Social Media Technology Assessment
Nathan Burkhart
Jeff Chen
Matt Chew Spence
Mario Espinoza
Jeffrey Kalvass
Devang Parekh
March 14, 2007
Strategic Computing and Communications Technology
University of California, Berkeley
1.
2.
3.
Introduction ........................................................................................................................................ 3
Key Players in Social Media ............................................................................................................. 3
Technology Case Studies .................................................................................................................. 5
3.1
MySpace ..................................................................................................................................... 6
3.2
Flickr ........................................................................................................................................... 6
4.
Policy and Legal Considerations ..................................................................................................... 7
4.1
Copyright Infringement........................................................................................................... 7
4.2
Indecent Content ...................................................................................................................... 8
4.3
First Amendment Rights ......................................................................................................... 8
4.4
International Policy Differences ............................................................................................. 8
5.
Business Models ................................................................................................................................. 9
5.1
Business model analysis and design ...................................................................................... 9
5.2
The value of Social Networking: creating identity, consuming and sharing content and
communicating with your people ........................................................................................................10
5.3
How can social media leverage these communities to create real economic
opportunity? ............................................................................................................................................11
5.4
How to grow the social community? Creating positive feedback and network effects 11
5.5
How to make money? Revenue models for monetizing social sites without
jeopardizing the relationship with the customers ..............................................................................12
5.6
How to create stickiness? Creating and managing lock-in ................................................14
5.7
Conclusions: Social media will emerge as a real economic opportunity. ........................15
Appendix A: Social Networks Revenue Model Components ..............................................................17
Appendix B: Social Media Sites overview ...............................................................................................20
References: ...................................................................................................................................................21
1. Introduction
Social media is a term used to describe online content found at the intersection of social
networking and new media. The Internet has enabled people to interact with media in ways not
previously possible with traditional media such as printed text or analog audio. Individuals can
interact with others around the globe, mix audio and video seamlessly, infinitely copy digital
content, and create communities around shared interests and experiences. The popularity of
social networking websites and Web 2.0 technologies has resulted in an explosion in the
development of social media applications. Interlacing text, audio, and video with social
networking components like personal profiles, friends, and groups has produced a wide variety
of social media websites.
Social networking researcher Danah Boyd defines social networking sites as web applications
with profiles, semi-persistent public commentary on the profile, and a traversable publicly
articulated social network displayed in relation to the profile. Microsoft technical evangelist
Robert Scoble describes how these components of social networking sites differentiate social
media from traditional media. He argues that the ability to comment on new media, copy it
infinitely, and mash it up with other new media are important parts of defining social media and
identifying why it has become so popular with users around the globe.
As social media applications gather steam through large increases in registered users and the
amount of user generated content on the Internet, investors and entrepreneurs alike have been
eager to evaluate the presence of real economic opportunities for both owners and users. While
some social media business models have been met with skepticism others have received great
deals of investor confidence. Our goal for this paper will be to outline the key players in social
media and the effectiveness of current business models. Through an analysis of technology and
policy relevant to social media networks, we will evaluate current applications and business
models using a specific methodology and deliver suggestions for the future of social media
business models.
2. Key Players in Social Media
It is estimated that nearly three hundred social media and social networking sites exist on the
Internet. Each enables users to build and maintain an online social network centered around a
certain set of goals such as self-expression or sharing of media. In this section we will describe
key players in the social media landscape. These players formed the basis for our assessment of
social media business models
Every social media site chooses to present its users with content in a specific way. User-profile
focused applications are centered on a personal profile page that a user customizes and shares
with the community. Content is centered on the user's on-line persona as described in their
profile. Other users visit the profile page and communication is directed through the profile
page. In interest driven applications, the focus is on a specific interest such as music,
photography or automobiles. The elements of social networking are centered on communication
and contribution centered around the interest. Most social media websites either serve a
functional purpose, such as business networking or group organization, or are used for
entertainment, such as meeting new people or sharing music. We classify key players in social
media on a two-axis scale. The horizontal axis shows the degree to which they are user-profile
focused versus interest focused Placement along the vertical access describes whether they are
primarily intended to be used to fulfill a functional need or are primarily used for entertainment.
