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The power and potential of social networking is a phenomenon that cannot be ignored in the 21st century.  Or, to put it more accurately, it may only be ignored at your own peril. 

Businesses who want to stay or move into profitability must keep their "finger on the pulse" of what their target market wants most.  This applies whether the business is an industry giant, like Yahoo!, or a business started by two college kids from their campus trailer, like, um…say… Yahoo!. 

Lose sight of the desires of your "tribe" or intended audience, and the connectivity of the worldwide web encourages them to move on to someone who will better fulfill their desires, at the click of a mouse.  This fear of losing audience, and profits, is apparently what has "forced" Yahoo! to update its business model, incorporating social networking into its user interface.  Yahoo! has discovered, according to the Washington Post, "The longer a user stays on the site, the more advertising dollars and e-commerce it generates".

Shout out to Yahoo!:  this isn't exactly breaking news, that social networking encourages people to "spend time" on a site that they enjoy…

However, with this greatly increased connectivity (the world is now your neighborhood, via the internet), also comes the accompanying responsibility of recognition of and responsibility for personal privacy.  Even before Yahoo! launches its new social networking concept, they are already being challenged on this issue.

Here is a summary of the breaking report from the Washington Post:

Yahoo plans to announce Tuesday that it is jumping into social networking by using its massive population of e-mail subscribers as a base for sharing information on the Web.

Over the next few weeks, its 280 million e-mail users will be able to exchange comments, pictures and news articles with others in their address books.

The plan could spark criticism from Yahoo e-mail users, who signed up for the free service perhaps never imagining the people they e-mailed would become friends for sharing vacation videos, political causes and random thoughts throughout the day.

After backlash, Facebook last week announced new privacy tools to make it easier for users to block Web sites from tapping into their information, as well as a simpler way to configure who on the site can see personal data.

To allay privacy concerns, Yahoo said it would give users a week's notice before launching the new features and provide a single button on the site for opting out entirely.

"We've been watching and trying to be thoughtful about our approach," said Anne Toth, head of privacy for Yahoo.

Specifically, the company will launch a product called Yahoo Updates that allows e-mail users to see what other contacts on their lists are commenting about or sharing on sites like Yahoo Finance, Facebook and the photo sharing site Flickr.

Yahoo has tiptoed into social media, launching a similar tool last year called Connections, which allowed each user to customize a list of contacts with whom to share information.

The move is part of a revamping of the once-rudderless Internet pioneer.

The longer a user stays on the site, the more advertising dollars and e-commerce it generates.

Yahoo will begin notifying users of the change on June 7, one week before the launch. Users who don't want to participate can click one button on the settings page to opt out.

"What Yahoo has done is recognized that your e-mail or messenger network is a useful resource and that you may be interested in knowing what your contacts are interested in knowing about, and they stop there," said Jules Polonetsky, the director of the Future of Privacy Forum, a privacy think tank.

What are your thoughts?  Given that social networking is a foregone conclusion in the 2010 environment, how does a business effectively and responsibility incorporate this reality into their marketing strategy?  Or should they even try to? 

I would love to hear your comments on this very important topic.  And, as always, thanks for stopping by!