Blood from stone: Don't focus on ad revenue from social networking services

Ok, so it's not a revelation when I say that you don't need to make money off your core service. Your core service drives the interaction with the customer, but the money can come from some other area.

But, be careful where you _think_ you can get the money.

I've never been a fan of ads as a mean to make money. At least not for someone who is just displaying the ads. The real money maker is the one who _sells_ the ads.

But, for most services, it's the best we got.

Bollocks.

I've never been satisfied with folks trying to build services that generate 'eyeballs' just to 'monetize' that traffic with ads. I've been even less enthused by social networking services that try to convert what is a personal interaction between the users of the service into a chance to score advertising views.

Online social networking services thrive because they are a form of social lubrication. They are a means to an end, but not the end. We're social grooming to _do_ things together - learn, invent, trade, strengthen trust.

Then make money by promoting the activity, not by having folks mill about. Yes, social network is the concentrator, but what the folks end up doing is where the money's at.

One good example is O'Reilly. Is it a social networking service? Sure is. Where do they make money? Selling info to the network, the info the network trades in when within the O'Reilly social network. For O'Reilly, it is the social network that differentiates them from just another publisher.

So, now I'm wondering about social networks overlaid on top of interest domains.

Social networks, such as Facebook, which do not have a focus for the _why_ people come together, might never gain the proper traction to make money beyond a few anemic ad clicks, or, like Facebook, will have to contrive sleazy ways to get money off the social network.

Someone like Facebook should optimize the service around the key reason folks use the service, rather than crate gimmicks to just keep folks around.

MySpace is at least trying to capitalize on Music and LinkedIn on business services. And there are a ton of examples, I am sure.

Just thinking out loud. These thoughts arose from noting that Google and Facebook are seemingly slowing down, and observing the interactions happening in my Twitstream. For some of you, I am sure this line of thinking is nothing new.

Comments?