In last issue's editorial (http://www.code-magazine.com/Article.aspx?quickid=1208011) I discussed the Veruca Salt mentality that a lot of people have when it comes to their favorite websites. One question I asked was, “How much would you pay for services like Twitter or Facebook?” Since I wrote that editorial I learned that people would be amenable to paying for these services (depending on the amount of course). Well, now's your chance….
Just yesterday my Twitter feed began lighting up with mentions of a new crowd-sourced social networking platform. I began digging into this project and realized this was EXACTLY what I was looking for: a company that provides an interesting service with a real business model. So here it is…
Click over to http://www.app.net. App.net is a fee-based social networking platform. As of this writing, over 11,000 people have contributed over $734,000 in the form of annual membership fees. I supported App.net for the $100.00 registration fee. Why would I support an un-proven platform? Simple. I believe in paying for useful services. I want to show the world that I am one person who values other people's work.
Is this done without some trepidation on my part? No! One thing that always concerns me about “yet another social networking platform” is critical mass. It takes a pretty good sized number of people before a service reaches this critical mass. I do believe that if over 11,000 people have ponied up money for a site, a critical mass might just be a given. There are no guarantees that it will ever amount to anything, but when are there ever guarantees?
I wonder if this type of site is just the start of a new trend. The stock market has shown pretty clearly that free sites are a bad deal for investors. Facebook has gone from $45.00 a share to $21.00 in a flash, and a lot of other recent IPOs have fared pretty badly as well. This has the potential to create serious problems for companies that have not gone public yet and have no real revenue model. Case in point: Twitter.
Twitter has no real revenue model to speak of. Twitter's lack of a revenue model makes them dependent on the already saturated advertising market. My Twitter reader (that I paid real money for) makes it very convenient to ignore advertisements. Then there is Twitter's data. The data collected by Twitter has the potential to be valuable. The keyword in that statement is “potential” because it will take some serious analytics to transform tweets into real salable products.
A more obvious revenue source is the users of Twitter. I have no idea why Twitter doesn't propose some type of paid add-ons to their service. How about 200-character tweets for $2.00 a month as a start? I know plenty of people who would pay for that. How about a fee to go back and retrieve all of your old tweets? I would like my first tweets. These are just a few easy ways for Twitter to generate revenue. Will this happen? Who knows? Hopefully they will come up with a solution before it's too late. Eventually the VC market will dry up for these types of plays for eyeballs. The world of easy money dried up in 2000. It could happen again.
Facebook should take a look at their revenue model as well. In my earlier column I said I might consider paying for Facebook. The more I think about it, I am not so sure now. As of late, I think Facebook is getting closer to being like MySpace, albeit without the “ransom letter” look and feel of MySpace. Facebook used to be useful for keeping up with messages from friends. Now it's the home of the witty photo. When the platform becomes more signal than noise it's longevity gets called into question. What sort of enhancements at Facebook might I be willing to pay for? How about letting me filter my timeline more? I might pay for it if I had more options to configure it.
In 2000 when the tech market crashed, the only real survivors were companies with real revenue models. Pets.com - gone! Etoys.com - Gone! Webvan.com - gone! The concept then was to attract new users at all costs. As we now know, that was a failed business model (it's almost an insult to call it a business model). I hope that App.net returns us to a place where people pay for services.
