Social Networking Doesn't Have a Business Model
I don't think social networking has a business model. It is not an end goal, it is a feature that will (should!) be included in other applications.
Adding social networking features allows additional functions in your applications: group filtering, recommendations, trust models, reputation, identity and profile management. The identity management part is an area that could use a lot of work still.
Stuart Henshall is thinking about it, so I'm sure we'll get some good thoughts on it soon:
David Coursey chimes in to the Social Networking is Broken theme. So if it is broken with no business model where to next?
Social networks are a good thing. Everybody should have one--and everybody I know does, in some form or fashion. But whether you need an online social network and, particularly, whether you need one whose primary purpose is separating you from your money is another question entirely.
No Business in Social NetworkingWhere to?
This is a question I've been pondering I just know I'm not getting to it tonight. Maybe someone else in the network will.Unbound Spiral (Stuart Henshall): Forget Current Social Networking Models
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Agree with Bmann
If you make a Lwyer Social Networking Site,.. better give them free tools to use to make their Job easier to have them stick around
I don't agree (from Leon Benjamin)
Boris,
I understand why you reach this conclusion "Social Networking Doesn't Have a Business Model" - it's quite possibly right, taken in the strictest sense. However, dating for example is a form of social networking and Udate and Match (both owned by IAC) measure their revenues in 6 figures every month. Monster.com is profitable. The fact is that people pay for search. It's just a question of where the intermediary takes it margin for bringing groups of people together.
The desire to communicate in groups is fundamental to human nature. In early societies, the development of co-operative communities became a key contributor to survival. This desire to relate to other people continues to drive society today, and it is natural that this is now reflected in the online environment. Ecademy has been around for 5 years, is profitable, has no debt, no VC cash, and a proven business model. Ryze.com has a similar profile. Both do not get the attention of other networks (LinkedIn, Friendster, Spoke etc) who have huge numbers of regsitered users, no revenue and $20m+ of VC cash.
Even if you just take professional bodies & associations (lawyers, doctors, etc) and provide community solutions to bring them online as part of their existing membership, and pay for it with a small increase, the market is huge. In the UK, almost £900 million of membership fees are collected (mostly offline) every year, from the Scouts to Alumni and trade associations.
Ezboard.com is the biggest free standing community in the world - 14 million registered users. They provide tools to enable other people to create/run their own communities. It's a private company with 6 figure monthly revenues. Barry Diller at IAC recently bought Zerodegrees.com - so community is on his radar. In Canada, communityzero.com has been very successful (financially).
Léon Benjamin
Practice Leader
Ecademy Services Group
Tel: +44 (0) 1428 645 975
Fax: +44 (0) 1428 645 794
Mobile : +44 (0) 7974 766615
http://www.ecademy.com/
leonbenjamin@ecademy.com
had no idea...
communityzero is profitable. Doesn't seem like they have many more groups than 2 yrs ago.
Missed your comment as I was
Missed your comment as I was responding -- see my other comment: you have to offer increased functionality to be able to charge. Today, sex is the primary driver, and something that humans will likely continue to pay for. Business connections (like the networks you mentioned) are only now increasing functionality and being able to charge.
Turns out that is something that I'm working on with StreamLine! Stay tuned, we should have some interesting things to announce. Wouldn't it be great if there was some way to hook these groups up into larger networks, automatically?
This can probably be summed up by saying "vehement agreement". I've been working with and exploring the social networking space for over 2 years now. My stance is that we are now at the stage where premium functionality is required. Some existing networks will be able to bridge the gap, whereas others will not be able to add those additional features.
And who says I can't use inflammatory titles to get really good feedback like yours, Léon? Thanks for this, very thoughtful.
Functionality of Online Networks
Boris,
FOAF is supposed to be the enabling technology for stitching the networks together but is stuck in geekdom with no (tech) serious brands getting behind it. Marc Canter (Macromedia founder) is trying this with Tribe.net. Owen Davis is working very hard to create a common identity system, see http://www.planetwork.net/interactive/interest.html?item=ID+Commons - no doubt you're familiar with this.
I'm convinced the issue is about (federated) identity and that directories are now the sun around which applications revolve - I've sent you a short paper on this.
I'd love to hear what functionality you'd be willing to pay for.
Leon.
why would any snet...
want to be stitched into another one? why allow transparent wandering across snetworks?
Why snets at all? seems only in few niches is it desirable to render explicit something which frequently has higher value if private.
Some golf clubs can charge $100K memberships, no one would ever pay that bracket for snet admission.
Yes, there is a business model for social networking
Online social networking services are filled with two kinds of users: those who will only use the service if it is free (let's call them the "frugals", and the people (let's call them "premos") who would be willing to pay as long as everyone (including the frugals) stays in the network.
The key is to offer enough functionality for free to keep the frugals engaged (and therefore reach and maintain critical mass), but then to offer a variety of premium services to the premos to monetize the network.
One example of premium services is Trilibis, a company that offers mobile social networking solutions to SNS and other types of online communities. Users download the mobile phone application and pay a nominal monthly subscription fee to have mobile access to their social networking service of choice.
My point is that the function
My point is that the functionality of a "social networking site" today is so trivial to implement that eventually many/all online sites will offer the same base level of functionality. Ideally, this basic information will also be portable. Actually, I think only the ones that subscribe to a certain level of openness/portability will succeed.
On top of that basic level will be additional functionality that some "premos" will be willing to pay for. And there will be sites that offer different kinds of premium functionality.
So, to revise my title: "Sites that offer only basic social networking functionality have no business model". Or no business model that is any different from other web businesses -- attract eyeballs, show them ads.