Social web business models
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Business models - it's revenues minus costs
There is no shortage of discussion about Internet business models these days. And they almost always focus on revenues. But revenues are only half of the value creation equation.
Freeconomics
This week we saw the release of Chris Anderson's book Free and reviews from the New Yorker (Malcolm Gladwell) and the Financial Times (John Gapper) . I'd like to talk a bit about the firestorm that freeconomics (fed by Chris' book) has unleashed but first we need to clarify something. The FT piece says: The most plausible contender for an "entirely new economic model" made possible by the internet is what Fred Wilson, the New York venture capitalist, has dubbed "freemium".Not only are most of the hottest Web 2.0 startups unprofitable, quite a few lack viable revenue models altogether. This has led cynics like me to criticize these startups quite harshly over the past several years. Twitter, for instance, is the perfect example of the prototypical Web 2.0 startup that has captured the hearts and minds of the Web 2.0 "community" but hasn’t captured any real money (outside of venture capital). When confronted with questions about the financial viability of their hottest startups, Web 2.0 proponents usually have a similar response: Rome wasn’t built in a day. When Google launched, we’re reminded, it didn’t know how exactly how it was going to make money. For young Web 2.0 startups that are growing rapidly, we’re often told that growth and "critical mass" are more important than revenue models and profitability.
Web 2.0, Revenue Models and Profitability: A Web 1.0 Comparison
A grim view of social Web revenue potential... but focusing only on the most obvious cases. There are plenty of counter examples. It just shows that the equivalent of 'monetization paradigm shift' that Google did with search, did not happen yet with social web. by Mar 1
Posted: February 11th, 2009 | 5 Comments » “A lot of expectations are coming down in terms of monetizing social media” says Paul Verna , quoted by Daniel Lyons in his latest article debunking some of the myths around bloggin g. Most (99.99%) blogs don’t make money and at best create value in an indirect way (exposure, network, invitations). I agree with the main point of the article: the business model for social media is yet to be found. It feels like 2002, when Google was still looking for a model while Overture was leading the way with a far from perfect offering. From the 2002 New York Times:
Patience - Google did not always have a biz model
Google also had its fair share of criticism at the time for its lack of business model... by Mar 1
Facebook is tight-lipped about its revenue numbers, which is typical of private companies. The most it has said publicly is that it became “free cash-flow positive” as of last September. At the time, we estimated it was set to bring in around $550 million for the year in revenues based on previous reports that we and others had heard, and from our own calculations. But how did the year actually end?
FB 650bn in 09
Jason Kincaid currently works as a writer at TechCrunch. He grew up in Danville, California and later relocated to UCLA in Los Angeles, California, where he studied biology with a minor in ‘Society and Genetics’. You can reach him at jkincaidtc@gmail.com (he has other addresses too, so don’t worry if you have a different one). → Learn More
1-2 bn in 10?
Posted by Tom Foremski - March 18, 2010 I recently wrote about Twitter's business model as ultimately enveloping ever greater parts of its developer community. [ Twitter Is The Black Hole Of The Twitterverse... ] After all, why leave money on the table? Why not produce the best desktop client, or mobile client?
Twitter's Future: Tyrant Or Benevolent King... - SVW
Survey of web biz model
Building or launched a web site/application? Check out the choices below on how to generate money from your hard work. Note that these are not mutually exclusive: consider mixed hybrid models too. Revenue Share End-users are offered a cash incentive to make the website/application generate revenue, by sharing a percentage of revenue with them (usually based on their personal referrals or popularity of their content).
It's towards the bottom of the page by Aug 3
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Social web player XING annual and interim reports
One of the best source of social web revenue and cost benchmarking: Xing - a european competitor of LinkedIn - is a public company so all reports are public. by Mar 8
So Business Week gets their hands on Digg’s financials and reports that the company had 2007 revenues of $4.8 million and losses of $2.8 million. The first three quarters of 2008 Digg had revenues of $6.4 million and losses of $4 million. That implies total 2008 revenue of $8.5 million, with $5.3 million in losses. First of all, ouch. People close to Digg once suggested to me that the Microsoft search deal , which was announced in July 2007, would bring in well over $100 million in revenue to Digg over the three year agreement (something we’ve never reported).
