So. Facebook's going to let everyone in, huh? Big mistake.

There are several reasons why, some that have to do with the reaction from the Facebook users themselves, some that have to do with the needs of advertisers, and some that have to do with the very nature of where social networking needs to be going itself. Let's break them down.

First, the users. Facebook was founded on the premise that it should be for connecting together students at one university, Harvard in particular. As its popularity grew it expanded over time to other universities and, eventually, high schools and companies. And while the site allowed all these different groups in, one of its hallmarks was that it maintained exclusivity by limiting access to user profiles. Users at your school could see you, users at other schools couldn't. The site, as large as it was and with as many users as it had still had the feel of an exclusive club.

Now they want to change that. CEO Mark Zuckerberg said on NPR this morning that the fact that Facebook is made up of "thousands of networks" means that the exclusivity of the original site is still intact, but the upset reactions from several users interviewed on NPR seemed to say otherwise. And they're right: even if users are still divided into "networks" based on location or school, the fact that the site is open to everyone means that eventually network entropy will set in, diluting the original intention (and draw of the site). You may not link to others outside your group, but once your friends do the ties begin to become more tenuous.

As for advertisers, the story's much the same. The exclusivity itself of Facebook made it extremely attractive for anyone trying to reach the high-school or college demographic, especially for colleges trying to reach prospective students. In addition, the fact that the networks were geographically exclusive (or close to geographically exclusive) made targeting all the easier. Again, while the change won't destroy these networks they may start to become diluted.

But as far as advertisers are concerned, it's not just the dilution that's the problem, it's the differentiation. Now that Facebook has opened its doors to everyone, what differentiates them from MySpace? For now, a lot. Eventually, not much. Facebook's lower traffic numbers have been an asset because of the differentiation of the audience. In the future, the lower traffic will be a liability, especially in the face (pun intended!) of MySpace's market dominance.

Finally, Facebook's open-door policy is exactly the wrong way to go when it comes to the developing world of social networking sites. A community is a community because it doesn't include the rest of the world. Once you open everything up, the value of that community begins to diminish because the characteristics of that community begin to disappear. Communities are defined by what they aren't as much as by what they are.

Now that the world has become more and more networked, the real opportunity may not lie in the development of wide-open social networks but in the development of increasingly exclusive networks. While "crowdsourcing" may seem like a great idea, looking at sites like Digg and the limited number of people who control the homepage content (along with the general degradation of content that's occurred since they opened up the site to general news) to see what can happen when the world has a say. The lowest common denominator seems to be the rule, not the exception.

Instead of being wide open, new social networking ventures may want to look at limiting access in order to keep quality or connections and content higher. The lesson of Angie's List are instructive because they show that if you put barriers to entry (such as an entrance fee), you can get better content that's more under the editorial control of the site itself. Angie's List subscribers can trust the ratings of the other users because the other users (being paying subscribers) have a vested interest in improving the quality of the site, not just stroking their own egos with homepage-dugg stories.

Other examples abound. CPEN is a site open only to University of Chicago Graduate School of Business alums interested in private equity financing. Sure, it costs $100 a year to join, but the benefits of being able to network in a secure (and, yes, exclusive) environment make the entrance fee look like chump change. One deal worked through the site would pay your yearly subscription fee for decades (at least)!

You can imagine other examples. Expensive-to-join networks for venture capital, networks to link advertisers to agencies, networks to link lawyers to corporate clients, networks that stock brokers to high-end clients, networks that link actors and agents and production companies...the possibilities are endless. The commonality is that exclusivity and barriers to entry make better networks, not worse ones.

So go ahead, Facebook. Open up. See what happens. You'll probably be sorry you did.

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