Markets

If We Value Social Networks, Why Won't We Pay for Them?

By Catharine Taylor

Updated on: June 18, 2009 / 12:05 PM EDT / MoneyWatch

Like many of you, including my colleague, David Weir, I've been musing about what the business model for Twitter and other social networks is, particularly in light of Twitter's role in the Iranian election protests. I wrote about this yesterday for a social media column for Mediapost; now it's time to bring that discussion over to BNET Media. The central question: Are we Westerners too comfortable in our free speech societies to realize what value we get from social media?

For me, that question hinges on two events from the past week:

The decision by Facebook not to charge us for vanity URLs, in part because users complained that they didn't have to pay for them on other services like Twitter and MySpace.
The obvious value social networks have not only to the people of Iran, but to the State Department, and, even New York City's Office of Emergency Management, which is setting up a Facebook page because its research shows that half of New Yorkers use Facebook to keep up on what's going on.

Yes, there are places out there that value social media, but I'm not convinced the free-speech West is among them. Any Iranian protester will tell you there is unbelievable value in what these social networks are providing. Would they pay, say, $5 a year for this service? As long as billing couldn't serve as a way to track them down, I think the answer is unequivocally, yes.

Meanwhile, most of us over here tweet, as I said in my Mediapost column, about the latest navel-gazing Twitter conference or to complain about the service at Starbucks. Even as we profess love for our social networks, we whine when someone suggests that perhaps, we, the users, receive enough value that we should pay something in return. We don't get it. Of course, the problem isn't just us; it's also the problem of social networks, which are following a business model that is frighteningly close to that of the online newspaper industry. Time and time again, as the Facebook vanity URL situation reminds us, these networks shy away from making the argument that consumers should maybe kick in some money to pay for those things they value. True, it would have been hard for social nets to ask for subs in the beginning; they needed critical mass to get where they are today. Now, I'd argue they may have to lose some of it in order to gain the revenue they will need to keep going in the future, when the v.c. money runs out.

Remember when the online newspaper industry used to believe that it would be able to aggregate enough eyeballs to make advertising compensate for the lack of a paid model? It isn't working for it, and it won't work for social networks, which, if anything, have a harder time building a viable advertising model than online newspapers. Something's gotta give.

Previous coverage of social media monetization on BNET Media: