This week I wrote a piece for the Financial Times about social software in the UK/Europe. Somewhere along the line (sub editing and the limitations of print) it was shortened, so at the risk of putting something unedited out there (yes, even in the age of blogging, some of us think peer editing is important), here’s the unedited version. I had a lot to say… :

European unions forged online

On a warm Spring evening, in a loft in London’s Covent Garden, around 75 people are gathering to network, discuss business and have fun. They’ve been brought together by a new wave of entrepreneurship bubbling up from Europe’s technology scene. And something called “social software” is helping them find each other.

Organiser of the gathering is Robert Loch, co-founder and marketing director of SoFlow.com, a web site which launched last year to try and replicate business networking parties online.

Joining him and, and footing the bill for the drinks is fellow SoFlow founder Paul Birch. Birch is an online networking veteran, and founder of Bebo.com, a self-updating address book service, and Ringo.com, a “friend-based” social network.

This is no coincidence. Soflow.com is just one of the latest web sites to emerge from the boom in social software and reflects the wider trend online to empower users to create a marketplace where people can find eachother and enter into some kind of transaction – a sort of ebay for people rather than things.

As Loch says: “We’re building a service which is more than just social networking. The Net is a great medium to support business people, but currently its very inefficient. People have to resort to Google to get anywhere. You should be able to just type in your problem and the solutions start coming back. Kind of like a concierge service but cleverer.”

Privately funded my Martin Clifford, ex CEO of Udate and Mel Morris, chairman, ex CEO of uDate, the online dating service which who sold to IAC/InterActiveCorp in 2003 for $150 million, SoFlow.com is designed to enable business people to search for potential partners, investors and contacts. Each member (membership is free) has a profile page about them and is able to make contact with anyone else on the network.

All in all it adds up to a recruiter’s wet dream, enabling them to find candidates at the click of a mouse – but ultimately it may be a nightmare for classified newspaper advertising.

Although not primarily focused on jobs, SoFlow.com resembles similar start-ups which appears three years ago in the US, like LinkedIn.com and Ryze.com.

While Ryze has premium paid-for services allowing members to find contacts or business prospects, LinkedIn remains free and has veered off into focusing on jobs.

SoFlow and its like have appeared as business version of the social software “pin-up” Friendster.com, which caused a storm of interested when it launched in 2003. Set up in May and now hosting almost 13 million users, Friendster allows true “six degrees” surfing. Crucially members have to already know each other. Thus only real relationships are forged and mapped, rather than “virtual only” ones.

And it is the potential for these virtual networks to impact recruitment advertising that lead Newspaper giants, Knight Ridder and Washington Post Co., to join venture capital firm, Mayfield, in investing $6.3 million in online networking site Tribe.net. Tribe’s unique online classifieds had convinced them the future of classifieds may be in these networks.

No such investment has been made here in Europe yet, however, suggesting that the curve is early on this side of the Atlantic.

Another “social” start-up, London-based ecademy.com, instead gleans revenues from a complex membership scheme which allows greater networking capabilities the more you pay. Thus, for £25 a year, a basic member can join clubs on the site and network with other business people. But a whopping lifetime membership for £3000 brings highly personalised services like “life-coaching”. Originally a vehicle to promote the books of self-styled business guru Thomas Power, Ecademy has mushroomed since 2003 into a global site with over 57,000 members.

Similar to Ecademy, is OpenBC.com (Open Business Club). With a core of its members in Germany. Founded by entrepreneur Lars Hinrichs, ceo, the privately funded OBC has a free and paid-for membership levels for advanced features. It is planning to broaden out into providing telephony and even video conferencing, to aid networking.

Co-founder Bill Liao says OBC is “much larger” than ecademy: “We are about doing deals and networking. We are not about jobs at all. 75% of our user base has been active in last 30 days. There’s no dead wood. As for marketing? We’re a social network – it takes care of itself.”

And it’s this social side of online networking which has real power. Not unlike FriendsReunited, which gathered users curious about their old classmates, social software sites rely on member to invite their real-word contacts to join up, creating a viral effect.

Clearly some of the “networking” is not all simply business or social. Orkut, the social software experiment from Google asks people to list their sexual preference.

