The future of revenue for Facebook and friends

18 Jul 2008

Like most things on the web, people expect to get full functionality on social networking sites like Facebook and MySpace because advertising is where the money is made and is what drives these sites forward. But is it possible to create an alternative revenue stream and will people pay?

Campbell Scott, CEO of Irish social networking start-up IGO People thinks the answer is, well, yes and no: “We have a slightly different business model. The individual and the group will be able to use this for free but we are proposing a licensing fee for each system that an organisation uses.”

This may not be a bad idea given that online advertising, while not drastically changing, is decreasing slightly in profitability since the economic downturn. A case in point is the 2pc decline in revenue from AdSense generated by Google in the second quarter of 2008, in comparison to the first quarter.

“IGO People is a social networking site but its purpose is getting things done: businesses connecting with the customer, citizens connecting with government,” said Scott. In other words, it is social networking but not quite as we know it.

“We see it using the same sort of tools as sites like Facebook or Bebo, but acting as an effective communication tools for commercial use and for society.”

Scott pointed out that in this day and age people are still phoning up the customer service section of a company with queries or complaints when that could just as easily interact online through a social networking platform.

“Why not use it as a tool to get customers to become part of your product development process?”

Scott also pointed out that as a company you will find that people talk about you online, blog abut you and you have to manage your reputation – a social networking platform could become the focal point to deal with this. Of course, you can always start a company blog, but a ready-made platform might suit people better.

“An organisation is a structured entity – you expect it to respond and to come back with its side of the story.”

IGO People will begin piloting its service in August with a number of commercial customers and said it is seeing early traction amongst telcos and the financial sector but also the small business scale.

By Marie Boran