This is a series that flows directly from Mark Anderson’s annual predictions, presented here in exclusive detail for the Industry Standard.

Part I: Mistaking Opposites

For most early users of Social Networking sites, these spaces were exactly like a yearbook -- in fact, their DNA can be traced back to a Harvard online yearbook wannabe. And like a yearbook, the marginal spaces where you write things were an odd mix of public and private, especially for targeted teen users.

In fact, public is really the wrong word, and this is where "friending" came from: These spaces were to be shared only with friends, or friends of friends who would request to "friend" you, get permission, and join your list of friends. Not really public at all.

All of that was B.R., or Before Rupert. Once News Corp bought MySpace, the pressure was on to deliver on the long-suspected gold mine of online ad revenues available through these nets. There was only one problem: Someone forgot to ask the customers how they felt.

It turns out the answer was, "not so good, thank you." Competitor Facebook, the faster-growing of the two according to a BusinessWeek story on this subject (written after BusinessWeek editors attended the SNS New York dinner where this prediction was first unveiled), had a virtual customer revolution over its Beacon ad campaign, creating advertiser unrest and forcing an apology from the founder.

What does this all mean?

First, early projections by News Corp., Google, MySpace and Facebook are way too optimistic in online ad revenue estimations.

Oops. On some level, this may foretell the lack of a business model for the erstwhile hottest new thing of the year.

Once again, we seem to have united Web 2.0 exuberance with a lack of paying customers to achieve, well, not much at all. My earlier suggestion that 90% of Web 2.0 companies will fail seems ever more likely to be true. It isn't about the easy tools, guys, it's about the customers.

And on a larger scale, this fracas will highlight how Google itself was based on pure luck: Invented as a search engine, with no thought for ads, the founders only later stumbled on what would make them rich.

The lesson to future entrepreneurs should not be confused. Don't go out and get a million eyeballs, and then try to monetize them. Go out and get a million customers.

Mark Anderson is CEO of Strategic News Service (TM), publisher of the technology industry's most accurate publicly-ranked predictive letter, at www.stratnews.com. He is also CEO of SNS Project Inkwell (TM), bringing appropriate technology design standards to K-12 classrooms (www.projectinkwell.com), and Chair of the "Future in Review (TM)" Conferences (www.futureinreview.com). He is a Contributing Editor to the Industry Standard.

The prediction: As advertisers focus in on social networking sites, users revolt against this trend, and power shifts in the worlds of social networking from owner to user, on issues ranging from Second Life rules and Facebook privacy to cellphone billing. Users will gain new leverage.

As Facebook fades with its Beacon blunder, people realize their private/public spaces are for proactive networking, not advertising and privacy invasion. Social networking sites become the hub of all applications; rules tighten. New sites show increased privacy protection, smaller numbers, and tighter segmentation.

Related news, commentary, and predictions:

• Prediction: FaceBook will release an AdSense competitor
• Mark Anderson: Social networks: The users revolt II

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