Aluminium Crowd, originally uploaded by Ngọc Hà.

For quite a while I´ve been asking founders of Social Networks how they earn their money. Some has replied flippantly “through advertising” and when you go on to their community you can´t find any advertising, it makes you wonder…Do they really earn any money or is it just a hype to create interest among investors.

Well..there are certainly successful Social Networks out there and here are some ways to earn money and make a social network economically sustainable.

Advertising – Various sorts of banners, Skyscrapers. Measured by CPM (Cost Per Mille) or CPA, Cost Per Action. Many established Social Networks charge £20 CPM. It means per every thousand viewer/impression you earn £20, minus the fee to the ad-agency partner.

Partnerships - Add services that brings value to the community e.g a msn chat will increase the functionalities of the community and add value to the subscriber.

Member Subscription Fee - Members pay a monthly fee to subscribe to the Social Network.

Merchandise - Online shop - T-shirts for an example, check out Threadless a good example of a buzzing niched social network focussed on the design of t-shirts.

Commission - You can act as a broker e.g ebay, amazon and can charge a commission fee, normally a percentage of the sales.

Micro Payments - Members buy virtual gifts, greeting cards, a bunch of virtual roses or other gadgets. Someone bought a virtual space station in the game Entropia see previous post.

Donation - If your members or viewers “like you” they can contribute with a donation, payment often through paypal or similar.

Upgrades - Add functionality. e.g with a pro version you can do this and that normally for a monthly fee.

Customization - The member can change and add to their status. Engage more with the community, of course for an extra fee.

lust money, originally uploaded by catsfather.

A model that we will see more of is the Shared Revenue Model e.g Revver. The revenue is shared with the content provider or member after deduction of expenses.

You can find valuable information about most of the Social Networks, what they charge to advertise on their site, how many impressions they have per month and who sells their advertising in the book Brad which you can buy monthly or why not go and read it for free at the British Library´s Business and IP Centre.

To learn more go to events like mini bar or nmx. I attended an event called Pitch Camp that was very useful. It was about how to fund a start-up of a digital business. The speakers were, Paul Fisher Advent, a venture capitalist. He explained their investment strategies. Jay Bregman, Co-Founder of E-Courier and Paul Birch, Co-Founder of Bebo, explained how they got started and how they got their first investments. view talk.

Virtual Security, originally uploaded by svenwerk.

Is the solution for virtual crime to invent a virtual police force?

I read this article about a 17 year old teenager that was arrested for stealing virtual furniture worth £2800 at Habbo Hotel and I was thinking, How would a virtual police force would look like!

I remember when Mindark (from my old hometown Gothenburg, Sweden) where struggling setting up the virtual world Entropia and where fighting against their biggest enemy, the cashflow. I also remember the quite weird thought about buying a virtual redbull for 50p to get more power. A golden dream for brands, to be able to sell products without the need of stock.

Now its cash-in time, Last year MindArk had a turnover of $365,000,000 for selling virtual items. One user have paid $100,000 for a virtual space station!

My (brilliant) idea was to invent a tool, that you could use to scribble down notes, drawings etc online and use it when you are chatting or skyping with someone, in a conference or in a brainstorming session.

I did my research and I found out that there were at least three different existing tools already. There are probably more out there. Let me know if you heard of any others.

Queeky
Is an ambitious site, built as a community for people who like drawing and would like to share their knowledge.
A nice function is the replay function, where you can follow how the drawing was made.
In the Multi-Draw function you can create a drawing together with a friend.

Imaginationcubed.com
A clean and well designed site, sponsored by GE. You have the basic functions here, Multi-Draw, replay and you can share the drawings with your friends.

Offtype.net
A quite simple site, feels like hobby project by a programmer, but it´s functions works fine.

This is an attempt to highlight success stories,
using new formats and Social Networks.

Lonely Girl15 was launched as an experiment by the creators, Greg Goodfried and
Miles Beckett. The format they are using is less than 4 min and they manage to capture millions of viewers.

I believe a key factor is the interaction between the viewers and the creators.
The creators read the feedback they get from their viewers and use it to produce upcoming stories.

Millions of viewers but how do they earn their money?

When the question comes up Miles Beckett roles his eyes.
They are moving over to a network called Revver, an online video
community that share its ad-revenue with it´s members,

but they are not interested in sharing the information with bloggers so
check it out on youtube - interview with the creators.

Is this the future of broadcasting?
I believe so…It´s just the beginning, just upload more crazy stories and themes, involve the viewers, or
why not ride on the wawes of the hype and launch your music video. This music video has so far 860 000 viewers!!!