(Editor’s note: Marc Parrish works for Jigsaw, a company that competes in the professional contacts business. Asked whether he felt conflicted mentioning companies LinkedIn and Plaxo, which are also relationship companies, he responds: “Jigsaw does not really compete with either LinkedIn or Plaxo – they are about relationships and we are about data – so I don’t really see a conflict there.”)
Social networking sites can get millions of users, but can they make millions in revenue? Here’s a partial list of social networking sites on Wikipedia. It shows that sites with little general brand recognition can show great growth and user counts, but are not relevant enough to our lives for us to give them a piece of our paychecks.
My favorite is aSmallWorld, touted as a “MySpace for the European jet set and social elite”, or “Snobster” because it requires an invitation, which claims 130,000 users. It was started by the son of a former Swedish ambassador to the US, and touts such members as Naomi Campbell, Paris Hilton, James Blunt, Ivanka Trump , Tiger Woods. My question is: Does Tiger plunk down his AMEX?
You can make money from your users, if you make getting revenue part of the social contract with the community.
Plaxo is a great example of social success not translating into monetary success. It was the first social network that I ever saw, and I have always liked the service. I signed up nearly five years ago, have used it a lot, and they have yet to earn a dollar from me. It recently doubled its user base to 15 million with the mobile integration. Wow! However, LinkedIn (with only half the users) purposely drove towards premium products available to their users at a price -• job postings, direct introductions, and service provider recommendations. I like them, and have paid for them!
Plaxo’s premium service includes de-duplication of my contacts in outlook, sending unlimited ecards, and recovery of your contacts should you have a disaster. I won’t pay the $50 a year for this (even though I once recovered all my contacts this way when it was free).
Relevance to your community and monetary engagement is what will propel social networking forward. Wikipedia has had their donations increase directly in proportion to the growth in articles and users. Match.com continues to increase their average revenue per sign up.
The meteoric growth in teen oriented social networking sites such as Friendster and Myspace spawned entrepreneurial companies who sell their technology to mesh with these sites • something I first saw with eBay. When you get big quickly, you can open the door to others to monetize your community in ways you didn’t have time to imagine.
Of course staying small and niche allows you to know your community better.
For example, VampireFreaks.com (with 750,000 users) offers a premium subscription which will allow you, among 17 other features, to “Create Unlimited Cults.” Now that’s giving your community what they want.