot of other efforts you can do, it’s still a relatively low cost, but there is a cost in both human and financial resources.

What comes next and what will it mean to online social tools, services or media?

As a follow up to this post, I will write a post with some thoughts on what comes next: will other social media like Facebook have to follow the example of Ning, how will things look in two years from now? But to write the post, I would love to get your input on the subject – so leave a comment an be part of the next post.

To view a Ning platform at work you can visit the Social Marketing Forum, a collaborating project we are doing with people around Europe – visit the forum here.

Below you can read the internal statement sent from the CEO at Ning to his team. (source: Techcrunch)

Similar Posts:

• NING Announced Their New Pricing Plan – Not All That Bad
• Everything You Need To Know About Social Media
• Watch out for Danish start-up – bringing you a social work platform

Tags: Adam L. Pennenberg, business, business plan, co-creation, Ning, online tools, Sharing knowledge, social marketing forum, social tool, Viral Loop