What does the search for profits mean for the future of social media?
We always knew it would come to this: The big four social networks are starting to get serious about making money. It makes perfect sense — after all, they can’t live off of venture capital forever. They’ve got server bills to pay, investors to pay back and growing staffs to support. And the business model that will cover all that is … what, exactly?
Here’s the problem: Web culture has evolved in such a way that questions of revenue are inherently gauche. I don’t know about you guys, but I wouldn’t pay to belong to a social network — at least not a general-interest network like Facebook. Some of the networks run ads, and those are OK, sometimes — as long they don’t take advantage of social media’s unique properties in a way that invades our privacy. Twitter is eschewing ads entirely, claiming that deals with Google and Microsoft make it profitable — though I’ve always been a little skeptical of those numbers. What does that leave us with?
- Virtual property. Think Facebook gifts and social gaming. Nice, but I’m not sure how much growth potential there is, especially five years down the line when we’re all a little sick of virtual roses on Valentine’s Day.
- Using social networks as a marketplace. Facebook is already working on setting itself up as a transaction hub. This could allow it to make money off of transaction fees. I worry this will make the network too commercially focused, however, and kill all the social fun.
- Tiered networks. Offering special features for people who are willing to pony up the dough, such as companies looking to use a network for marketing. This has a lot of potential, especially when you consider that businesses using social networks for marketing want different features from everyday users, anyhow.
Or maybe they’ll come up with something really new and different that I can’t even begin to imagine. No matter what they choose, I feel like we’re coming to the end of an era. Whatever revenue plan the networks devise will fundamentally alter the user experience. We’re living in the last days of the digital free lunch.
How will efforts to monetize social media change the user experience? How will users respond to these changes?
Image credit, Andrew Johnson, via iStock
Posted by Douglas Naegele on January 28th, 2010 at 11:03 am
I can appreciate that everyone has their own price points for things — it’s what makes the world go ’round. But, I’d gladly pay $5 – $10 for Facebook.
The average FB user is on for 24 minutes a day — which is a staggering proportion of one’s day when you subtract the times when you can’t possibly be on it: sleeping, showering, driving, actually working, etc. In addition, considering what people spend for cable television and cellphones (+$200/mo), a few bucks for Facebook seems ‘in the budget’. Lastly, if I make a list of all the things I spend $5 – $10 in a month, Facebook would be in the top quarter, not at the bottom.
(Incidentally, late-night burritos at Roberto’s in San Diego is at the top of the $5 list.)
Posted by Timothy Post on January 28th, 2010 at 2:31 pm
Facebook wants to be the VISA of the internet. Once the Open Graph API is introduced in April, we will see the disintermediation of Facebook.com by Facebook itself. Essentially, Facebook Fan Pages and their apps will embed themselves onto standard commercial websites.
Facebook will make a merchant services option available to the website owners and Facebook users will eagerly use their Facebook accounts to pay for stuff. Facebook will undercut VISA and M/C, as well as Paypal, with super low fees (think: 1.5% to start).
The key strategic move in this direction is the launch of the Open Graph API in April. Watch the F8 developer conference closely.
Posted by Mark Clayson on January 29th, 2010 at 12:50 am
What does the search for profits mean for the future of social media? You raise a good topic here. Thanks for all your sharing here.
Posted by Jesse Stanchak on January 29th, 2010 at 8:14 am
Douglas — always good to get the other perspective. you’re probably not alone. I’m just really, really cheap. I won’t pay for cable either.
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