Abstract
On September 15, 2009, Facebook CEO Mark Zuckerberg announced that the social
network had surpassed the 300-million-member mark and reached
cash-flow-positive status for the first time. Those milestones validated
Facebook' s core concept of monetizing its service through advertising, and
revived a lingering question that has swirled around social networking since
its inception: Will users pay for content?
A close look at the social network landscape reveals that beyond mainstream
sites such as Facebook and MySpace, paid content is alive and well. Networks
that cater to market niches have particularly thrived on hybrids of paid
models and ad-based systems. Some of these players, 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 ancillary
income sources.
Key questions this report answers:
- Are social network users willing to pay for content?
- What is the revenue outlook for paid social networking sites?
- What are the prospects for Facebook and Twitter charging their users?
- What strategies work for paid-content providers when ad-supported
competitors enter the fray?
Sources:
On September 15, 2009, Facebook CEO Mark Zuckerberg announced that the social
network had surpassed the 300-million-member mark and reached
cash-flow-positive status for the first time. Those milestones validated
Facebook' s core concept of monetizing its service through advertising, and
revived a lingering question that has swirled around social networking since
its inception: Will users pay for content?
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