Time for this Grumpy Troll to state publicly an opinion previously only passed on in speaking. Nothing presented here is given as anything other than the opinion of one person.
Social networking sites are items of fashion. They come, they go. They may get fabulously large and generate a lot of money while they're in, but if so then they're aimed at the general population and sooner or later they'll always fade from prominence. The quality of the site will say a lot about whether they fade into non-existence or merely into the background, but they'll fade.
Clothing fashion goes in cycles, driven in part by merchants always wanting to be able to sell more merchandise. That forced cycle lasts about thirty years, with items going from sneered at to ultimate height of fashion in about 15 years.
In social networking sites, each vendor is mostly touting only their own thing, they're not encouraging folks to switch. But there are different vendors, with no high-street shop to act as middleman: the customer is able to use services from multiple vendors, including at the same time. We've yet to see how long a typical, well-executed, site can last, but the history of MySpace and Orkut offers some suggestions.
Fashion, and cool, is driven as much by those on the social outside being excluded as by those on the inside. They're markers, not just tools. When those who are uncool wear the cool clothes, the definition of cool clothing changes.
Fashion for social networking sites depends upon the target market. A site like LinkedIn is probably safe, because they're mostly not aiming at being fashionable so much as useful in particular contexts. LinkedIn is not aimed at teenagers or other fickle beasts, but at folk trying to establish long-term trust. It has aimed at a niche, a sub-set of the population, and works to do very well in that niche.
Facebook is aimed at everyone. When the uncool come in, the cool departs. Parents, uncles, grandparents ... with these characters present, it becomes a place to visit in nice clean clothes, eat a polite meal at a dinner table, excuse yourself as gracefully as a teenager can manage, before running off to raise the kinds of hell that prematurely whiten parental hair.
Google+ claims to be aimed at everyone. It's so far only truly succeeding at a niche of technically inclined folks, who love it because of the social exclusion working in their favour, keeping the signal-to-noise ratios high, for the signal they seek. If Google+ moves beyond this niche, it may rise if Google truly have learnt how to handle social, but then it will fall. But inside, Google is mostly run by engineers, so its ideas are aimed at technical folk, and that shines through. Circles are powerful, but only likely to be used with those who have a touch more of that obsessive ordering streak running through them. This troll counts himself amongst that number.
Is any of this wrong? No, it's merely a reflection of human nature, inclusion and exclusion, and shifting ideas of what it means to be that something that defines a measure of people which can be used to exclude those not favoured by those who adhere to that measure. Cool. Even the word used to describe "cool" is subject to fashion trends and very few have had the staying power of "cool".
In clothing, the only creators that have staying power are those that manage to get included in that central circle once, and then manage to set their prices so as to exclude the majority of the populace and instead inspire clones. Fashions may change, but they can shift with them, changing their product. For a social networking site to achieve this, they too will need to find a way to attach to a niche. In clothing, the niche is defined by cost, as a proxy for defining "those with much money". When the product is free, that option does not present itself.
So investors beware: there's a lot of money to be made in running a social networking / media site, for a time. But expecting that to last is expecting a breakthrough in ability of merchants to undo the social constructs that underlay fashion. I'm not a historian, but as far as I know, this hasn't been done in the past few thousand years. Of course, for most of that time, the money in being a merchant has come from the userbase, with the users being the customers, so there has been little incentive to change a system that offers lucrative future income.
As always, the customer is the one providing the money. Special purpose vehicles such as TheBackplane should succeed, because they're like the fashion house turning out new fashions each year. They sell to the brand and there will always be more brands, while in the meantime they can accumulate more and more technological features to keep them ahead of the competition. A few companies like them can survive long term (100+ years), selling to brands, competing amongst themselves. The sites will come and go, the companies will endure.
Special-interest sites can potentially succeed long term. LinkedIn, aiming at most adults, but for a special purpose; sites aiming at hobbyists; variants of these. At the moment, Facebook is trying to capture the hobbyists with groups and other clumsy tools, using their account system as a way to bring folks together in one place. A small number of major players in identity provisioning, with readily available toolkits for site-builders to use to hook those in, with some way of dealing with anonymity and reputation tracking (which can be, but does not have to be, orthogonal identity provision), and suddenly those sites can exist anywhere, getting their own advertising revenues, or supported out of pocket by a few core members, or membership dues for more feature access. If there is revenue which comes from some of the people, then that can be spent on features such as video and image hosting from providers who, like TheBackplane, weather the storms of fashion by not clinging to one site. This is just a less immediately integrated approach. Buy from the big providers of social sites, or build your own from components, choosing providers for each aspect.
I do not see that any company based around one social site which is free to use and designed to appeal to the general populace for general interests can ever last. They'll soar high, make lots of money, then crash and burn, causing much grief to investors who do not recognise the industry they're actually in.
-The Grumpy Troll