Show Me the Money – Social Networking

Fred Stutzman has a good analysis of revenues generated by online social networks, building on to the models discussed at FOOCampBarCampNYC.  He first comments on the five models:

1) Ads – or, the interestingness problem
2) Product affiliation groups – or, the non-scalability of affiliation
3) Partnership Opportunities – or, limitations of partnership
4) Micropayments – or, the selling of value
5) User payments/gatekeeping fees – or, the virtual country club

He then goes on to discuss additional models:

1) Exogenous or alternative markets
2) Brokering of trust
3) The negotiation of community

The entire post is worth reading.

In my opinion, the successful revenue models on social networks will end up being the ones that exploit the inherent qualities of the connected media model.  Traditional web advertising neglects to take advantage of these qualities.  The product affiliations, micropayments and secondary markets are where my bets would be.


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