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Paid Social Networking Revenue Expected to Increase

According to Piper Jaffray, paid social networking sites, such as LinkedIn, Classmates.com and MyLife.com, are doing well and are expected to increase in revenue by 2013.

In 2008, paid social media accounted for approximately $502 million in revenue. That number is expected to increase by 25% at the end of 2009 to $627 million. Piper forecasts that number to more than double to $1.4 billion by 2013 as a result of a combination of new, paid services from existing social media networks and increased use of premium services on websites such as LinkedIn and Classmates.com.

Social media leaders predict the best way to monetize social media is to offer a “freemium” service; that is, offer users the ability to access basic features for free, but charge a fee for premium content. For example, LinkedIn allows users to post job experience and browse other profiles at no fee; however, they must pay for a premium account to maximize search results, better organize contacts and contact certain people.

These findings also present an opportunity for free social networking sites, such as Facebook and Twitter, to explore revenue streams for users willing to pay for such services. The eMarketer report suggests users are willing to pay for content on social media websites as long as they “cater to specific market niches as opposed to broader, mainstream audiences.”

Source: eMarketer, November 2, 2009

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