Putting the search for a business model into perspective
The search for a working business model isn’t limited to just online newspapers, y’know.
Bob Garfield of Advertising Age points out:
Consider Twitter, Facebook and YouTube, which among them have altered human behavior of a grand scale. Two and a half years ago, Google paid $1.65 billion for YouTube. The 2008 payoff: about $90 million in ad revenue — which might (but probably won’t) cover the costs of copyright-infringement litigation and certainly won’t cover bandwidth charges. Facebook, whose 2007 valuation of $15 billion has shrunk to about $3.7 billion, had 2008 revenue estimated at $300 million. And Twitter had $0.
Thus, the mantra: “We have the audience. All we need is a business model.” As if adequate revenue were somehow guaranteed by physics or heavenly deity. It isn’t. I’ve pored over Isaac Newton and the Ten Commandments. There is no “Thou shalt monetize.”
And Pete Barlas of Investor’s Business Daily reported Monday that despite all its buzz, Twitter is facing some huge hurdles on the road to making money.
What it hasn’t done, yet, is bring in one dime of operating revenue. The 2-year-old company reportedly will unveil its plans to make money in April, and analysts say the plans will almost certainly, to an extent, include selling ads on its Web pages.
And that’s not a slam-dunk, Barlas writes. Reports are that most web advertisers now say they’ll spend significantly less on social networking sites over the next year.
Advertisers have become wary of social networking sites, which don’t help sell products as well as Google search ads or ads tied to other content-related Web sites, says [Forrester Research] analyst Jeremiah Owyang.
“Historically, ads on social networking sites perform very poorly,” he said.
Well, you know what they say. “Information wants to be free.”
Read the Investor’s Business Daily story here. Find the Advertising Age piece here.
March 24th, 2009 at 2:28 pm
Is it sad that instead of enjoying web sites, I now go to a site and ask “how do they pay for this stuff?” Twitter being one and a bunch of other sites with free templates and other hoopla.
What are we doing with the world?
We’re either moving toward a bigger collapse or finally moving toward the moneyless society of Star Trek!