Archive for the ‘TechWatch’ Category

Alternative Ways Social Networks Are Making Money

October 9, 2007

Social Networks are often criticized as having a hard time at being profitable. Most are supporting themselves in one of two ways, traditional online advertising, or a subscription model. But I wanted to briefly take a look at some other ways that social networks are trying to increase their revenue streams.

Virtual Gifts
The next largest monetization method taking form behind advertising and subscriptions are virtual gifts. With the massive success of virtual gifts in foreign markets (i.e. Cyworld) a lot of US properties have started experimenting. Most notably Facebook recently launched their “Gifts” area where people can send gifts to others for $1 a piece. Social Network HotorNot has even completely abandoned their subscription model that has made them millions year after year in exchange for a virtual gifting system. Virtual worlds are most suited for this type of system, but traditional SN’s are finding a place for it.

My guess is that this type of monetization will only be lucrative for extremely large social networks. With the very low cost of virtual gifts you have to produce many transactions for it to be worth it in the aggregate. The only communities to support this level of transactions are those in the top tier with millions of users

Survey Network
A monetization model pioneered by social network, Xuqa, survey’s are proving to be very profitable for a number of online communities. In a social network like Xuqa where there is a form of social currency that users collect, people can take surveys or sign up for other offers to receive more of the virtual currency. Xuqa has expanded their survey system into an ad network model called Peanut Labs where other publishers can sign up to monetize their site in the same format. According to Peanut Labs each survey response pays out $3 and affiliate leads payout between $.50 and $15.

Unfortunately this system is only structured for those communities that deal with virtual currencies, but can be a very viable source of revenue.

Photo Printing
With most social networks naturally being a place where users upload a lot of photos, many have experienced with providing printing services for a cost to their users. Most social networks outsource this and take a cut of the action. The most recent entrant on to the scene that helps with this is moo.com. While it is something that is easy to add and doesn’t interfere with the user experience, photo print revenue sources are still not substantial to make much of a dent.

Cardvio

I recently saw one of the founders of Cardvio demo their product at a Boston Web Innovators Group and was impressed with their technology. Cardvio is a system that lets you create your own card online and send it via snail mail. Social networks are a logical place to include this service considering it is usually where people store pictures to create cards, and the connections to the people they would want to send them to. Doesn’t hurt either when you have small features like Facebook’s birthday reminder.

While another easy add on similar to photo printing, this might be icing on the cake for social networks but by no means a main revenue source.

Product/E-commerce Affiliate Programs

Most online retailers such as Amazon offer affiliate programs that allow social networks to promote items next to people’s favorites. This has been around for awhile, but really hasn’t caught on or proven itself as a significant revenue stream. The downside to these programs is that it usually does interfere with the user experience, making it a tough cost-benefit decision.

I still think that there is room for innovation in monetizing social networks via E-commerce, but the current affiliate program structure just isn’t producing massive benefits.

Data Access

A very interesting revenue model that has appeared in micro niche professional social networks is charging for access to the data a community has created. For example, Sermo.com, a community for doctors charges companies such as hedge funds, and drug companies $150,000 a year to have access to the data being created by the community. Another example of this would be ActiveRain.com who isn’t charging to consumers yet, but will likely in the future, for content created by their community of real estate professionals through a portal called localism.com

If you know of any others, please leave them in the comments. In my opinion online communities and social networking is the future of the internet just like search was back in the late 90’s. Old revenue models are trying to be squeezed into a new medium, just like banner ads tried to be squeezed into search engines. There will continue to be innovation until a lucrative revenue model is created. My guess is that it will once again be a new form of advertising that takes advantage of the massive amounts of user specific data that social networks contain.

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What Technology Does My New Business Need?

July 15, 2006

By Ramon Ray

Congratulations, you’ve opened your new business! As your hands run over the new furniture and you wrap up a few things with your lawyer and accountant, you’re probably starting to wonder what kind of computing infrastructure you should consider for your business.

Many businesses have very similar needs, which I’ll outline below. Depending on the specific needs of your business, there will be some particular technologies you’ll need that other businesses have no need for. Here are six things your business must have in the beginning in order to be successful.

Local Technology Consultant
One of the most important investments you can make is to ensure you have one or two local technology consultants who you trust, who know about your business, and who can guide you in your technology growth.

You have an accountant (for obvious reasons) and a lawyer (for even more obvious reasons)–having a local technology consultant or solution provider is no different. Get references, see what past work they’ve done and, like an employee, give the relationship time to mature to be sure they’re working in your best interest.

A good place to find small-business solution providers is at Microsoft’s Small Business Specialist Program (www.microsoft.com/smallbusiness).

High-Speed Internet Access
Every business, no matter how big or small, needs high-speed access to the internet. Having traditional dial-up access is simply too slow and too limiting for a business. High-speed internet will enable you to take advantage of online backup, VoIP and other technologies you wouldn’t be able to do at all or as efficiently with a dial-up connection.

For those businesses who are only online or do a significant amount of business online, your internet service is the life blood of your business. You must ensure that the vendor providing the service offers very reliable service and support.

Computers
Of course, you must have computers for each employee. These computers shouldn’t be slow, rinky-dink, bottom-of-the-barrel relics from the early ’90s, but should be relatively new, high-speed tools. Each computer should have plenty of memory (512MB or more), hard-disk space (80GB or more), a fast processor (2-3GHZ) and a quality screen for minimum eyestrain.

Your computers must be set up in a network with a file server and shared internet access.

Those who are dealing with large files such as graphic artists, design shops or others must have very powerful computers to be able to quickly manage and store the files. The memory you use backing up 100-word files that a very small law firm might deal with is much smaller than backing up 100 hi-resolution photos.

Data Security
It’s absolutely imperative that your businesses data is secure and backed up. Your local network and each of your computers should have a firewall (a hardware firewall for your network and at least a software-based firewall for each computer) and anti-virus software (many come bundled with features to detect phishing and other online threats as well). In addition, ensure your computers and network are configured by a local security consultant (your general knowledge solution provider might not have sufficient expertise to properly harden your computers and network from online attackers).

If you have a wireless network make sure it’s secured as well. The second phase of your security plan is to ensure all of your data is backed up and that you have a recovery plan in place. If you came to work and found nothing but a hole in the ground, what would you do? What plan would you have in place to recover your data onto other computer systems? That’s how you have to think.

If your business retains personal information of your customers, especially financial information, social security information, etc, it’s even more important that a professional security consultant work with you to ensure your information is secure. Your network must be secure, but also your online applications. Hackers can go to your website and use “back door” holes in the online software to access your database if the online application or database isn’t properly configured.

Website
Every business must have a website. If you want to start out with a very simple site that’s more like a digital brochure, that’s fine for now. But consider having a website filled with relevant information for your customers, partners and employees.

You can easily build a website on your own using tools from Homestead Technologies, Microsoft Office Liveor many other web-hosting companies. You can also hire a website developer to do this for you.

As your business grows you’ll find that filling your website with as much customer-facing information as possible will a) reduce the amount of inbound e-mail and phone calls to your business, and b) customers can serve themselves from your website and be happier.

E-Mail
One of my personal pet peeves is seeing a growing business with an AOL, Yahoo! or Hotmail e-mail address. I think it’s unprofessional, and since it’s very easy to have an e-mail address with one’s business name, there’s no excuse. Your web host can set up e-mail accounts for you as part of your web-hosting service. Or, as always, you can work with your local technology consultant.

If you’re in a regulated industry it’s vital that you have systems in place to archive your e-mail to ensure it complies with government regulations for your industry.

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