Social networking sites should take the indictment of the evil Mom who used MySpace to drive her daughter’s friend to suicide quite seriously. I’m sure the folks at MySpace feel terrible about this and, like all of us, their hearts go out to the family of the dead girl. It was a real and senseless tragedy.
 
But let’s talk business.  Social networks—like other catalysts—create value by getting people who value each other together on a single platform. They build communities in which people generate value from being around other people whose presence they may benefit from. But ever since mankind emerged from anarchy - many millennia ago - people have recognized that for communities to work, there needs to be rules and regulations that prevent individuals from harming each other.  (See my discussion Policing Blog Content and Devise Rules and Standards.)
 
Smart catalysts recognize this ancient proposition. Marketplaces have had such rules for centuries at least—medieval bazaars had rules that policed merchants with shoddy goods. Today eBay has rules for disciplining merchants that behave badly; one merchant who sent me something that was “lost in the mail” was summarily bounced. For millennia private social clubs have had rules on what members could and could not do. Social networking sites need to do the same and not the faux rules that MySpace has had. Internet sites that that behave like the wild west won’t, in my view, survive for long—they will be subject to a version of Gresham’s Law where bad behavior will drive good behavior out. 
 
Or, as we are seeing from MySpace, lack of self regulation will invite intrusive and perhaps badly conceived government regulation. The notion that the Internet could thrive without rules and regulation has never made sense—it goes against everything we know about societies. Developing rules and regulations that make the community safe—that harness what economists call positive externalities and minimize negative externalities—is just good business.  Just about everyone who has a web site in which people interact should watch out for bad behavior and institute rules and penalties for discouraging harmful behavior.