But the trend to create new kinds of niche communities online has also emerged from the world of blogging. Here the business models are still relatively unformed. US firms like SixApart (the creators of the MoveableType software) and Blogger – owned by Google – are bringing in revenues from offering web hosting and premium services.

In the UK and Europe, blogging companies are limiting themselves to creating communities and straightforward niche publishing businesses.

While blogs have mushroomed in the realm of amateur vanity publishing, some are trying to fully commercialise the form. In the UK it still remains a tiny field, with companies like Mink Media and Shiny Media at the fore so far.

Azeem Azhar, who runs Mink Media which publishes blogs including Honourablefiend.com, Bleepblog and WandaLust.com, says the market is early but has potential: “Audiences are growing. We’re up to a quarter of a million page impressions a month, which is the point at which advertisers get interested. Though the businesses are in a very early stage, we think there are good opportunities. There’s a model out there that’s working and we have to localise it for our market.”

20six.net is another European start-up available in the UK, Germany, France and the Netherlands. Its java-based Weblog technology lets anyone publish a blog both for free or with enhanced paid-for features. It’s strategy is to spread further across Europe, offer premium subscriptions and advertising, while also selling a white-label version of its platform.

But its the sales of services and platforms which has also come to dominate the social software scene.

Companies like Headshift.com in London are selling both consultancy and blogging platforms to corporate enterprises in a kind of new take on the “knowledge management” arena.

Lee Bryant, a director of the Headshift.com consultancy, says “We see a lot of demand for bringing these social software tools inside companies. There are a lot of applications to law firms, health management, business support and consultancies where they are looking at alternatives to expensive knowledge management software and even some document management software. They usually find that social software like blogs are easier to use and far cheaper to deploy.”

Although European firms are making hay with technology from US blogging giants like SixApart, Bryant says he has yet to see many European-based firms creating their own platforms to sell.

However, in the world of ecommerce, Europe may have come up with a business model the rest of the world might soon be taking an interest in.

Zopa.com is an “e-social” site bringing lenders together with borrowers – mixing ecommerce with social software. The brainchild of the founders of online bank Egg, it works like an exchange, allowing customers wanting to borrow money to be matched up with those seeking to lend it.

Zopa (Zone of Possible Agreement) customers have to be credit checked, with only the top 40% off applicants being approved. Lenders set the amount of money they are wishing to lend, the rate they are offering and whether the loan is to be paid back over a one or two year period. Members are allowed to borrow up £15,000, or loan up to £25,000, and are automatically matched with suitable deals. Like eBay and Betfair.com, Zopa will charge a 1 percent commission on matched deals.

To spread risk, loans are defrayed across 50 different borrowers, with bad debts sold to a collection agency on behalf of the lender.

James Alexander, CFO of Zopa and the former strategy director of Egg, says there isn’t anything like Zopa in US, making it a European oddity.

“It’s an old idea which has been going on in families for centuries, where individuals like parents and uncles are the hub for money lending. But in 10 years time there will be many lending and borrowing exchanges like Zopa.”

He says Zopa is based around the way consumers want to live today: being in control of their destiny and more self reliant.

“People want to consume on their own terms. The next movement in business is the transfer of power to the individual, via a middle man, but a very light touch middle man,” says Alexander.

It all sounds very reminiscent of the peer to peer marketplaces created by the likes of ebay and Betfair.com.

Long before social software arrived on the scene of course, peer-to-peer communities made big splash via online music sharing. File-sharing program KaZaA has since spawned the Skype Voice over IP company, also headed by Scandinavians Niklas Zennstrom and Janus Friis.

Skype’s peer-to-peer technology has been threatening the public telephone networks for the last three years. With not much more than 100 employees, Skype has gone from zero to 31 million registered users inside 18 months. It promises free phone calls over a broadband connection between two members anywhere in the world. Late last year Skype released a public API (Application Programming Interface) so that independent programmers could write useful add-ons for the application – a strategy which could see it expand its reach even further.

Skype faces threats from outside Europe, however, in the form of our old friend Microsoft. Microsoft’s New MSN Messenger 7.0 has been launched with some enhanced PC-to-PC audio capability. In other words, why download software to talk to your friends, when you can talk to them over an installed programme like MSN Messenger anyway.

All in all Europe, with its diverse borders and highly mobile population, is waking up to the possibilities of online services which create links across borders and between people, whether these be social, or financial.