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I contend that monetizing social software is actually very much easier than most people believe. However, the trick, I think, is to look at assistive rather th

I contend that monetizing social software is actually very much easier than most people believe. However, the trick, I think, is to look at assistive rather than extractive models. Rather than looking at how to interject ads into social media, or to otherwise hijack a fraction of the collective attention span of your userbase that you can then sell to the highest bidder, instead look at how to leverage social functionality to put tools into people's hands to help them help themselves in the service of commerce. For example, google search ads and pinterest. Other examples: enable finding product and restaurant reviews, ratings, and suggestions by friends; improve wishlists for gift-buying; make group purchasing at discount easier for many products (games, books, movies, concerts, events, etc.); enable time sharing of services; facilitate picking up hobbies, skills, and activities; and so forth. There's tons of money in these ideas, but it's more common for companies to go to the advertising trough because it's seemingly so easy. In my view it's always easier to make money off of a transaction that both sides obviously benefit from.

amirmc 13y ago
"... but it's more common for companies to go to the advertising trough because it's seemingly so easy." Easy and lucrative once you're big enough and to get big enough, you probably have external investors (who've trodden the path before and know the likely outcomes). The sad thing is that while we may see lots of disruptive innovation in tech, we see much less innovation in the business models that follow (though please do correct me if I'm wrong!).
mijustin 13y ago
Everybody seems to keep forgetting about Geocities. They had millions of passionate users who built over 38 million pages on the site. They introduced ads in 1997 and two years later became the 3rd most visited sited on the web. Yahoo acquired them in 1999 for $3.57 billion. Yahoo was unable to further monetize those users. There wasn't some magic money tap they could turn on to make money from the site (despite it's popularity). Geocities never made a profit. What's Geocities worth today?
- stevetsuida 13y ago
  I wonder if it's just that the folks who convince their bosses and boards to make bad moves just don't care. It's a subsidized party. Acquisitions mean travel, splashy events, big budgets, and no one remembers who did what or who's to blame for it as long as you stay a few pay-grades outside of the spotlight, and have a new job before the last one craters. Picture generals and arms dealers seducing politicians into voting for a war, keeping themselves just outside of the consequence field-of-fire.
  - mijustin 13y ago
    This is the only answer I've heard so far that makes sense: cash-rich companies (and investors) have money, and want to spend it. "It turns out, there's a lot of money in the world. The money is bored. Money wants to be spent! Money is intended to be gambled. These are big numbers, but these are big companies." - Jason Calacanis, http://youtu.be/SY62KuoxWJ0 http://youtu.be/SY62KuoxWJ0 [Video]
- ahoyhere 13y ago
  cough Myspace cough Quite a lot of dotbombs, too, relied on… advertising. Back when it was banners. Punch the monkey!
  - mijustin 13y ago
    Exactly! And Digg. And Friendster. Advertising can be a good business, but it still needs to follow the same formula: Revenue - Expenses = Profit In my mind, Google is the only real B2C internet company that's proven itself.
- bfgmartin 13y ago
  I think Josh has it mainly right in his Medium post https://medium.com/i-m-h-o/a5890c2c2cc0 https://medium.com/i-m-h-o/a5890c2c2cc0 - it's not just about traffic but engagement. I was one of those passionate users on Geocities, to the point where I was given shares in the Yahoo acquisition for my work in the community. GeoCities died on the vine because they didn't continue to innovate on the site building and community they had. They certainly could have been so much more - foreshadowing blogs, social networks, everything myspace became, etc and could have found a way to build the kind of sticky (and huge) audience that monetises better - if they'd continued to develop.

amirmc 13y ago

"... but it's more common for companies to go to the advertising trough because it's seemingly so easy." Easy and lucrative once you're big enough and to get big enough, you probably have external investors (who've trodden the path before and know the likely outcomes). The sad thing is that while we may see lots of disruptive innovation in tech, we see much less innovation in the business models that follow (though please do correct me if I'm wrong!).

mijustin 13y ago

Everybody seems to keep forgetting about Geocities. They had millions of passionate users who built over 38 million pages on the site. They introduced ads in 1997 and two years later became the 3rd most visited sited on the web. Yahoo acquired them in 1999 for $3.57 billion. Yahoo was unable to further monetize those users. There wasn't some magic money tap they could turn on to make money from the site (despite it's popularity). Geocities never made a profit. What's Geocities worth today?

stevetsuida 13y ago
I wonder if it's just that the folks who convince their bosses and boards to make bad moves just don't care. It's a subsidized party. Acquisitions mean travel, splashy events, big budgets, and no one remembers who did what or who's to blame for it as long as you stay a few pay-grades outside of the spotlight, and have a new job before the last one craters. Picture generals and arms dealers seducing politicians into voting for a war, keeping themselves just outside of the consequence field-of-fire.
- mijustin 13y ago
  This is the only answer I've heard so far that makes sense: cash-rich companies (and investors) have money, and want to spend it. "It turns out, there's a lot of money in the world. The money is bored. Money wants to be spent! Money is intended to be gambled. These are big numbers, but these are big companies." - Jason Calacanis, http://youtu.be/SY62KuoxWJ0 http://youtu.be/SY62KuoxWJ0 [Video]
ahoyhere 13y ago
cough Myspace cough Quite a lot of dotbombs, too, relied on… advertising. Back when it was banners. Punch the monkey!
- mijustin 13y ago
  Exactly! And Digg. And Friendster. Advertising can be a good business, but it still needs to follow the same formula: Revenue - Expenses = Profit In my mind, Google is the only real B2C internet company that's proven itself.
bfgmartin 13y ago
I think Josh has it mainly right in his Medium post https://medium.com/i-m-h-o/a5890c2c2cc0 https://medium.com/i-m-h-o/a5890c2c2cc0 - it's not just about traffic but engagement. I was one of those passionate users on Geocities, to the point where I was given shares in the Yahoo acquisition for my work in the community. GeoCities died on the vine because they didn't continue to innovate on the site building and community they had. They certainly could have been so much more - foreshadowing blogs, social networks, everything myspace became, etc and could have found a way to build the kind of sticky (and huge) audience that monetises better - if they'd continued to develop.