The business of Social Media and the new old boy’s network

Just to make sure we have the parameters of this discussion straightened out right from the beginning there are two aspect to this whole social media rigmarole. The first aspect is the actual online world that is social media. It is about interaction with others using a wide ranging set of tools and services. That is not what this post is about.

The second aspect is the business of social media. From the promotion of services and software through to the funding of social media type start-ups this is a multi-million dollar business. Hell it could be a multi-billion dollar business if you fall for the paper valuation of stuff like Facebook. At its core though this business of social media is a relatively small group of very rich and/or powerful people.

Part of this inner circle are a number of equally powerful bloggers who have done very nicely for themselves off of social media – the online environment. While their blog properties carry an immense amount of weight both in the environment; and the business side, it is the names of the people involved with those blogs that are the real cash.

The problem is that this real A-List of social media power brokers is really no different that the old boys network that surrounds old media; or even old business. Even though the idea of blogging is about openness, transparency and disclosure this new old boy’s network practices something much different.

A perfect case in point is the news surrounding Circle of Moms. On December 4th two post written by authors that weren’t really associated by the respective blogs wrote about the amazing numbers that Circle of Moms was getting. Now Circle of Moms originated as a Facebook application but in October launched a parenting website presumably built around the same concept as the Facebook app.

TechCrunch, one of the two sites referenced, brought Nick Gonzalez out of blogging semi-retirement to pitch the news about this wondrous event. The other blog to post about this was Mashable who had Jennifer Van Grove; a Social Media Strategist, write up their version of this ground breaking news.

And what was the news you might ask?

Well apparently since launching in October this mommy site had amazingly enough acquired 850,000+ members. The interesting thing is that this number is pretty close to the number of installed Circle of Moms widget on Facebook.

Now I am going through all this because what comes next is important and knowing some background will be helpful; I believe, in you being able to see what is happening.

Interesting enough on searching through Techmeme on the the day that these posts went live shows nothing as far as buzz happening. I looked through every hour after and it was until 3:50 AM EST that anything showed up. However it was enough to catch the eye of the blogger behind The Drama 2.0 Show who with some journalistic chops that old media would be proud of did some digging and fact checking on this news.

Now this is where this story starts to get really interesting so hang in there. In the case of TechCrunch and Nick Gonzalez there is some interesting undisclosed connections between Mr. Arrington, Gonzalez and the people behind Circle of Moms. It turns out that Nick Gonzalez works for a company called Social Media which bills itself as a social advertising network that sells ads for widget and application developers.

It also turns out that Social Media’s CEO one Seth Goldstein is friends with the founder of Circle of Moms – Ephram Luft. As well Naval Ravikant as investor in Social Media is an investor in Circle of Moms.

So what is the take away from this simple set of facts?

Nick Gonzalez is an employee of Social Media for which he is probably getting a nice paycheck. Social Media his employer pays him as a result of money invested in them by the same person with interests in Circle of Moms. Now tie this in with the fact that Ravikant, Goldstein and Luft are listed as friends of Michael Arrignton on Facebook which as The Dramma 2.0 Show blog shows Mr. Arrington has a personal connection with all the people involved.

Does any of this matter?

It wouldn’t matter one bit if Arrington through his ownership of TechCrunch and association with the involved parties has publicly declared his conflicts of interest in this. After all isn’t that the most basic tenet of this new media – disclosure and transparency. Well we didn’t see any of that here and this isn’t the first time that questions have been raised about this type of thing with TechCrunch.

Now what about the other shoe – how about dropping it now?

This one isn’t as complex a circle as with TechCrunch but as The Drama 2.0 Show blog found out Mashable isn’t without some ethical questions that need to be asked.

For example the writer of the wondrous news as it appeared on Mashable is one Jennifer Van Grove who as she says on her own site – a community and social media consultant (a cutsey phrase for marketer). So it is her business to write posts like this and wouldn’t you know it she’s listed as a friend of Luft on Facebook.

However one has to point out as well that Pete Cashmore; like Mr. Arrington, is listed as a friend of both Luft and Ravikant as well on Facebook.

As with TechCrunch this involvement by Mashable’s owner Pete Cashmore and new writer Jennifer Van Grove with people surrounding Circle of Moms is something that was never disclosed by anyone involved.

Perhaps this is all just a hinky coincidence?

Sure and I’ve got a bridge you might be interested in. While I’m not going to get my head sized for a tin foil hat by any means one has to really wonder what is being gained by two puff pieces about a website with some highly questionable numbers being bandied about. As many of the commenters on the TechCrunch post pointed out – the numbers don’t make sense.

For me though the more important point to possibly be made here is how the business of social media is potentially being manipulated. Sure Facebook is all about networking and increasing your number of friends. What it shouldn’t be is a meeting ground of the social media power set so that they can create possible false impressions of success or failure because behind all this some-one’s money is being screwed with.

Not to mention that the very people we want to believe in this new media – our readers – won’t appreciate being played like this. Which means we pay the price and the whole basis of what the social media environment is based on is screwed.

But hey – the rich get richer, the powerful get their ego’s fed and the new old boy’s network will continue to grow.