Do User Numbers Disguise Problems at Social Networking Sites
Following on from the last post it got me thinking that these are interesting times for social networking sites to say the least. I for one am anxious to see how Facebook, MySpace and Twitter address the revenue-generating issue.
What’s interesting about the whole social networking topic is that all of the sites attract an incredibly large number of visitors. We’re talking consistent off the chart numbers. It’s an audience ripe for any form of revenue-generating scheme. But here’s their little secret. None of them are making any money directly from their service - it’s FREE. Yes, you read that right, despite the sheer volume of users to these sites, not one of them is profiting from this traffic. In fact, all of them are losing money. So it stands to reason that sooner or later, the issue of profitability has to be addressed.
Twitter alone has millions of people following tweets, but it doesn’t make a penny on any of them. Its predecessors, Facebook and MySpace, are stepping up to the plate to compete. Facebook is in the process of adding similar real time update features to its platforms and you can bet MySpace, under the direction of Rupert Murdoch’s News Corp., will begin actively looking for ways to generate revenue.
With ad revenues far below expectations, the social networking sites need to turn inward to see how they can make money from their own platforms. There’s no denying that Twitter, Facebook and MySpace provide value. The next step is to create a pricing structure based on this value.
In Twitter’s case, its creators have even greater options. They could either sell out to the big search engines or sell their infrastructure to other sites who want to build off their technology.
The popularity of these three social networking sites is testament to the creativity of their creators. They have taken the mainstream by storm. But one has to wonder how long it will be before others move into cyberspace with the next version of social networking. That’s why it’s critical for Twitter, Facebook and MySpace to start generating revenue. Any further delays could cause them to lose dedicated users and their niche in the social network arena.
With Twitter, Facebook and MySpace, their continued success comes down to two key questions: How much do you value social networks? And how much are you willing to pay for this value? Use the comment link to respond.
Matthew Toren
Cool Post very informative and interesting worth reading…
I personally wouldn’t be willing to pay for these services because they’re to general. And I think a lot of others aren’t willing to pay for it too. On Facebook you already can see many groups coming up who are against a paid Facebook. I think a lot of people are joining these social networks just for fun.
But that would be a chance for creating a social networking site which is targeting a specific niche. People are more likely to pay for a service they’re interested in and they want to learn more about it.
Daniel
What you fail to mention in your article is that these websites like myspace and facebook do make money from their sites though it is not charged to the user but rather generated by the amount of users they have and how many of those users they can get to click on an ad link on their site. If you are on lets say myspace you will see ads to watch a movie clip or click here to see if you’re a match and even the google search bar and every time someone clicks those links or does a search that website owner is making money. I don’t know how your article seems to think twitter is ahead of the curve when it is really the newcomer to the field and trying to take on two already very heavily visited websites in facebook and myspace.