LinkedIn vs Facebook: room for both?

This morning I woke up and as usual checked my email while sipping my first coffee of the day. Nothing unusual there. Then I noticed I'd received a LinkedIn 'connection' request (LinkedIn users don't have friends, they have 'connections'). Wow I thought. I haven't had one of these in while. Compare this to the number of recent Facebook friend requests, and it's clear that, in my social circle at least, Facebook has replaced LinkedIn as the flavor of the day.

However, according to Fortune blog The Browser, LinkedIn CEO Dan Nye says that's just fine. In a world where people like to keep their professional and social lives separate, there's room both social networking sites, he argues.

Stealing some of his material from LinkedIn founder Reid Hoffman on the matter, Nye said people will build one profile for their personal life and another for their professional life. The argument, self serving as it is, makes a certain amount of sense. Not good to have a prospective employer stumble on to those photos of you freshman year in Delta Kappa Epsilon.

After the inevitable social net shakeout, Nye says, Facebook and MySpace will remain standing and will compete to supply an outlet for personal self-expression and community. Meanwhile, in the Nye/Hoffman scenario, LinkedIn will dominate the business of business networking — serving as a “productivity tool,” used for professional reference checking, recruiting, and to get expert advice.

Nye makes a good argument, and it's true that LinkedIn has a slightly different subset of functionality to Facebook (let alone MySpace). And for recruiters at least, LinkedIn is far more geared up to meet their needs. But most of LinkedIn's users aren't recruiters, and for them Facebook might function just as well and could provide more value and certainly more fun.

I was recently discussing LinkedIn's value proposition with somebody who knows quite a bit about networks, and he pointed out that the majority of LinkedIn users are non-premium customers (they don't pay to use the site) and yet create most of it's value by filling out their profiles and resumes etc, and getting others to join, and contribute references. LinkedIn then sells this data to premium customers (recruiters) in order to make a profit. So the non-paying users add most of the value, which LinkedIn extracts to sell to the paying customers.

What if those unpaying customers find more value elsewhere -- say over at Facebook? The result would be less value for LinkedIn to sell to its premium users.

However, taking Nye and Hoffman's argument at face value (no pun intended), that's unlikely as people don't want to expose too much of their social life to their professional contacts. It's an argument that I would have bought fully into until recently.

You see, nearly all of my Facebook requests are from professional contacts not purely social ones. (The main Facebook group I belong to is the web 2.0 group.) And with Facebook's heritage being the college campus, it makes sense that young professionals (graduates) would start to utilize the site for more career-based networking.

Facebook's new platform strategy also removes the friction to keep adding more functionality. If there is demand for professional features that are missing, anybody can come in and build them. Were Facebook to add even more flexible privacy controls, then LinkedIn might become irrelevant to non-paying users, eventually becoming less valuable to paying users.

One solution would be for LinkedIn to build a Facebook app, so as to make it much easier for Facebook users to contribute data which LinkedIn can continue to sell to recruiters.

Those as Forbes points out, LinkedIn's founder, Reid Hoffman, is an early investor in Facebook, so either way he's set to profit.