Monetize My Social Network? How One Can Answer the $580 Million Question


How do you monetize an online social network?

That is, after all, the $64 million question of the moment (or should that be the $580 million question, Mr Murdoch?). ‘Social networking’ is all the rage, and new online social networks are multiplying like rabbits – just witness their aggregation at the Museum of Modern Betas, which operates a useful list of The 50 Most Anticipated Applications in the Webosphere, as measured by the number of bookmarks at for applications which have not yet been publicly released, updated each week (

So how DO online social networks make money?

Well, in the first instance I’d suggest that that depends on the nature of the network itself, in terms of where it sits on a particularly crucial axis — the axis of trust. In other words — is your network low trust or high trust?

MySpace is a low trust social network. Its colossal size and success-breeds-success/’social phenomenon’ standing, coupled with the proliferation of fantasy profiles lurking behind anonymous user names, has, the more high-minded might argue, devalued the concept of exactly what constitutes a ‘friend’ (as witnessed by Christine Dolce’s 900,000-strong network at Where trust exists on MySpace, it does so amongst those who already know each other outside of the network, or — in a different dynamic — from fan to performer/celebrity. Otherwise, the low trust thing is just part of the fun.

At the completely opposite end of the online social network spectrum is ASmallWorld. ASmallWorld is a high-trust social network. It operates by invitation only, and was specifically designed by its founder, Erik Wachtmeister, for people who are already connected to each other in the offline world, by ‘three degrees of separation’, as he calls it.

Because invitations are selective, and because any abuse of the network is policed stringently by both membership and site management, an exceptional level of trust exists on ASmallWorld. Simply by virtue of being part of a ‘gated’ community, the members have access to a degree of acceptance, and therefore to a caliber of introductions, social events, jobs and mutual, practical support and assistance, that is a rare commodity in the online social network world.

Where your network sits on the trust axis is important when it comes to making money out of it, because it affords you very different types of monetization opportunities.

Frog Design talks about how we have moved from an Age of Information to an Age of Recommendation. As with the internet itself, online social networks and communities take word of mouth and ‘recommendation’ to a whole new level. Whether you are a high trust or a low trust network determines your power of ‘recommendation’, and whether that power is a function of the network brand itself, or simply a function of what can be stimulated within the community.

If you are low trust, then pulling in advertising and promotional opportunities will depend on your ability to enable your commercial partners to leverage impact, surprise, a rapid build of awareness and numbers, and an immediate ‘social phenomenon’ effect — ‘flash mob’ marketing, as it were. ‘Recommendation’ becomes more about superficial buzz, word of mouth, a targeted crescendo that drops away again quickly.

This is why low trust networks lend themselves well to, say, movie/entertainment launch marketing or specific promotional timelines. But also why they could seek out further monetization opportunities in areas where ‘flash mob’marketing and rapid mobilization of both word of mouth and action in a short space of time are particularly important — such as cause marketing; any brand or communications effort revolving around some kind of manifesto or movement; and highly seasonal products/services.

If you are high trust, you have a different ‘recommendation’ dynamic going for you — one that, in a high trust network, is driven as much by the emotional contextual endorsement of the network brand itself, as by the network members. In a high trust environment, the appearance of any commercial presence carries an implicit network brand ‘recommendation’ that is more heavily weighted — which in turn puts more of an onus on the network brand to ensure that there is real synergy and perceived ‘reason to be there’ for commercial partners, in order to protect their own brand.


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