Figure 1: Categorizing Social Media Websites Along Two Axes
Although most social media websites are a hybrid of these descriptions, we have positioned their
relative locations on these axes above. We have chosen to classify these major players as a
foundation of our analysis of social media business models. The type of social media application
largely impacts how users contribute and navigate the website and thus can play a large role in
the choice of business model and its ultimate success. For a brief description of these key players,
please see Appendix B.
Underlying Technologies
As individual users access social media companies through the Internet, the underlying
technology used by Social media companies is not substantively different from that used by other
commercial websites. The technology solutions employed in social media applications do not
generally involve the use of cutting edge technology. A social media application needs a
webserver and a database to function, and uses some sort of web programming language to
combine the two to dynamically display content. Below is a table enumerating the operating
system, web server, database, and programming languages used by key players in social media
applications. The technology decision represented therein is whether to use an open source
architecture such LAMP (Linux, Apache, MySQL, PHP) or to develop with proprietary
technology such as Microsoft Windows Server, SQL Server, ASP.NET, and C#. Some sites not
only use open source technology, but also contribute back to the open source
community. Facebook actively contributes to open source projects like memcached, phpsh, and
APC to help their site as well the open source community.
Social Media
Application
Classmates.com
Craigslist
Facebook
Flickr
Friendster
Gaia Online
Google Groups
Last.fm
Operating
System
Linux
Linux
Linux
Linux
Linux
Linux
Linux
Linux
Resin 3.0.18
Apache 1.3.34
Apache 1.3.37
Apache 2.052
Apache 1.3.33
Apache
GWS-GRFE .5
Apache 1.3.33
LinkedIn
LiveJournal
Solaris
Unix
Windows
Server 2003
Linux
Unix
Sun-One-Web-Server 6.1
Apache
MySQL
MS SQL
Microsoft IIS 6.0
Server
N/A
MySQL
Apache
MySQL
Xanga
Windows
Server 2003
Microsoft IIS 6.0
YouTube
Linux
Apache
MS SQL
Server
MySQL
Yahoo! Groups
Yelp
FreeBSD
Linux
Apache 2.0.59
MySQL
MySpace
Second Life
Vox
Web Server
Database
MySQL
MySQL
MySQL
MySQL
MySQL
MySQL
Programming Language
Java/JSP
PHP
PHP
PHP
PHP
PostgreSQL Java, PHP
Perl
C#/ASP.NET, Cold Fusion
Perl
C#/ASP.NET
Python
Figure 2: Core Technologies of Major Social Media Applications
Choice of development platform needs to be carefully considered due to the lock-in that occurs
once a significant development effort has happened. But not all underlying technology
components have the same level of lock-in. One can relatively easily switch the operating system
in a LAMP implementation, whereas it may take some effort to switch to a different
database. The highest level of lock-in occurs with the custom applications and glue code written
in the chosen programming languages. Social media companies tend to stick with the software
used from the initial launch of their web application unless there are scaling issues. However,
due to the sheer size of many of these websites, being able to scale efficiently a problem that is
constantly faced. For example, MySpace decided to upgrade from using ColdFusion to
BlueDragon.NET. A key factor in this decision was that BlueDragon.NET had the ability to
understand Cold Fusion Markup Language (CFML) as well as C#, allowing an incremental
transition to C# as the programming language.
3. Technology Case Studies
In this section we will take a closer look at the technology of two social media
applications: MySpace and Flickr. From these technology case studies we can draw on the key
components that enable the technological success of social media websites.
3.1
MySpace
MySpace is a social networking site that allows users to create and customize a profile that
describes themselves, their interests, and the types of people they would like to meet. This site
differs from many other social networking applications in that users can use HTML/DHTML
and CSS as part of their profiles, allowing significant customization in profile layouts. Users can
upload pictures into MySpace and link to them from their profile. They can also link to music
uploaded by others so that a particular music track plays when the profile is viewed. One must
have a "musician" account to upload music. Other specialized account types include "filmmaker"
and "comedian," both of which allow the user to upload video. In this way, Mypace provides
role-based account versioning.
The social aspects of MySpace include the ability to join groups, and to designate other MySpace
users as friends. Content within a profile can be limited so that it can only be viewed by
friends. Additionally, friends can add comments to a profile that can be viewed by the
public. Communications aspects of MySpace include instant messaging, email, and the
aforementioned comments. Users can block other users from contacting them. MySpace also has
forum and classifieds functionality, and has developed an interface that allows MySpace services
to be accessed from a mobile phone via services offered by companies like Helio.