Digg cost base figures
Actual cost per FTE is around USD 200k or EUR 150. So should be a bit lower in Europe given lower salaries or prices vs. Silicon Valley. by Mar 6
Cool sizing figures 5-15 engineers is a highly usefull confirmation! by Mar 1
Agreed. The total cost base is also in line with our thinking. by Mar 1
Twitter profitable
Interesting as well to note that they passed directly from "no revenues" to "break even".....! by Dec 21
Interesting to note that Twitter has a total cost base of 20-25m$ for 80 employees by Dec 21
YouTube profitable in 2010?
As financial forecasts go, it wasn’t delivered with the sort of ringing conviction you might like. But today, for the first time, Google’s CEO disclosed that he was expecting YouTube to make it into the black some time in 2010. If he’s right, it will be a significant turning point, and bring vindication for one of the most controversial internet acquisitions ever mounted. It came in a brief conversation I had with Eric Schmidt after the analyst call to discuss Google’s latest earnings. Given very positive comments on the call about the pick-up in advertising YouTube had seen in the fourth quarter, I asked him whether that meant it would finally turn a profit before the end of the year. His understated response: “I’d assume so, yes.”Despite some ups and downs, Twitter's future is still looking pretty good and the site is nowhere near its goal of one billion users. So, in anticipation of another flood of users, the site has been hiring like crazy , doubling the number of employees in half a year. Twitter has now reached the 140-employee mark, as cofounder Biz Stone announced, a symbolic number considering Twitter's famous 140-character limit. In keeping with the site's trademark simplicity, the announcement was short and straightforward, "today we are celebrating our 140th employee at Twitter!"
Twitter Plans to Go Beyond the 140-Employee Limit - Having alrea
Zynga Revenues Are Closer To $250 Million, Says Banker
While the most aggressive reports we've seen so far peg Zynga's revenue around $150 million, our banker says he understands the number is closer to $250 million, with huge 60% EBITDA margins. Bonus: See Mark Pincus's presentation from the Web 2.0 Summit → We asked Zynga founder Mark Pincus about these numbers and a Zynga spokesperson told us, "We aren't giving out any numbers beyond what we have publicly stated."Dailymotion, 20 millions d’Euros de revenus en 2008 | Dauran, bl
Dailymotion prévoirait un CA de 20 millions d’euros en 2008. Quand j’ai lu cette ligne ça m’a paru très faible vu l’importance de la plateforme vidéo. J’ai un peu fouillé et j’ai trouvé les chiffres suivants… A priori la croissance de Dailymotion va continuer à augmenter ils devrait donc avoir au minimum 700 millions de vidéos vues par mois sur 2008, soit environ 8.4 milliards sur l’année (estimation faible). Chaque vidéo rapporterait donc 0.24 centime d’euro, je ne sais pas si on parle de CPM dans les vidéos mais si c’est le cas on a un CPM de 2.38 euros sur les vidéos vues. Si on parle en pages vues (PV), il y aura au minimum 14.4 milliards de PV ce qui donne un CPM de 1.4 euro … A comparer au $0.1 / $0.33 soit €0.07 / €0.24 de Myspace (donnée 2006 ?)Dailymotion va licencier - SCIencextrA
La start-up française a bien du mal à trouver le chemin de la rentabilité. Alors que «l'équilibre» était visé pour l'année 2009, Dailymotion se voit obligé de chercher à lever une dizaine de millions d'euros. Le site prévoit d'être en manque de liquidités d'ici à la fin de l'année. D'autre part, les fonds actuels présents dans la start-up, AGF Private Equity, Partech et Atlas Ventures, demandent une réduction des effectifs de l'ordre de 10 %. « Nous sommes en train de voir dans chaque équipe s'il est possible de diminuer le nombre de salariés, explique une source interne. Il ne s'agit pas d'un plan social, mais de départs volontaires négociés qui doivent concerner dix personnes. ». Cet hiver, le Directeur France de Dailymotion avait déjà déclaré à nos confrères de NetEco.com : « Certains analystes surestiment sans doute nos coûts mais sachez par exemple que la bande passante nous revient désormais moins chère que la masse salariale ».Guy Kawasaki: Two Years of the Real Numbers of an Internet Start
Another post with useful figures for cost sizing by Mar 1
Adobe financials
Les résultats 2009 des sociétés Internet - Journal du Net e-Business
Excellent pearltrees. C'est rempli d'infos tres utiles et interessantes. Merci wallen by Oct 19
Interesting. Who said one cannot generate revenu on the web? by Sep 16
Freemium
Ad business model
Usage based billing
Others
Facebook revenues
Web 2.0 monetization
Business model