

Ask HN: How would you monetize a social media site? - rumpelstiltskin

Apart from traditional ads, what avenues would you pursue to monetize a social media site's traffic? Assume loyal, returning visitors.<p>1. Subscriptions - based on the freemium model, where the basic features will be free for everyone while paying subscribers will get access to premium features<p>2. Job board<p>What else?
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jacquesm
Stuff you should do because it makes good business sense and won't piss off
your userbase:

\- permission marketing

\- voluntary surveys

\- text link based advertising (if it's done subtle)

Stuff you could do (but that may infuriate some of your users):

\- regular advertising

\- affiliate programs

\- text link advertising (done wrong)

Stuff you should never do:

\- sell email addresses

\- sell other user data

\- popups / unders

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gehant
We obviously need more data, but for starters:

Figure out what your users value on and _off_ your site. Also, research
competitive and complementary sites to get a quick and dirty list of potential
options. There could be existing or future features that users would be
willing to pay for.

If your site doesn't display ads, carve out space so that you ease them into
it. Set their expectations and you're less likely to shock/upset them (sage
advice from Reid Hoffman).

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dpnewman
One option that I think hasn't been explored enough yet, and may be much more
prevalent in the future, is micro-payment. Definitely the biggest initial
barrier is the submission of payment info. But after that, I think that
charging small amounts for certain special actions could be viable if those
actions are deemed very valuable by the user -- "feel fair".

Examples would be offering free uploads of images up to X megs per month but
charging X cents per image after. Or the ability to create more than X number
of interest groups. Micro-payments advantage also is that the service can
charge strategically to offset some of the higher serving costs of certain
functionality, eg., storage.

The advantage of micro-payments over freemium is that with freemium the user
may be very hesitatant to lock into $10 a month -- but might be willing to pay
more ad hoc for enhanced functionality that over time they really want to use.
The key of course is the network must be very smart about pricing and what
actions are charged, and still provide an exceptional experience for free.

The system is working well in various online games (buying powers) and cell
phone networks ... could it work well in a social network? I expect to see
more attempts for sure.

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leftnode
Simply charge them for it. I don't understand why not. I haven't read the
latest stats on how big Facebook is, but lets put it at 200 million real
users. Let's say that Facebook says that it now costs $5 a month to use. You
get _all_ of the same features you have now, unlimited everything, just like
now. If only 5 million stayed and paid that amount, thats $25,000,000 a month.

I would much rather have $25,000,000 a month in real cash, than having other
people give me money and have part of my company. Facebook is unlike Twitter.
There are a bunch of Twitter clones out there, and Twitter is fairly easy to
copy. If Twitter started charging for its services, 99% of the users would
migrate somewhere else. I think Facebook has a powerful enough application
that other companies couldn't touch it for years, and people would pay for it.

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jacquesm
You are missing one very important point. If facebook were to do that there
would be a free alternative with traction within 24 hours and the 195 million
that go away will pull the remaining 5 million with them. Facebooks sole
raison d'etre is the fact that they have a userbase that has a high
probability of including some people that you know.

See 'metcalfe's law' about the value of telecommunications networks.

It's very easy to destroy a community that was built on 'free' by starting to
charge for it.

It is always easy to solve other peoples/businesses issues in five minutes, in
practice things are seldom as simple as they appear to an outsider.

~~~
amrith
I doubt that very much. There is a point of diminishing returns, I agree. If
the charge were $1, less people would leave than if the charge was $100. But,
the value of facebook or other social networking sites is in the social
aspect.

For pay services have competed favourably with free services. Ringtones are
one example where people opined that paid services would fail because free
options would emerge. And yet, people still pay and download ringtones.

The catch to making people pay the $1 or $5 is to make it easy. If you require
them to pull up a credit card or some such, you will lose people. If there was
a simple way to pay such that the money came out of some account (PayPal or
some such) then you'll get the $1 in a heartbeat.

~~~
jacquesm
The only way that I know of - also known as the freemium concept - to convert
a large userbase of free users to a paying userbase is to provide a lot of new
features under a premium banner that you only get access to when you pay.

Over time the weight of the new features starts to be larger than the 'simple'
free version. The free version is the hook that you use to get people to use
the service and to stave off encroachment by competitors.

If a free competitor should arrive on the scene that offers part of your
premium features for free then you can choose to selectively offer those
features to all your users (not just your paid users) but here you have to be
careful not to erode your paying userbase because it is possible that people
are paying for just that one feature and they'll possibly cancel their
subscription.

This is not as trivial as it sounds.

For the record, I manage a website that has an active userbase of about 100K
people a small percentage of those are paying users.

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LostInTheWoods
Facebook and Twitter (and their like) have yet to turn a profit or even come
up with a plan to make one. Meanwhile, Blizzard's World of Warcraft continues
to rack up millions a month from loyal and paying users. If you want to make
money on the internet you need to take a good long look at what Blizzard is
doing.

~~~
jacquesm
There are more ways to skin a cat. By your account the owners of icq never
made money either. Until they were bought out that is...

Not every strategy is based on making money operating a service, some people
aim for the big exit and are well willing to operate under a loss as long as
they hold on to the service. It's a risky strategy, if your timing is off then
you usually fail big time. But if the timing is right and you can find a
partner that perceives an upside to having access to your users you just might
score the jackpot.

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CCs
I would go for other than paying to be member. Maybe it's OK to have some
paying members (like LinkedIn) for vanity or extra (non essential)
functionality. Letting 195 million users to go away is suicide.

Ads are OK, but it's really for Google type of business - a social site want
people to stay.

Collateral revenue ideas:

\- Geni could have a "Get your family tree poster" printing service

\- Facebook could do the same with friends

\- Twitter: I like Twitter, but I have no idea

\- SecondLife: virtual stuff for real money

\- dating site: organize real life parties

\- A product review community could become Amazon

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tortilla
My buddy runs a social networking site for a niche market and they run a
freemium model along with ads. The one mistake they made was charging too
little as the difference between charging $6/month and $15/month is not as
great as they expected (they have 2 levels of paid subs). The bigger hurdle is
just getting the user to pull their credit card out in the first place. So
don't be afraid to charge a fair amount, if your site offers good value.

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dirtyaura
If it's a more casual site where users hang around then satisfying self-
expression needs by selling virtual goods around avatars, gifts etc. can be a
possibility.

It has been quite successfully used by several casual gaming sites and
visually intensive social sites (Habbo, Playray, Stardoll ...)

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yannis
The value of a social media site is its user base and one should try and
preserve that. Think of it as if you have created an 'economy'. Let the users
'trade' between them and charge a 'tax' like the government!

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windsurfer
Totally depends on the client base. If it's high-end, you could charge a one-
time fee to participate. If it's low-end, you could go with the freemium
model.

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pclark
what _are_ the people? tell me about them.

