Page last updated at 12:58 GMT, Tuesday, 2 March 2010

What are your friends worth to you?

By Mark Ward
Technology correspondent, BBC News

Glastonbury crowd, PA
Listening to music is often a very social experience.

The benefits of friendship are many and varied. By their nature they are hard to quantify and put a value or price upon.

Until now.

Some social networks are finding ways to ensure that your connections and communications are rewarded, tangibly. It is about friends with benefits, but of a distinctly pecuniary kind.

Felix Haas is the founder and boss of Amiando, a site that helps people organise and administer events, be they birthday parties, conferences, gigs or school fairs. Anything that needs tickets.

The event can be for lots of people or just a select few. "You could use it just for 10 tickets," he said. Typical numbers are for events that cater for between 500 and 1,000 people. Though the biggest event it was used for had 80,000 attendees.

It makes widgets that can be embedded on social networking pages to handle all the various elements of organising and administering an event.

What has helped make the site popular, said Mr Haas, was the viral element of the ticket selling.

"When you buy a ticket you get a unique code and you share that with friends," he said. "If someone buys a ticket with that code, you get a refund."

The exact refund rate is determined by an event's organiser. Many also give a discount to those that buy on the recommendation of their friends.

"We sell 20-25% on the basis of the viral element," he said.

Network effects

In a sense, Amiando and others are re-discovering the accepted wisdom of the business world which knows all about the value of recommendation from friends, family and colleagues.

The web has given it a bit of a twist, said Ed Stevenson of search firm Marin and made it their reason to be.

Screengrab of MFlow homepage, MFlow
MFlow gives credits if you buy a track recommended by a friend

"The whole existence of Facebook has come from word of mouth," he said. No surprise then that firms have been keen to get at that energy.

Said Mr Stevenson: "Brands want to be able to replicate that or bottle some of the keys to that success."

What was attractive, he said, was the subtlety with which the interaction is played out.

"With social media they get to interact with the public in a very unobtrusive way," he said.

Many companies, such as mobile firms Orange and Vodafone, are trying to tap into that by analysing their customer databases to see how those influences and recommendations play out. Technology means recommenders and recommendations are more visible.

Tap the right people and they can have a disproportionate effect on an advertising or marketing campaign.

The web means that, instead of trusting to word-of-mouth and casual encounters in everyday life, those recommendations turn up on profile pages, message streams and in e-mail inboxes.

Making music

For the moment though, social network start-ups are leading the way. One such is fledgling music service MFlow that bases its entire site around those recommendations.

Like many other online music services, MFlow is organised around a library of tracks. To that it adds sharing, following and commenting. Think of it as Twitter, The Musical.

MFlow members choose who they follow and regularly get recommendations from those folk, be they friends, popstars or opera singers. If they buy a track on the recommendation of one of those folks, that person gets a 20% of the price of that track as a credit.

Glass of champagne, BBC
Friends can get discounts on tickets via Amiando

"It's a network to share music," said Atan Burrows, marketing manager for MFLow. "It rewards people for legally sharing and recommending music to each other."

While other music sites, such as Mog, operate a similar scheme in that people can find out what their friends like, none apart from MFlow, reward recommenders.

Mr Burrows said the idea for the service came out of the disillusionment that its founders experienced when using other online music libraries."You end up re-discovering, going back to old favourites and never discovering anything new," said Mr Burrows. "Some of their algorithms are not very good at recommending."

MFlow, he said, was all about finding new tracks. That could be old favourites of friends that strike a chord or fresh material from the bands, DJs and artists that a member loves.

"We believe music is better when it is shared," said Mr Burrows. "We want it to be much more social. That's the value of music, it's that you enjoy it with other people, that's where the real value lies."

For the last couple of months, MFlow has been in a closed beta test with about 500 members and a catalogue of around 400,000 songs. Before MFlow was set up, said Mr Burrows, its creators thought that the credit for a hot tip would be what made its wheels go round.

But, he said, that has not been the case. What those testers like is finding out what music their friends like, often to their surprise, and coming across great music they had never heard before.

"That reciprocity is at the heart of any good social network," said Mr Burrows.

MFlow is working towards a public launch in April but said anyone can apply now to join the second stage of beta testing that will be based around a much larger music catalogue.

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