After reviewing some of the business models employed by the social networks, we are struck with the lack of self-sufficient concepts being employed.
Many are falling back on advertising or virtual transactions because recession has made it difficult to sustain a business without a solid model.
Just two years ago there was a effort to find and define the various business models for an internet business.
How about white elephant gifts?
I have included a few links to some of the business models lists:
From Fred Wilson comes a long-tail list.
From professor Michael Rappa who wrote, “In the most basic sense, a business model is the method of doing business by which a company can sustain itself — that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain”. (We will discuss how the Value Chain is important to selling in a minute.)
Dave McClure spent some time discussing Facebook’s need to find a good business model in early 08 when he suggested, “All they gotta do is figure out how to Show Me The Money“.
The big social platforms like Facebook and Twitter have relied on rapid growth to buy time, as they figured out a monetization model that could sustain. In the end, they have mostly fallen back on advertising sales to pay the bills.
Selling advertising is great. But Google and thousands of other sites are reaching into the pocket of advertisers all at the same time.
Yes, advertising is an important part of the process of selling, but it is not finding a great deal of success in social networks.
Selling things (real things) has been a part of the business value chain for generations. Selling goods can be adapted to the large internet networks as well, but the sales offer must fit the audience.
As we study the list of business models, we feel that the sustainable models for social spaces will begin in Affiliate sales and then move into full-on E-commerce. We believe that unique white elephant gifts could support the functions of an online white elephant gift exchange party.
Nothing happens of real value until someone sell something. Amazon sells real stuff, so does Ebay, Microsoft and Apple. Sustainable models work off from the proven components of cost-of-goods, capture-cost, mark-up and efficient distribution.
The internet already has proven Affiliate sales commissions and E-commerce both succeed online… The Web 2.0 world will eventually evolve into a place where it is common to buy something real by using an application that adds extra value to the purchase and delivery process.
Sell something like white elephant gifts!