Social Networks gather people with common interests and many people enjoy being part of a large network of friends and future friends. Social networks actively promote people to join so that they can increase their clout with online advertisers. These Social Networks make large amounts of money from the advertisers that want to get their products and services in front of all of these people.
This is why most Social Networks provide splendid high tech features such as discussion groups, video email, online social games, photo albums, contests, and many more exciting things to come. They create a virtual mall of fun things to do so people will not only visit but stay for long periods of time. The longer a person stays on a website, the more opportunity there is for the advertisers to place their ad in front of more people. This is referred to as the “Stickiness” of a website.
But there are other good reasons for people to use social networks as well. Networking is a way for business people to meet prospective clients, partners, and customers in a friendly social way and this has always proven to be lucrative. This is similar to the reason why many companies provide tee times for their employees who are entertaining clients – it is a way to personalize a meeting during a friendly round of golf. Thus if you have a business, being socially active can make you money.
These attributes of social networking have been very successful in recent times for increasing the number of people gathering on these social network sites. However, competition in this ‘niche’ is growing and will continue to grow. A new niche is needed.
Most business must spend money not only to start up but also to grow the number of customers they have. Social Networks do advertise in their infancy to gain members and this usually puts them further in the “red” until they can persuade enough people to join for companies seeking good advertising opportunities to pay them for the ad space. Many companies of all types commonly must spend upwards of 70% of their revenue to maintain and grow their business. If this money is paid to advertising agencies, it only benefits a limited number of people.
Enter the “monetized” social network. Since most businesses in the world are very happy if they can make a 30% profit, why not pass 70% of the advertising revenue back to the members of the social network? Base the amount of revenue each member receives on the amount of members they bring into the membership and you have a viral team of social net-workers who are being paid to increase the number of people in the network. Instead of paying for advertisements to get people to come to their website, the members become the advertisers and are compensated for their efforts. Also, since the advertisers who would pay this social networking site for hosting their ads is willing to pay the going rate for internet advertising, both the 70% share being passed back to the members and the 30% profit for the social networking site owners grows proportionally with the growth of the membership. If you can find a social network like this, wouldn’t you rather be a member there instead of Facebook, Twitter, or MySpace who keep all the profits for themselves and take advantage of the very lucrative services their members provide them?
The business model of this monetized social network could be structured to reward those who work the hardest to bring new people to the website. After all, this is how money is made on the internet. So imagine if you developed a method to track both how much each member views the advertisements on the website and how many people they have invited who join the network, how this could provide the basis of a commission structure that would be fair and equitable.
Consider a commission structure in a simple database that tracks who invites who and places the new people in a structure under the person who invited them. Assume that membership at this social network is free. Now imagine a common multiplication of people due to all being rewarded for bringing new people. Say Joe invites 10 of his friends to join and provides them with a link. These 10 friends join because they like Joe and they have common interests together. Each of these 10 friends have 10 friends who want to join them also. Now there are 100 people under Joe and Joe is being rewarded a portion of the advertising revenue for 100 people and he only invited 10 of them. Of course, those 100 people could have 10 friends each that they invite and the numbers of people now under Joe are 1000 and this continues. Joe only invited 10 but there is nothing to stop him from inviting far more and he continues to be rewarded for bringing new people to the website. This is the real power of social networking which will dominate the industry very soon.
Each member is paid based on the amount of time they spend on the social networking site doing the things we all do such as clicking advertisements (just window shopping), doing searches, checking our email, playing games, interacting with our friends, and making new friends. The social network could also provide volume discounts to its members through their advertisers so the members can save money on the products they buy. Thus each member shares revenue in one case by the time they spend accessing the website. The other stream of income is from a commission a member gets for bringing the new people onto the site..
You can do the math. For instance, just use 5% of the total revenue generated by Joe’s 10 (plus) people he invited himself, and use 2% of everyone they invited down to 6 levels below Joe. Using the example, if Joe’s group expanded to 6 levels, there may be 1 million people under Joe. Considering that there are over 1.7 Billion people using the internet and this number is increasing every day, how hard is that to believe?
Also, to get a group of more committed people to get involved, you offer a premium level membership to some. This is a normal business method to employ leaders who can help manage and promote the groups who will come. But instead of being free, you charge $200 USD so that you only allow people who can commit to an idea and make a sound decision to join in that level. Right at first, you will need many of these types of people but once they have established themselves, you would close this level of membership until the size of the groups demanded more leadership or training. So you compensate these special premium members with say, 20% of their directly sponsored member’s revenue and 6% of of the revenue generated by the people they sponsor down to 6 levels.
A plan such as this would expand the social network quickly and probably dominate the niche in just a short time.
So, can you make money with Social Networks? Yes, and Social Networking on the Internet is ripe for just such a business plan.