Social Networks: Where is the Money?

Everywhere and nowhere is how The Economist puts it. I agree. The ever elusive earning model that capitalizes on the social aspects of your network may be about to get more complicated. If we we were to cross reference the information of your email in-box with that of your social graph, as the article suggests, we might infer what you're up to with greater accuracy.

The opening of social networks may now accelerate thanks to that older next big thing, web-mail. As a technology, mail has come to seem rather old-fashioned. But Google, Yahoo!, Microsoft and other firms are now discovering that they may already have the ideal infrastructure for social networking in the form of the address books, in-boxes and calendars of their users. “E-mail in the wider sense is the most important social network,” says David Ascher, who manages Thunderbird, a cutting-edge open-source e-mail application, for the Mozilla Foundation, which also oversees the popular Firefox web browser.

The money follows the relationships - the real, one-to-one or many, conversations that people exchange with each other. Remember Jerry Maguire?

Listen to the words, watch the body language. Congratulations, you get to keep all those names in the network. Those people, they are who makes it social. They may decide to use your product or service and recommend it to a friend. It still depends on whether the item and experience is worth talking about and sharing. Provide something of value and the network will invite you as part of the social. That simple.

Comments

[Dave Huston]

It's certainly interesting to think of e-mail as a social network and you're right on about how to focus the marketing of a new product or service in these social networks, but I found this title to be a little misleading. I expected to read something about how the social networks are going to make money for themselves.

[Valeria Maltoni]

Hello Dave:

The title of my post is a question. The dynamics of online social networks are the same that we find off line. People take the recommendation of other people they know and trust. So the money is everywhere your product and service is worth having and nowhere as not in one specific place as increasingly people cross over from online and off line without distinction. How was the title misleading?

[Carolyn Ann]

I dug out my copy - and you're right! There's money to be made in that maelstrom of change. In fact, it's probably fair to say that wherever people intersect, money can be made. :-)

It used to be shops and taverns, with the odd salesman pitching wares from a horsedrawn van. The Internet didn't really change that model - despite all the shouting about online commerce being "new" and "the future"; all that shouting obscured simply hid the fact that the venue had changed - but the business model was still the same. No bricks and mortar? Sure there was - it was just hidden behind a glitzy webpage and a delivery truck.

All of that re-iterated convention has left many entrepeneurs a little unsure about what's next. So far, the social networks seem to operate on some sort of perverted book-club model: get lots of subscribers, and sell the thing before anyone realizes that making money from "this" is harder than it looks. (Personally, I think Google is facing the same challenge; it's hidden behind their outrageous profits and their "new and improved" business model - which can be, I think, simply described as a merging of television and roadside billboards. Provide content - people will come to see it, and then show them the billboards. At some point it will become apparent that this model has limits; actually, Valeria's post and the Economist article demonstrate some of those limits!

So, where is the money? I don't know - and I'm not sure anyone has thought about it enough to figure it out. Articles like the Economist one, and Valeria's highlighting of it, will help someone think about it; maybe some budding entrepeneur will have that essential "a-ha!" moment, and the rest of us can piggyback on their insight. What I do know is that it will be so simple everyone will say "Duh..." (Because if it's obscure - it won't happen.)

"Show me the money" meets "Where's Waldo?" Now, that's a classic problem - and one the world's entrepeneurs are good at solving. :-)

Carolyn Ann

Oh - and here's to the demolishing of Internet silos (I say, as I hoist my mug of coffee :-) ). They serve little purpose, and as "walled gardens", they're appalling bereft of interest. /CA

[gianandrea facchini]

Valeria, if I get the point:
- social network still not have a business model to generate revenue
- one issue is that they do not speak each other and you eventually meet the same people across three of four social network
- we need to aggregate all our information in one single source, allowing us to meet different people in different places but from one entrance point only
- are some companies overpriced? I believe yes. I cannot understand why Facebook is valued 15 bn usd base on the assumption that, soneer or later, someone will get the killing idea
- is this a potential bubble? I would watch closely to Google, which is hiding major issues under the profit coming from other business
- last, there are privacy concerns that may harness the business model for the social network ( as seen with Facebook case) and we may see, in a future, people willing to pay 10 usd a month to be part of a social network without privacy concern.
But this is another story.

[Valeria Maltoni]

@Carolyn Ann - right now, as you mentioned for Google, the model is "if you build it they will come." Then what? We're getting pretty good at creating mash-ups on the customer/reader side. Patching what we know to work from each application and network to get us some of the desired results. And in the meantime we leave behind a lot of information for those who can mine it. Which brings me to the issue Gianandrea latches on.

@Gianandrea - privacy is an issue near and dear to my heart. There exist already membership-based networks, particularly when it comes to career development. Do they work? The one experience I had left a lot to be desired. Those were conceived more as special interest groups or clubs, than social networks. A universal sign on would simplify things. I have 3 different passwords at work alone!