Facebook's service is free to end users. Its revenues currently generated entirely by advertising, although financial transactions (Facebook Credits) are enabled and expected to generate increasing revenues in the future. According to InsideFacebook, Facebook will exceed $1B in revenue over 2010.
W3C's Social Web Final Report mentions some other examples of how social network services try to make money:
In Japan, Gree, Mixi and Mobagetown provide their social networking for free and generate revenues from sales of advertisement to brands, sale of premium options to members of the community (e.g., extra storage for photos, a larger virtual ΄room‘ for their avatar, a new template for a blog with professional graphics), as well as the sale of digital goods ( games, wallpaper, accessories for avatars). We expect the trend towards combining current business models to continue, leading to the desire for secure Web-centric identity and Web payments.
This need paves the way for new business models. These five are quoted from W3C's Social Web Final Report:
- New kinds social applications that enable new kinds of collaboration to take place that take advantage of social data-mash-ups from multiple services.
- Software sales, maintenance or tuning of new identity-aware and privacy-aware Social Web applications that offer strong guarantees to users.
- A more flexible and open market of low-cost social media paid for by Web payments
- Increased liquidity of social data with strong assurances of a lack of legal liability.
- Integrating social features into all aspects of existing applications and computing in general.
The report hints at (paid) services offering "a highly robust authentication mechanism that would be considered a value add due to its prevention of identity theft or the enabling of Web-based e-commerce based on micropayments."
Maybe even individuals could make money over their activities on the social web, selling "bundles of privacy-protected data about the user that [the user] puts up for auction on personal data exchanges (similar to stock markets) wherein other providers can bid and acquire these data in order to provide new and valuable services back to the user."
What do you think of that last idea? Would you, as a (personal) user of social networks, ask for money whenever an advertiser or seller would want to interact with you?
- W3C Social Web Final Report @ w3.org
- Facebook Revenues Up to $700 Million in 2009, On Track Towards $1.1 Billion in 2010 @ insidefacebook.com
- Facebook Credits @ Facebook.com