Wednesday, March 28, 2007

So, There Is Money In Social Networking

No wonder that hundreds of social networking start-ups – eyeing niche markets from dog enthusiasts to high level executives to moms – are sweating and grinding to peel away some of MySpace's market share. With the announcement that MySpace is now earning "in excess of $30 million" a month in revenue, the days of speculation over whether there was any real money to be found in social networking are long gone indeed.

Pete Cashmore at Mashable asks: "Should we be surprised that one of the world’s biggest websites actually has the ability to generate some revenue?" If anything, it was surprising to me that it took them this long to ramp up earnings on an audience roughly the size of Jupiter.

CenterNetworks' Allen Stern uses this news as an opportunity to speculate that the transition from print to online news and magazine publications will quicken. He then asks: "Will the Internet become clogged with these new online-only magazines?" I would think that the Internet is already "clogged" with just about everything. Quality content and hardnosed marketing and audience acquisition and community building are the keys to the online content kingdom.

MySpace is without doubt king of the hill in the social networking space. They're now making money through advertising and cutting deals to allow some exclusive third-party widgets to reside on user profiles. But if they don't innovate and give their massive (and fickle) audience a reason to stick around, social networking-seekers will find innumerable other places to decorate their personal space.

9 comments:

Ourtbeat said...

I just posted a comment on your posting entitled: A Post-Convergence (Virtual) World: Gaming and Social Networks. within that is my introduction of who I am and why I think your blog rocks!

I don't want to clog your blog with the same info twice, but I do hope you check out what I had to say in response to that.

In response to this post, while working on creating ourtbeat (explained in my previous comment) I've had to create a MySpace profile for the first time in my life (to understand the competition and reach people looking for something more evolved). I am not a fan of MySpace and one of the largest reasons is their "in your face" advertising. It's virtually impossible to travel anywhere on the site without ads cluttering your view. There is money in social networking, yes, but in my opinion, MySpace is earning that money in a way that is unfair to its users. Granted, I don't think Rupert Murdoch really cares whether his members are happy or not when he's earing $30million a month. Nor are people leaving MySpace in herds.

Regardless, many artists use MySpace to promote their work. I wonder how easy it is to promote your work or your business while your own "personal space" is inundated with advertising that you have to compete with. (from what I'm learning, it's not that easy at all) The great thing about niche social networking sites is that they aren't developed enough to "sell out" to this type of advertising. This may mean it takes them longer to earn money, but as the web develops, more creative means of income develop as well.

The reason the merge of 2D and 3D can be so successful is because advertising can be organized into the 3D realm without being so obvious and apparent.

Will the advertiser pay high fees for their banner to fall into the background? I doubt it... but it's about time a user's "personal space" is their own and an advertiser's promotion comes second, third, or much further down the line. Who needs $30 million a month anyway? The members are the ones making these social networks the money... it's about time the members get a little in return.

Eric Berlin said...

The funny thing is Amy that part of MySpace's success was built on the fact that it was very hands off in terms of laying ad space on profile pages themselves. But I think the impression is that ads are everywhere because the functionality forces you to perform redundant click-throughs (which drive up page views and allow for tons of space on interstitial pages to throw huge Match.com ads in your face).

I'm curious to learn about what you mean by "more creative means of income."

As I also mentioned in response to your other great comment, I'm moving ship over to Online Media Cultist (www.onlinemediacultist.com), so hope to continue the convo over there!

Anonymous said...

I dont' know, there is a lot of money to be made in social networking sites, but once they start pulling in ads and floating the viewing space with things people don't care/want to see (i.e., myspace, facebook), it becomes repulsive and people will automatically go out and look for new ones. On this note, I heard of a new social networking site from a friend, its called iby or something like that. The point is, new networks will gain shares of the market and making old ones obsolete. At least that's my $0.02

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nettingbird said...
This comment has been removed by the author.
nettingbird said...

Nice post….I too have an account on twitter and trust me it’s so useful either to promote your business or to make new contacts. Twitter has many activities to do like it’s a social network site, you can play games and also tweet on it…so it’s a new and interesting site must make an account on it and see you the results…

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