Social Staying Power — Business Models Matter

Revenue sources wield a powerful influence over the decisions of any well-run business. Sometimes strategic objectives may temper or even ignore that power for a short time, e.g., to pursue a diversification or attempt a paradigm shift, but over the long term a company that does not satisfy the needs of paying customers will fail.

This principle has profound implications across today’s landscape of social networking platforms. The revenue sources are mostly advertisers and buyers of tracking data, not the individuals and companies that participate in the social network. Of course, on most social networking platforms the users enjoy “free” services and, as a result, wield no direct revenue power. It’s no wonder that the business models of the social platforms are called “Surveillance Capitalism,” and discontent among the user populations is beginning to boil over.

Advertising is a tried and true model for media businesses such as newspapers, magazines and television. Measuring viewership and campaign results are long-established techniques for maximizing the value for and revenue from advertisers. This model has served the public media markets quite well, but there are some important differences in the way the models apply in a social network environment.

Ideally a social network is a point-to-point media environment rather than a public one. Most content is created by the participants and targeted to their own niche audiences — its value is largely personal. Tracking in this environment today occurs at much finer granularity, and often encroaches on areas that most individuals would consider private, even intimate. This richer data set offers much greater value to advertisers and others wishing to influence the behavior of network participants, and so this tracking data has, in many cases, become as important a source of revenue as advertising.

Of course, advertising and tracking data are attractive revenue sources that scale organically with the network user base. But monetizing eyeballs, tracking user behavior and selling the resulting data subverts any notion of privacy for end users and ultimately creates an adversarial relationship between the social platform and the social user. Moreover, such a business model forces the need for growth in all possible ways, particularly to meet the objectives of advertisers. This focus inevitably results in very large, impersonal networks delivering low and declining value to users.

At Neone we believe that a social network service business model should center on the needs and preferences of users as a natural priority, not an afterthought. Such a focus depends foundational and sustainable revenue coming from those users, not acquirers of user data. Our assessments show that with the economies of scale available through virtual networks and the cloud, provision of rich social networking requires only very modest subscription rates. This approach is arguably the only long-term stable model for building and growing a social network service.

As a result, we don’t need to monetize your eyeballs, track your clicks or sell your data.

At Neone, we just want to help you connect, today, and for the long term.