The Problem With Social Networks: No Money
Posted by Nick O'Neill on April 3rd, 2008 10:00 AMLast night after reading Noah Kagan’s post about how there is no money in social networking I began seriously thinking about the issue. If there is no money in social networking, why am I investing so much time reading and writing about it? Ultimately, where is the real money to be made out of this? The end result is what I keep coming up with time and time again: personal branding.
If you are looking to make money off of Facebook applications or your own social network, odds are not in your favor. On Facebook for instance, only the top 100 companies at the most are generating substantial revenue from social networks. The rest are scrambling to figure out a way to make money or spending somebody else’s hard earned cash. The largest value to be gained from social networking and social media is building social equity.
Somebody will soon figure out an effective way to monetize relationships (most likely Facebook) but for the most part it will be extremely challenging. As such, I’d suggest leveraging these new technologies to build brand you. I know I posted this yesterday but as I think more about whether these technologies can currently be effectively monetized, the reality is no. It is the brands that end up generating the revenue. So what are you doing to build brand you?
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how long do we wait for facebook to solve this "it will eventually be able to monetize" problem?
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I mean someone else can try to develop an effective monetization system but ultimately I believe Facebook is working on this with Social Ads. My guess is that they will launch an individual CPM rate for users and start paying out to the users. How sticky do you think their site will be when you start getting paid to use it more frequently?
If you have a better solution I'd always be happy to listen (and possibly participate) :)
Best,
Nick
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LinkedIn is making money. They can stand to make even more. They need only realize a few things about their mission and they could be rolling in it.
Facebook? Oh, I have my theories, most of them dark.
Velvet ropes and nichemining.
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