Social networks and making $

Illustration by Claudio Munoz - The Economist July 23

Illustration by Claudio Munoz - The Economist July 23

The illustration introduces an Economist article on the monetizing of social networks such as Twitter.

How do and/or how will these networks make money?

As the article notes:-

With the number of people online worldwide expected to go from 1.5 billion today to 2.2 billion by 2013, according to Forrester Research, many of these networks will grow like Topsy.

They will also have a profound influence on consumer behaviour, prompting firms to shift a hefty chunk of their marketing budgets in their direction.
Consequently investors are looking at to how serious money might be made.
Though note the cautionary tale of My Space.
MySpace, which was bought by News Corp in 2005, offers a cautionary tale. It grew rapidly from its origins as a site focused on members’ musical interests into a more eclectic network. But as it expanded, it spent too much time chasing revenue and too little improving its online offerings. Now it is bleeding users and advertising: eMarketer, a research firm, estimates that MySpace will bring in $495m of ad revenue from America this year, 15% less than in 2008.
Those who view Murdoch as an internet visionary take note.
The article closes with:-
Some analysts have warned that if social networks do not get smarter at generating revenue themselves, they risk seeing the best money-spinning opportunities siphoned off by those venture-backed start-ups. By some estimates, developers working on Facebook applications may pull in as much revenue this year as the site itself. In a report published in May, ContentNext Media, a research firm, concluded that Facebook should think of itself as a shopping mall and start charging developers “rent” to be on its platform. Twitter might ultimately want to follow suit. Such a move could bring in plenty of cash, even if it does appear a bit, er, anti-social.

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