It seems like a long time since Internet startups thought they could offer a free product and make a living selling ads. That would be in 2004, during the birth of Web 2.0.
Such is the incredible pace of change in the Internet's evolution. In its own historical scale, that moment would be equivalent to the Renaissance: the Dark Ages of the dot-com bubble was past, but superstition still at times superceded reason.
To wit, the mantra was: "Build a community of users first, monetize later."
How far we've come.
"Making money from ads was never a proven concept, it was just a promise," said Paul Verna, a senior analyst at research firm eMarketer. "Companies discovered eyeballs [on web pages] don't equal money, especially when you're dealing with user-generated content.
"This is very clear now. It wasn't clear until a while ago."
Although the web is filled with free tools that let people talk, share content and offer advice, few make money. Twitter, the social network on which people communicate in 140-character bursts, is the most famous among them. Though it boasts millions of users and continues to grow at a cheek-rippling rate, it has yet to make a dime.
Its leaders said they won't display ads on the service, and they won't ask its users to start paying for it.
But they've hinted at a revenue model that is becoming increasingly popular with new startups in social media: Charge the companies that use it as a marketing tool.
Big companies have the money. And they're increasingly turning to social media as a way to reach consumers and cultivate a youthful brand image. That works fine for startups scratching around for a revenue model.
One of these is Praized Media, a Montreal startup that offers a tool that can is embedded in blogs and elsewhere online, which allows users to search for and rate local merchants. Their original plan was to make money each time a user clicked on a sponsored link by a merchant.
But now they're moving away from a consumer product to monitoring online conversations for companies so that the companies can seize on sales opportunities.
"Let's say someone on Twitter says she's planning her daughter's wedding," said Paul Dawalibi, president of Praized Media. "We'll be able to pick out from that, that a wedding means a florist" and connect buyer to seller, for a price that would be paid by the seller.
"People are yelling out needs online, but so much of it gets lost in the ether," he said.
Another Montreal startup, Identi.ca,is an open-source copycat of Twitter, popular among the free software crowd. It plans to make money by offering a version of itself for companies to use internally among employees.
The idea of seeking paying customers in enterprises is still experimental, but it shows promise. Companies large and small embracing social media see them as no longer a fad, but a crucial element in their marketing.
In a survey of decision-makers in media and entertainment, consulting giant Accenture found that 53% believe social media represent the highest growth opportunity for them.
About the Author
Rajeel is the Web designer and also a blogger at Lab Of Web. He is a 15 yrs old teen guy who lives in Kerala, India, and have great interest in Computers and other Tech Stuff. That's why he loves to call himself as a TeeN GeeK. Follow Rajeel on Twitter for updates, design and web development.
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