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Social Networking Sites Still Figuring Out The Money Thing

from the no-wonder-they-all-sell-out dept

Despite the massive popularity of some social-networking sites, it’s well known that they’ve had a hard time monetizing their page views. In the case of MySpace, the company is trying a different approach. Instead of selling site-wide ads, it’s allowing advertisers like Disney to buy sponsored profiles that are separate from the normal user pages. Essentially, it’s exploiting the fact that MySpace is perceived to be a haven of tawdry teenage high jinks by offering a way for brands to be present on the site without mixing in with the “bad stuff”. Whether this makes any sense, or whether users will want to make friends with these officially sponsored profiles remains doubtful. The other powerhouse in the space is, of course, Facebook, which is well known for wanting a $2 billion buyout. They recently announced a new advertising deal that came with one caveat — they gave the buyer an equity stake in the company. The company is claiming that this wasn’t a quid-pro-quo, and that the deal is more strategic than a mere ad sale, but it certainly sounds a lot like some of the deal making behind the last bubble when offering up an equity stake in exchange for a purchase was a common strategy. Given the troubles these companies are having, maybe these companies are a little too good at moving value to the edge of the network.


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Comments on “Social Networking Sites Still Figuring Out The Money Thing”

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18 Comments
Avner Ronen (user link) says:

value of eyeballs and the business model

users will not pay for the MySpace service. NEVER.

so yes the business mode needs to be based on generating a critical mass of eyeballs, and finding ways to monetize it.
– sponsored profiles
– banners
– keyword advertising
– selling music, tv shows, movies

different today from bubble 1.0 is the fact that there are more advertising/sponsorship dollars flowing to the web from non-internet players. and more monitization opportunities (e.g. selling content, video ads)

not different crazy, crazy, crazy valuations.. and stupid internet ideas getting money

what social networking site keeps them coming back says:

There’s no argument that MySpace comes out on top as far as getting eyeballs on the sign in page.. and ads on your home page.

Frankly, friendster dropped the ball with not keeping up with traffic demands.. People just don’t have patience for slow moving web sites.

When my MySpace log-in page turns into an elaborite full screen Superman advertisement, I have to say that has a lasting impression.

Crystal (user link) says:

Wow. I always thought these sites were making bank. I never thought they would have trouble advertising. I think they already sold out though.

“When my MySpace log-in page turns into an elaborite full screen Superman advertisement, I have to say that has a lasting impression.”

This is exactly what I thought. I saw that, and my jaw dropped. They must have made a pretty penny on that deal

John Safar (user link) says:

Niche Social NEtworking sites

Interesting discussion that I happen to come across while signing up for a social site. Honestly, I think th eonly real market is for niche topic social networking sites like “Soccer Moms”, “Golf Lovers” or in my case, “Stage and screen artists”.

I signed up for a new site (barely a week old) called StartingStage.com and it’s grown pretty fast already. I think when the site is niche enough and useful enough, it’s easy to gather members and eventually build an advertising base.

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