With all the space being devoted to "Web 2.0", I've often found myself wondering if I'm the only one who just "doesn't get it." Not that I don't understand the enjoyment individuals are getting in connecting online in new ways with friends, colleagues, peers, contacts, etc. That I get. The thing I don't get is what's the hype all about. I especially don't get the surreal valuations and venture capital funding for some "Web 2.0" companies. Connecting is fun, monetizing the engine doing the connections is an entirely different story. Which leads to the next question: how valuable is a social networking engine if its plans for long-term viability are unclear?
Maybe others are better than me at seeing the potential of these types of platforms, but for today, at least, Google's CFO seems to agree that there are still questions to be answered as to the viability of monetizing on social networking. Indeed, as part of Google's release of their quarterly results, he said: "We have found that social networks are not monetising as well as we were expecting". Apart from reporting an almost 10% drop in the search giant's shares, the Financial Times further outlines what seems to be best guesses on the part of Google's top management as to how they might be able to monetize on the traffic going to the social networking sites they are working with.
I wish all the best to Google of course, but I still wonder how any of this adds up when, on the other hand, we have eBay informing its shareholders of a Skype write-off because basically they can't make as much money as they thought they would on it, despite Skype having over 200M users.
Myself, I'm an avid user of LinkedIn. It does a good job of keeping my contacts up to date and allows me to find out if some of my direct contacts might allow me to get in touch with 3rd parties of interest. A simple and straight-forward use for me as a user. I'm unsure, however, whether LinkedIn will ever be able to make money from me. I don't readily see a service they might offer that directly relates to my contacts that I'd be interested to purchase and I'll have to admit that I don't pay attention to the ads shown when I'm on the site. And the latter is probably a problem for both LinkedIn and me -- I'd like LinkedIn to stay around, it's useful.
For better or worse, and I know others who do the same, the only online ads I sometimes pay attention to are those shown as part of a Google search result. And, no, I don't pay attention to Google ads shown on any other web page, just those that show up when I type a search after going to google.com.
Putting on my business hat again. Connecting is fun and, done properly, can definitely boost productivity. The key question here is: how can a social networking engine be used as the basis of any business ecosystem if those financing said engine still have yet to figure out which monetization strategy will hold?
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