Like most social networking sites, MySpace uses a webserver front-end to access a database and
application server back-end. The database portion is used to store the text part of the user
profiles, photo/video uploads, and metadata associated with friends, group membership, user
blocking, and rating information. The application servers are used for the blogs, instant
messaging, and email applications. Like most high traffic sites, MySpace uses managed DNS
services, is fronted with caching proxy servers to offload frequently requested data, and uses
loadsharing across multiple servers within a large datacenter environment.
3.2
Flickr
Flickr is a social networking site focused around the sharing of photographs and other digital
images. Where MySpace is centered around a user's profile, Flickr is centered around the
individual images a user chooses to upload, allowing a user to apply view or comment access
permissions on a per picture level of granularity. Like MySpace, Flickr has the concepts of
friends, groups, and comments. Flickr also has social tagging, which allows users or their friends
to add searchable keywords to an image. One can associate an image with a location through the
use of geo-tags. Another feature is interestingness, in which is partially determined using
automated image analysis derived from Russian signal processing algorithms developed for
missile detection.
Flickr uses the same underlying technology combination of a web server, database, and
application server as MySpace. Where Flickr differentiates itself technologically from many other
social media applications is the functionality it chooses to enable. Like MySpace, Flickr is
accessible via mobile phones. Unlike MySpace, Flickr allows external applications to access
content via RSS feeds and APIs. This allows anyone to create mashups with web applications that
make use of Flickr content, resulting in a large number of potential complementary services.
Flickr does versioning by providing "Free" and "Pro" accounts. The Pro account costs $25 per
year. The Free accounts have limits on the size and amount of images that one can upload, the
number of photo sets a user can have, and the groups one can join. Unlike the Pro account, the
Free account displays advertising to the user. A significant amount of the advertising featured
on Flickr is for complementary services, such as photo printing, incorporation of a user's images
into calendars (qoop.com), posters (bighugelabs.com), T-shirts (zazzle.com), and DVD based
archives and slide shows (englaze.com). Regardless of the account type, Flickr promises to never
delete uploaded images unless they violate Flickr's usage policy. This promotes a level of lock-in
as users develop a growing archive of images over time. Flickr was purchased by Yahoo! in
March of 2005, and since there has been a steady migration of legacy Flickr accounts to Yahoo
accounts. As a result, Flickr is becoming one of Yahoo's many bundled services.
4. Policy and Legal Considerations
Because social media sites allow users to create, display, and share various types of content, they
must be conscious of the myriad different legal restrictions involving what can and cannot be
displayed. Especially relevant are laws involving copyright and intellectual property protection,
indecent or obscene content, and freedom of expression. Moreover, due to the nature of the
Internet, this content may be created, stored, and displayed in any given country, forcing social
media sites to take into account many different and sometimes contradictory legal policies.
4.1
Copyright Infringement
Though it mainly pertains to content focused sites like Flickr and YouTube, almost all social
media sites allow users to upload potentially copyrighted material such as music and video
files. By offering access to such content for free, sites may undermine the ability of copyright
owners to monetize their content that had uploaded without permission. As there is not yet an
effective automated way to determine whether or not uploaded content is protected by copyright,
social media sites can choose to either manually review all content before it is displayed on the
site, or to implement an automatic filter to attempt to minimize the amount of copyrighted
content that is posted. The first approach is an extremely expensive process, and the delayed
upload time decreases the value to users. The second approach, however, runs the risk of both
displaying copyrighted content on the site and denying non-copyrighted content from being
uploaded, due to an automated filter's inherent inability to perfectly distinguish the two.
Since being acquired by Google, YouTube has been the target of multiple copyright infringement
lawsuits, and has had to remove a large amount of content from its site. YouTube's approach to
battling copyright infringement, the same policy adopted by most social media sites, is simply to
put a clause in the terms of use that says the user must agree to not submit copyrighted
material. If copyrighted material is posted, they rely on the copyright owner to submit a
notification of copyright infringement.
