Revenue streams and other business of social networks

You analysing my blog post about me analysing Ameel’s blog where he analyses his dream. I think. From cartoonstock.com

Ameel (who is studying an MBA and works in technology) had a dream that he walked into a secondhand bookstore in Melbourne and -in the dream- bought the store. I’d love to own a second hand bookstore, but I’d never get any work done. I’d be reading in the corner. That’s my dream. :

Soon after my (Ameel ) dream, I stirred and, in that half-awake, half-asleep state, I realized that I had automatically started doing a full-fledged analysis of the business. I remember wondering about:

• Revenue streams — which new ones I was going to add
• Profit margins — trying to figure out which revenue stream would bring the business the most profit
• Inventory and inventory management — which types of books were the most profitable, what their turnover was, whether I should move into selected first-hand books as well, etc.
• Plans for expansion — in the first phase I was going to add wireless Internet and a small, self-service kitchenette/cafe in the corner
• Marketing plans — customer surveys, flyers, word of mouth, sponsored events, starting a reading club, partnerships, etc.
• Industry analysis — figure out which industry I was in (second-hand books), whether I wanted to be in any other industry or industries (coffee shop, retail bookstore, Internet cafe, community venue, etc.), who my competitors were and what were they doing, etc.

So funny, that’s what I do with social networks. I stumble on them, create an account, and immediately take mental note of features and processes that I like/dislike. I’d just change that list a little:

• Revenue streams — Standard Subscription, Premium Subscription, Advertising, Virtual Goods Sales, Monetizing User Generated Content, Merchandising, Sponsorship, Revenue Share etc
  
• Profit margins — in social networks it’s the stream most sustainable, not necessarily most profitable
• Inventory and inventory management — Features that are important. For example, in ‘event’ based communities such as Sports and Reality TV, immediate synchronous communication (chat channels) is important. How’s the game, what’s the score, who sang what? Twitter and MSNMessenger currently fulfill that need. Need blogs? Video gallery? Forum? podcasts facilities? tagging? voting?
• Plans for expansion — Web 2.0 has a BETA tag for a reason.What are you rolling out next week? And the week after that? Forget the corner office, get yourself some APIs and widgets and whatnot. 🙂
• Marketing plans — rewarding friends signing up friends, developing word of mouth, seeding into receptive online communities, encouraging machinima, mashups and user generated content.
• Industry analysis — pretty well the same as Ameel. Expanded to Porters (?) Five Forces – who has a similar service online? who has other services online that target same demographic (but not same topic), what competes offline for attention (sports, Tv), and so on.

I think I would add in another layer, not sure what to call it, infrastructure?

• Infrastructure —scaleability, moderation tools, reporting mechanisms for behaviour, security including tracking IP of bad guys, managing identities, actually this would be the biggest bit. All the bits not above.

You don’t need to do an MBA in Social Networks now, you just got the Readers Digest version. Don’t thank me- thank Ameel, he did a great job of putting it together in the first place. Well his subconscious did…

It’s pink cos I feel more Valentine Day-ish TODAY.