Monetizing Social Media

In the same way the dotcom boom from the late 1990s gave birth to countless Internet start-ups, the Web 2.0 era has led to the development of a large number of social media sites—some informative and entertaining, many not. What resulted after the tech bubble burst in 2001 was a shake-out of the most irrelevant companies and businesses, and I predict that the same will happen to the litany of SMSs online today.

The main reason why this shake-out seems inevitable is that social media have failed thus far, like the dotcom businesses of the Web 1.0 era, to find a business model to monetize the traffic from their members. Even Facebook, Twitter and MySpace, three of today’s social media leaders, have failed—to date—to find a compelling business model to profit from the millions of visitors and members they hail.

So, does this mean all social media are bound to die? Of course not! Social media remain one of the most exciting things to happen to the Internet these past few years. As long as users continue to be entertained by SMSs and find value in building online identities, social media will continue growing.

In addition, while SMSs have yet to discover how to capitalize on the fickle social media user, it is clear that there is value in having millions of visitors and information about their habits, likes/dislikes, interests and access to their friends. In fact, a number of organizations, such as Adobe, have already successfully used Facebook to market to their audience.

So, even though SMSs have yet to figure out how, there is no doubt that they will one day find a way to make money. The company that can figure out how to unleash the underlying potential could very well become the next Google.

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