Social Networks Need To Figure Out Revenue Models Soon
It’s been said several times our favorite social networks have really struggled to turn a profit. YouTube, MySpace, Twitter and Facebook all are in this same boat, though they must not be a total money sink since they’re still around. The bigger ones do have advertising programs in place at least.
Though big audiences grant longer honeymoons
And patience seems to be the name of the game. Google seems confident YouTube will have fair command of the market in due time. Despite the cost of operation—before it was bought YouTube was said to cost a cool million per month in bandwidth—having cornered the market in online video is a good thing, current unsustainable revenue model notwithstanding. 
Likely Google looks down the road toward the coming TV/Web convergence as justification for this early, rather experimental phase. Likewise for the rest of them—save Twitter, which is still in the meteoric, VCs love us growth stage—MySpace and Facebook have, at least right now and for the foreseeable future, huge audiences to leverage.
There’s no way News Corp. is giving up its golden network after the bargain they scored, and there’s still lots of opportunity to squeeze out of MySpace. Facebook and Twitter are still largely on their own, having turned down acquisition offers from larger companies (Twitter turned down Facebook) who could have comfortably floated them through their experimental stages.
Twitter vowed not to put advertising on the American version of the site, leaving much of the world to wonder how exactly Biz Stone and Evan Williams could so coolly turn down half a billion from Facebook when a revenue model doesn’t readily present itself.
Facebook has more luxurious problems with oodles of venture funding and backing from Microsoft, though the founder was similarly unwilling to give up control to Yahoo. Mark Zuckerberg must feel that Microsoft money will keep things going long enough for him and his crew think of a plan beyond contextual advertising, a plan that won’t irk 150 million privacy-concerned members.
Zuckerberg famously stated last December he had Facebook on a three-year discover-a-revenue-model plan. Regardless, he still told Robert Scoble 2009 would be Facebook’s “intense” year, so maybe he was only fooling about that three year thing.
Sites like Facebook and MySpace seem to have more room to tinker with than Twitter—where microblogging may turn out one day to equal micro-returns without some really creative, workable models in place. With Facebook especially it seems like new potentialities develop constantly.
Harry Huai Wang, for example, recently introduced on the Facebook blog about a new functionality to send digital birthday gifts to friends. (Facebook informs you when your friends have a birthday coming up.) Why stop at virtual goods available through the “Give Gift” tab? If the friend is anything like me, he’d rather have a gift certificate to Burger King.
Indeed, the possibilities seem rather endless on Facebook. If they can’t find a way to generate revenue in three years, it may be time to handover the reins to the corporate money machines.
