My favorite social networking site is one that makes $10B of revenues/year, has no infrastructure costs, and has no salesforce, has no management team. Can you guess which one it is? I can't tell you. It's invite only. You'd know if you knew. But it is a great site. It's browser based, but technically not a site, since it's all peer to peer. All the data, all the content, is scattered around the laptops of our 50M users all around the country.
Our site is different than others, in that it's owned entirely by its users. It's the open source equivalent of social networking. Our members suggest features, and our members implement it. It's a lot of fun when you interact with other cool people in a place that you've built yourself. Being P2P, there are very little costs too, but they are far overcome by the revenues we generate, and that's in the billions.
That's right, this open source community makes nearly $10B in revenues per year, with room to grow to $50B. No other social networking site makes this much money. How do we do it? We make this happen by being our own ad network. Any advertiser who wishes to influence our decisions, can do so, but they now have to pay us to do it not some evil third party. While other sites only allow you to monetize the content you create, we let our users monetize their most valuable assets; their decisions.
Advertisers spend about $2000/person in advertising per year. Our users spend 25% of their awake time on our sites. That's $500/person and we have 20M members. That's how we get $10B in revenues.
So how do we build our own ad network? Well there are two things that must be done. We have to find and sign up advertisers, and then get the right ads in front of the right member.
The first is easier. Our users sign up businesses and products they like. With 50M users, it doesn't take long to sign up a lot of advertisers. They sign them up for free for the first three months, and our users do all the work of creating the ads and messaging until the advertiser can do it themselves. The advertising world has embraced user-generated advertising, and they let us do all the creative work for them. Each user who signs up an advertiser gets a piece of their ad spend on our network. Since each user competes to create the best campaign for people like themselves, they create great ads, and our advertisers are hooked once they see how effective this all is.
How do we determine who sees what ad? Every one of our members, when logged in, shares their browsing history into the community. So we know what our users do on their site and we generate a profile for them. Then we experiment. We put ads randomly at first, but quickly it becomes clear what kind of person reacts to what ad (we know all the way form clicking to buying, nobody else can do that), and we learn from the community what ads work for who. It's not an algorithmic solution but a social one.
No data centers, no sales force, no infrastructure costs and $10B of revenues.
That's the beauty of my new social network.
What do we do with all the money? Campaign contributions...we have a huge influence on our elected officials. When and email goes out from us, it is as if it came from 50M people, ergo, whatever we want, gets done. In the election year 2008, we are thinking of asking the new President to write us a weekly email on progress on our issues on his blog. What do you think, can we pull it off?
Wow. Think of all the money I could make as a spammer on this network.
Posted by: Kevin Dewalt | April 27, 2007 at 08:17 AM
We haven't had a spam problem yet. Since a spammer has to go through the experimentation phase, it doesn't get to put up an ad unless it gets good clickthroughs, and spam usually doesn't. If somebody put a really creative spam ad and did get meaningful clickthroughs, then it's not spam :-)
As for spam emails, if a spammer signs up we knwo who invited them and let the community know. Your profile would have a badge that shows you invited a spammer :-)
Posted by: baris | April 27, 2007 at 12:47 PM
Ok this is getting scary. I wanna get out of it...
It's worse than Google 2084 here http://livepaola.wordpress.com/2007/04/21/google-2084-humor/
PS Baris, isn't your birthday today? Have a happy one!
Posted by: franzbuquy | April 27, 2007 at 03:48 PM
Franz,
Thank you!
Posted by: baris | April 27, 2007 at 09:54 PM
For a very long and thoughtful reaction to this post, please see the comments at:
http://alwayson.goingon.com/permalink/post/13223#comment2832
Posted by: baris | May 08, 2007 at 09:26 PM
In a cultural sense, this sounds somewhat like Second Life already (or even the Web itself!), although technically it's rather different (SL not being peer to peer - yet, but they're open sourcing a lot now). Companies are already paying SL veterans to build stores, islands, and items for them, and SL users are visiting those properties. SL then cashes in because they're paid on a per-server basis.
If SL were totally open sourced in a P2P-esque fashion, where does the revenue come from? A virtual economy? Possibly, although if the client were also open sourced, you might have big issues in implementing such a network due to the ability to totally eradicate or block advertising from view (the Web is already dealing with this problem).
In fact.. isn't what you're describing /almost/ the Web in its current state, but with some sort of P2P Google in place? The Web is P2P (in a sense), individuals run advertising through brokers, etc.. and Google is probably the biggest ringleader reaping big financial value from little self-worth.
Posted by: Peter Cooper | May 11, 2007 at 02:17 AM
Peter,
Thank you for your comments. Makes me happy to see thoughfulness on this blog.
What I am describing is a group of people who have decided to own the ad network that advertises to them. We have people who have written their own databases (mySQL), their own operating systems (Linux), why not own something that makes the community some money. If signing up as an advertiser is as simple as a self-serve process, why not own that network?
That I believe, is one thing different than the SL and the web today.
Posted by: baris | May 12, 2007 at 03:40 PM
One new social network site I found is Tuxxo.
Tuxxo combines the featurs of MySpace , YouTube and Flickr all in one site.
The place to go is http://tuxxo.com
Jenny
Posted by: Jenny | March 11, 2008 at 03:18 AM
Hi Baris,
I think that it is nice that you help out start-up technology companies. I'm trying to get the word out to VC's like you, about a new website called Conektinc at http://conektinc.com. It matches VCs with entrepreneurs. If you are interested, you can enter in your e-mail address at the link I provided to receive a notice of the launch of this new site. Thank you!
Posted by: Mernald | November 06, 2009 at 01:17 PM
Such sites are my favorite too))
Posted by: Clenbuterol | April 29, 2010 at 04:13 AM