4.2
Indecent Content
Similar to copyrighted content, indecent or obscene content needs to be restricted by social media
sites if the are to comply with legal mandates. Because virtually none of these services
implement an effective age verification system, the display of material deemed inappropriate for
minors risks civil or criminal penalties. Though it is easier to automatically filter obscene content
than copyrighted content, no method is 100% effective. Thus, a similar situation occurs: these
sites must strike a balance between hosting a small amount of indecent material and restricting
the uploading of completely legal content. Due to the morally sensitive nature of indecent and
obscene material and its viewing by children, lawsuits in this area can tend to discourage both
current and potential users, dealing more damage than the actual cost of the lawsuit.
Because of its high number of younger users, MySpace has come under scrutiny for its potential
to disseminate indecent material to minors. Though the site officially prohibits pornography and
indecent content, there are no measures taken to actually prevent it from appearing on the
site. Instead, MySpace relies on the userbase to notify them of inappropriate content, which is
then removed if it violates the MySpace acceptable use policy . YouTube takes the same
approach to identifying and removing indecent videos.
4.3
First Amendment Rights
Most major social media sites are based and incorporated in the United States. Of special interest
is the First Amendment, which gives United States citizens substantially more freedom to express
themselves than many other countries allow their citizens. Because the First Amendment gives
United States citizens this right to free expression, enforcing too broad a policy to protect against
uploading the aforementioned kinds of content may itself be grounds for a lawsuit. Therefore, it
is in the best interest of social media sites to make their content filtering policies as specific and
fine-grained as they can, both in the interest of forestalling First Amendment issues and allowing
their users as much freedom as possible.
4.4
International Policy Differences
Finally, because this content may be created, uploaded, and viewed by users in any country,
lawsuits may be filed from virtually anywhere. Rules dictating what content can be displayed
where vary greatly between countries, and the rules of two countries may be in direct
contradiction to each other. A site policy relating to copyright, indecent content, or political
expression that is applied without regard for the location of users is likely to be illegal
somewhere in the world. Thus, as these sites continue to grow in popularity and scope, they
need to keep in mind the legal policies of many different countries and attempt to limit the
number of those policies that are violated.
As an example, Yahoo! was sued by an anti-racism league in France because their auction site
was selling items with Nazi symbols, which is illegal in France and some other European
countries. However, the First Amendment protects the right of American citizens to sell and
display such items. The court issued an order to Yahoo! to take all necessary measures to prevent
Nazi-related auctions from being accessed by French citizens. Obviously, if more countries
pursue similar routes, keeping track of and following all of the different legal policies would be
extremely difficult if not impossible.
5. Business Models
5.1
Business model analysis and design
The term “Business Model” doesn’t have a precise or commonly agreed upon definition. It
frequently used by business professionals, financial analysts and the press as a buzzword to
mean anything from the organizational structure of a business to how a business hopes to
generated income. A business model can include some or all of the following: The value a
company offers to one or several segments of customers, and the architecture of the firm and its
network of partner for creating, marketing and delivering this value and relationship capital in
order to generate profitable and sustainable revenue streams.
For the purpose of our analysis we will use the definition of business models proposed by
Osterwalder & Pigneur. According to this view, a business model can be described by the
following nine elements in the four areas of infrastructure, offering, customers, and finance:
Infrastructure
1. Core capabilities: The capabilities and competencies necessary to execute a company's
business model.
2. Partner network: The business alliances which compliment other aspects of the business
model.
3. Value configuration: The rationale which makes a business mutually beneficial for a
business and its customers.
Offering
4. Value proposition: The products and services a business offers.
Customers
5. Target customer: The target audience for a business' products and services.
6. Distribution channel: The means by which a company delivers products and services to
customers. This includes the company's marketing and distribution strategy.
7.
Customer relationship: The links a company establishes between itself and its different
customer segments. The process of managing customer relationships is referred to as
customer relationship management.
Finances
8. Cost structure: The monetary consequences of the means employed in the business model. A
company's overhead.
9. Revenue: The way a company makes money through a variety of revenue flows. A
company's income.
The relationship between the different components is depicted in Figure 1 Business Model
Components
Figure 1 Business Model Components
5.2
The value of Social Networking: creating identity, consuming and sharing content and
communicating with your people
Social media sites provide value to users and to companies wanting to market to these users.
From the user perspective, we can group the benefits of social networks in three categories:
1.
2.
3.
Create a unique identity: users upload their photos, comments, page design, video, and,
information about their friends. Teenagers and young adults can express themselves in
the same way they do when they choose their clothes, social circle, gadgets, hairstyle,
language, etc.
