Commerce is rife on the web of course, but there isn’t a lot of cross over into areas of the web where there is a different primary objective perceived to the community members. Ebay people go there to buy or sell. But places like Facebook, a comparable large community but where buying/selling isn’t the first reason to be there, has struggled to add this element to the mix. Beacon got slated in spite of it doing much the same thing as the buying history feature on Ebay that most people are happy to share.

There is greater potential in more specialist social networks I agree (that was my point), but it is very interesting you should mention forums, as in my experience forum members HATE being sold to and if anyone joins a thread in a way perceived to be “too salesy” then they get slated. Referrals can work in that sort of environment, but then unless the site owner can provide a link directly to the company being endorsed it’s hard to monetize. An ad linked to a competitor won’t benefit from an endorsement of someone else.

I am not writing off socnets as doomed to failure because they can’t generate business, but I think we need to consider what sort of business they can generate. Our model at WeCanDo.BIZ will be charging the network members a fee (they are small businesses) to manage their endorsements and better channel the referrals. They won’t clear cash on the site itself (we will from them however), but they’ll see value in the number of calls or messages they get that lead to (B2B) business down the line and this will, we hope, keep them as paying members.

I think money can be made, but not everywhere.

Ian Hendry
WeCanDo.BIZ
http://www.wecando.biz

I think you are missing the point. IMO, the key to making money is turning a community into an economy, where trade can take place and recognition can be given. In an economy, there are lots of ways to make money and build profitable businesses. And if you look at it from the perspective of turning communities into economies, it is not restricted to consumers, the young or anyone else for that matter.

If we segment the use cases for social networks, I think we will find different mechanisms to create economies.

Gaming: Virtual currencies obviously work great as a way of turning gaming environments into economies. Casinos in the real world use chips and make more money because they do. Second Life uses Linden Dollars to run it’s economy. XuQa uses Peanuts as it’s currency and is profitable. In this segment, the virtual currency reduces trading friction and creates a recognition system for users. Lots of money is being made by the bank in this segment.

Commerce: eBay is the best example in my mind of a community that has been turned into an economy. eBay uses real currency. But it enabled an economy to build by enabling trading mechanisms such as auctions, user ratings and PayPal to reduce trading friction and ensure efficiency in the market.

Specialist social networks: In this segment, I think there is a stronger argument for people being interested in buying things, but this type of social network is all over the web in the form of forums. There is every type of special interest forum imaginable on the web and the forum operators can make money advertising into these special interest groups. Just look at Internet Brands and you will see great example of this. Internet Brands is monetizing communities in automotive, home and travel segments. The thing that they are not doing is creating an economy where trade can take place, and I believe leaving money on the table. Perhaps the most interesting example to me of someone creating an economy in the specialist segment is Etsy.com which is focused on the handmade craft segment. In Etsy’s case, the creation of the economy is not about a virtual currency, but about combining a social community with a social marketplace.

B2B: I think in the B2B use case it may be more about using the social network to increase the effectiveness of the real world trading economy. Just look at the Quickbooks or SAP communities. They are big and active, and more importantly they increase trading efficiency by helping people who need help find providers who can provide it.

I could go on, but hopefully this clarifies the point that turning communities into economies can be a very effective way to create profitable businesses.

Alex

I remain unconvinced that there is EVER going to be a way of making real money on mainstream social networks and this ultimately affect their longevity. The sort of people who have spured their growth perceive they have an online chang out to play with friends – no one likes their personal spaces being invaded by salesman in the real world and so, I believe, will be the case online.

A much greater potential to make money from social networking is riding a forthcoming wave of specialist social networks, appealing to specific interest groups, such as sports or business. People on these will be more receptive to buying because the sellers can be much more relevant with their offers.

Creating a gimmick to try and engage the uniterested is NOT the way forward in my opinion.

Ian Hendry
http://www.wecando.biz