Social networking and privacy

Privacy is the big bugaboo with social networking. Just ask Facebook after its terms of service debacle. This CIO.com article does a good job of laying out the importance of privacy (or lack there of for users) in terms of social networks being able to significantly monetize and how any social networking site is one security breach away from losing all the cards up its sleeve.

From the link:

As social networks like Facebook and LinkedInstrive to formulate sustainable business models built upon advertising or the selling of premium services, the biggest hurdle they face might rest within their users’ increased awareness of online privacy.

The common assumption that social networking users don’t care about privacy is misguided. The majority of people who use social networks (nearly 60 percent or more) have already modified their privacy settings, according to two separate research studies from the Pew Internet & American Life Project and School of Information and Library Science. Furthermore, privacy experts warn that an unfortunate (but perhaps inevitable) security breach that exposes user data over social networks in the coming years could cause a privacy tipping point in which users push back in a more substantive and widespread way.

“Privacy will become more important when the information is used for more nefarious reasons, like for stealing your identity,” says Larry Ponemon, president of the Ponemon Institute, a privacy research firm.

For their part, executives at major social networking sites and their advertisers argue that a culture of greater openness on the Web will prevail. They also say increased user attention to privacy could actually be advantageous to their business: If people feel comfortable with who can see their Facebook profile, for instance, they are more likely to be honest with the information they contribute to the network, which helps in serving up relevant ads that people might click on.