Monday, November 2, 2009

Paid Social Network Opportunities—Alive and Well

While mainstream social networking sites such as Facebook and MySpace have always been free to users, paid social network content models are alive and well. Networks that cater to market niches have particularly thrived on hybrids of paid models and ad-based systems. Some of these, such as LinkedIn, Classmates.com and MyLife.com, are earning at least as much revenue from fee-based content and services as from advertising.

“As the online ad market continues to struggle, paid services including membership fees, premium features and virtual goods will take on increasing urgency for social networks, either as primary revenue generators or as ancillary income sources,” said Paul Verna, eMarketer senior analyst and author of the new report, “Social Network Content: Are Users Willing to Pay?”

Advertising has been the main focus of social network monetization, but data points to paid content as an important revenue source. In July 2009, Piper Jaffray forecast that US paid social networking site revenues will surpass $1.4 billion in 2013, more than doubling the 2009 figure of $627 million.

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