Discussions on Social Media Monetization Challenges

Posted: January 2, 2009 in web 2.0
Tags: , , , ,

In recent days, I have followed a few discussions at different forums, debating the possibilities or the lack of it, for monetizing Social Media. There has been an extended discussion on the Web 2.0 group at LinkedIn. Then there was the post by Robert Scoble, and there have been others too.

At the end of the churn, the jury remains out still. No clear answers, and anyone who emerges with a brand new monetization model will be hailed like Google was hailed for creating revenues out of search!

I posted a comment at the post of Robert Scoble, which was somewhat inspired, in as much as it related Social Networking to offline Social Clubs (known by different names in different communities), and seeing if a parallel could emerge there. I am reproducing part of that comment here:


1. We are looking currently at known methods of monetization. The answer will more likely emerge from methods that are unknown today. The monetization of search that Google did, was a thought out of the box. Amazon Cloud Computing is also a different direction from known methods. Twitter and others may also discover a model which will only become a new method and a new standard, thereafter.

2. I try to relate web models with similar offline businesses / models. The social media online is most similar to a social club offline. My understanding of these clubs are:
a. They are cheap – which is how large numbers find it easy to congregate there,
b. There are few expensive and more exclusive types, but they offer significant value in terms of ambience, luxury and services, and for which the elite are willing to pay the price,
c. Social clubs do not meet out their costs, from the members’ contributions; there have to be other ways to supplement their incomes,
d. What they end up doing is to run a good restaurant and give out the contract for the same, to someone who pays them a good chunk of money; or they give out the space that they have built, every once in a while, for others to use as a banquet location; or they charge a decent sum for a one time membership fee, which is usually a lifetime fee then.

Mapping some of these observations to the online social media, it might indicate that:
a. Social media sites will not be able to charge the members, especially if they are going after the mass markets,
b. A few exclusive ones, with seriously high value added offerings, might manage to keep exclusive usage, and charge a good fee for the same,
c. The typical social media property, might be able to contract their platform to the “restaurant” (some paid service equivalent, that is reasonably universally required by the users), and charge them a good fee for giving that exclusive access, for the particular vertical (“food” in case of the offline restaurants); such engagements can be for a period of time, just like the restaurant contract in an offline social club would be say, for a period of 2 years at a time,
d. Then there is the equivalent of the social club giving out its space for a one-day banquet event. The analogy here could be banner advertising on all Twitter screens, for example.
e. Finally there is the one-time fee from members, that a social club can charge. I am not sure if the analogy can be pulled off on the online social networks. But seeing that users spend $1 to send virtual gifts on Facebook, there could be an option to ask members to pay say, $10 (or $50 or whatever that makes sense) as a one-time fee for being members at Twitter. I am not sure, but its an idea again..


As I said earlier, the jury is still out. Whether Social Networking can be monetized and to what extent remains in the realm of inquiry at this time.

  1. Ajit says:

    There’s one way by which Twitter can earn revenues and sustain themselves, but don’t want them to give them ideas, which will hurt users like us a bit. πŸ˜‰

  2. Brand4profit says:

    The old method of advertising is interactive marketing. The term is misleading. Most people think it means that there is some type of interaction on the part of the person advertised to, and there is. But, it is not conversational. Instead, the advertiser wants you to interact with their campaign in a specific set of steps. Following the call to action and visiting a website for instance. It’s the push to make you do something. Live this image. Buy this now.

    Social Media Marketing is just the opposite. It’s the pull of the tribe. The tribe already has your trust so the actions they take are ones you align with. On a larger scale, it’s the allure of belonging in the group as you take action together. “I am doing this so why don’t you do it with me?” On an individual level, the attraction is to behave the same way to get the same results that benefits your fellow tribeswoman or tribesman. “She looks hot! I want to look hot too. I want to go to her hairstylist” and you do. Social Media Marketing uses the power of attraction.

    While advertising tries to use the same tactic, with a billboard for instance, of a gorgeous woman telling you the benefits of the salon, it doesn’t have the same impact because it’s pushing you to go. It is not pulling you in as a trusted friend. Your friends have your best interests at heart and advertisers do not. Social Media Marketing is based on building trust and that foundation will make Social Media a dominant player in Marketing.

  3. wisdominhindsight says:

    Dear brand4profit,
    While I appreciate what you say, you are addressing the use of Social Media for a marketeer. That is not the focus of my post.

    My issue is not how a business can use Social Media Marketing for themselves, but about how the Social Network itself make money?? And which is where I have shared a few examples of possibilities.

    Would you like to add anything on that aspect?

  4. Anu says:

    I was wondering if you’ve seen Mahalo Answers – a recent attempt at monetizing a network of users. Though we have seen concepts like these even prior to the Web 2.0 days, something tells me this one will turn out differently – well, let’s wait and see.

    Personally, I feel the reward and punishment model works for social networks – you earn better karma for desirable actions (deemed desirable by the marketers of course!) and you build up bad karma for undesirable behaviour. We’ve got this far with several Web 2.0 businesses. Monetising is now the next step and I think several businesses will be able to get to that point pretty soon. Would love to know what you think.

  5. wisdominhindsight says:

    I must admit that I did not know much about Mahalo Answers before you brought it up. Have taken a quick look, and what my cursory view suggests is that its a model similar to Yahoo Answers. And where with the help of a Mahalo Dollar concept, they have tried to make it count for money.

    Not sure how that will go. Its an attempt like all others.

    However, I am more and more convinced that attempts to make small money from the users, may not really be the answer. Finally it will have to be giving access to your large base of users, to someone else, who pays you dollars to get that reach. As long as free options are available, the management of this Mahalo dollars model, may be just too tiresome without corresponding value.

    But as you said, we will wait and watch!

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