Sunday, April 20, 2008

Monetization of Social Networks




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Many email sites such as yahoo, gmail, and hotmail have not been able to generate a significant revenue base for offering such services. Likewise social networking sites such as facebook and orkut may find it difficult to generate sizeable income from such ventures. Microsoft’s takeover bid illustrates the point that Yahoo may be failing to adequately profit from its online services. Some may argue that founder and CEO of Yahoo, Jerry Yang, was crazy not to accept Microsoft’s $44 billion dollar offer, because there are many challenges to earning a decent revenue base from certain online sites. Once facebook becomes too commercial with an abundance of online advertisers, viewers may move on to the next best thing. Charging people to use the service, is also a deterrent and so ad revenue is a more legitimate way to monetize social networking websites.

Providers of social networking sites find it a challenge to offer the service and yet profit from them. As soon as they start charging for services, people move on to a competitors network. It would be interesting to see what is in store for the future of social web sites, web portals and Internet Technology. If Microsoft takes over Yahoo, I fear that this would be anti-competitive and not to the benefit of Internet Users. Microsoft has a trend of being too business savvy and concentrating on their bottom line, then on the best interests of society.

2 comments:

Raphael Jaras said...

I like everything your saying Deepak the only question I had was if you really think it would affect the users if Microsoft bought out Yahoo or Facebook. Its almost like the Wal-Mart of the online community and there are plenty of people who don't like a lot of change and everything in the same place. If its so difficult to make revenue online why did Microsoft offer $44 billion to start?

Kendra said...

I just want to touch upon one comment and that is about advertising. I know many people have said they liked advertising and I'll admit at times it's OK. But I think in the long run, it will have a negative impact and cause people to switch networks. Overall, I find that the majority of people find many advertisements irrelevant to the website and obnoxious and that in the end could possibly ruin their popularity.