Ok, so it’s not a revelation when I say that you don’t need to make money off your core service. Your core service drives the interaction with the customer, but the money can come from some other area.
But, be careful where you _think_ you can get the money.
I’ve never been a fan of ads as a mean to make money. At least not for someone who is just displaying the ads. The real money maker is the one who _sells_ the ads.
But, for most services, it’s the best we got.
Bollocks.
I’ve never been satisfied with folks trying to build services that generate ‘eyeballs’ just to ‘monetize’ that traffic with ads. I’ve been even less enthused by social networking services that try to convert what is a personal interaction between the users of the service into a chance to score advertising views.
Online social networking services thrive because they are a form of social lubrication. They are a means to an end, but not the end. We’re social grooming to _do_ things together – learn, invent, trade, strengthen trust.
Then make money by promoting the activity, not by having folks mill about. Yes, social network is the concentrator, but what the folks end up doing is where the money’s at.
One good example is O’Reilly. Is it a social networking service? Sure is. Where do they make money? Selling info to the network, the info the network trades in when within the O’Reilly social network. For O’Reilly, it is the social network that differentiates them from just another publisher.
So, now I’m wondering about social networks overlaid on top of interest domains.
Social networks, such as Facebook, which do not have a focus for the _why_ people come together, might never gain the proper traction to make money beyond a few anemic ad clicks, or, like Facebook, will have to contrive sleazy ways to get money off the social network.
Someone like Facebook should optimize the service around the key reason folks use the service, rather than crate gimmicks to just keep folks around.
MySpace is at least trying to capitalize on Music and LinkedIn on business services. And there are a ton of examples, I am sure.
Just thinking out loud. These thoughts arose from noting that Google and Facebook are seemingly slowing down, and observing the interactions happening in my Twitstream. For some of you, I am sure this line of thinking is nothing new.
Comments?
You may want to be careful to note that this advice applies to bigcos looking at the space, not startups.
Noted. Though I still think it’s a slippery slope. At least, most thinking I’ve noted has been flawed, big or small company.
I think folks like you just are smarter than this than the average bear. It’s folks not as smart as you that need to be on the look-out, and I know that I am likely in that larger bin.
everyone i know installs and uses adblock and when they come across a computer without it they cringe at how much filth (ads) are on the net.
the real money comes from adding a premium service on top of an already free service.
case in point: flickr. sure you can use it as a free loader, but it rocks so much more as a member.
iTunes: fantastic to organize your music collection, but missing one of your favorite songs? we can sell it to you.
i think we’re going to enter an age where everyone trying to make a dollar is going to look at every possible interaction that can be deemed a service and try to make money off of it.
nickel and dimeing consumers to death seems like the right thing to do, but it will backfire when new services come out with the one goal of attracting said eyeballs by giving away the features that the previous generation of services charged for.
it is not going to stop, it is a viscous cycle, but at the end of the day we [consumers] win.
the real real real future will be in collecting that interaction data and recommending new ways a user can interact. what i mean by that is don’t be a passive ad or fee, but be active and recommend something like a restaurant or video game or song.
as a digital pirate i can tell you right now the hardest part of piracy is finding something worth pirating. recommendation engine may sound unsexy now, but they will LEAD the next generation of corporate buy outs and be the foundation for the services we use in the upcoming decade.
just thinking out loud, it’s Saturday so i’m a bit hung over. don’t mind the typos.