Analysis: Social Networks All the Rage, But Where?s the Money?

Twitter co-founders Evan Williams and Biz Stone said during last month?s Reuters Global Technology Summit that they?d be generating revenue from their social media site by year?s end.

More...

---

› See More: Analysis: Social Networks All the Rage, But Where?s the Money?

Twitter co-founders Evan Williams and Biz Stone said during last month’s Reuters Global Technology Summit that they’d be generating revenue from their social media site by year’s end.

That got everyone pretty excited until Williams and Stone said they planned to accomplish that goal without advertisements and gave nebulous answers as to how else they’d go about raking in the dough, leading the wireless industry to throw up its hands in exasperation and go looking for the monetization holy grail someplace else.

Social media seems like it should be a huge money maker. Just picture it – thousands of people waiting to be advertised to, millions more who might be willing to pay a bit for the service. Carriers share social media sites’ eagerness to glean money from the networking service because handsets are increasingly functioning as social media portals. In the end, a business model that works for social media will probably work for carriers as well.

But both the Web sites’ and carriers’ efforts to find a viable business model have been frustrated by a host of different factors.

Essentially, the problem is one shared by the Internet as a whole: Getting consumers to pay for services they’ve historically taken for granted as free. But carriers have one added complication. They need to convince their customers to accept intrusive advertisements on their devices, which long have been seen as a sanctuary from annoying telephone solicitors and intrusive advertisements. And they’d really like to accomplish that without having customers defect to another, ad-free network.