Consuming and sharing content: social media sites allow people to author, upload and
share content with friends. With the availability of large quantities of user generated
content people are consuming part of their content, especially entertainment content,
from social media (for example YouTube and Flickr).
Communicating with other people: reconnecting with people in your existing network
and facilitating the communication with people in your “space.”
Figure 2 Objectives of Social Networking shows how existing social media companies combine
these elements to create their value proposition. Social networking sites build communities by
providing various combinations of these benefits to users.
Create a unique Identity
LiveSpaces
Xanga
MySpace
Flickr
SixApart
Classmates
Facebook
YouTube
Content consumption /
Content sharing
Friendster
LinkedIn
Communicating
Figure 2 Objectives of Social Networking
5.3
How can social media leverage these communities to create real economic opportunity?
Using the business model analysis framework we compared a subset of the most popular and
successful social media business from their business model perspective. We conclude that to
determine how a social media company can create economic opportunity, we need to answer
three important questions:



5.4
How to grow a community?
How to monetize social media or other aspects of a community?
How to create stickiness to keep the user base?
How to grow the social community? Creating positive feedback and network effects
Online Social communities exhibit unique characteristics to fuel growth. Most communities are
based on the idea of managing an individual’s network of social connections. Depending on the
nature of the community, these links to other people may be called “friends” or “connections.” In
most cases the friend group is visible to the entire community. Even when the members of the
friend group are not visible, the number of connections one has may be. Within the community
and in an individual’s social circle, having many such links is seen as a sign of success and
conversely having few is perceived as a sign of failure.
In such communities, the more connections one has, the higher the prestige one is accorded. All
new MySpace accounts have a single default friend “Tom.” Members of the MySpace community
will joke about others having only Tom as a friend. LinkedIn members tend to compare the size
of networks and regard larger networks as “better”. This results in people inviting friends and
personal connections to join the LinkedIn to grow their network. LinkedIn members will review
other people’s network and invite those they know to grow their own network. The viral
marketing effect of the invitations allows fast growth. This type of positive feedback at the
individual network level extends to the community level.
Positive feedback and network effect can be engendered by benefits created by the collaboration
of linked community members. Facebook picture tagging is a good example. A Facebook user
may upload photos of an event such a college party to their personal page. Others that attended
the same event will view the photos and recognize people therein. If these others are so inclined,
they can tag the photos with the names of people they know. Thus the user who uploaded the
photos can enjoy the benefit of having all the photos tagged by friends without doing any work.
Again, the more connections one has, the higher benefit provided by picture tagging. Another
such example is the LinkedIn recommendation system. The more connections in your network,
the more opportunities you have for recommendations. Positive feedback at the individual level
also fuels network effects at the community level. In general, social media can rely on the
generation of valuable metadata generated by members of the community that benefits the
community. Figure 3 shows the components playing a role in user growth in the business model
of MySpace.
Partnerships
Relationship
Search engines
Community
Media /
Journalists
Capabilities
Activities
Large user base
Software
developement
Large UGC
Search
Business
development
Value
Proposition
People Search
Channel
Customers
Viral Marketing:
invitations
Teenagers
Reconnect with
classmates/
collegues
Website
Young Adults
Magazines
Authoring tools
Promotion
Find friends
Express identity
Photo Share
News Corp
Search Engines
rd
Music bands
Merchants
3 party develop
Music labels
Costs
Revenues
Media
SW Development
costs
Subscriptions
Business Admin
Advertising
Disk space
Bandwidth
Figure 3 Components addressing User growth in MySpace
5.5
How to make money? Revenue models for monetizing social sites without jeopardizing
the relationship with the customers
The inherent difficulty in revenue generation in social media environments is to generate revenue
from content that does not belong to the company without jeopardizing its relationship with its
users. We illustrate this situation by analyzing four different ways of monetizing online content
and user bases: charging for the placement of content, charging for the access to content,
Charging for the access to the user base and Charging for complements enabled by the use the
online content. These four methods are illustrated in Figure 4 below.
Access to users
(Ex. Advertising)
Placement of content
(Ex. premium services
extra space)
Revenue Sources
Complementary
services/products
(Ex. Photo printing)
Access to content
(Ex. LinkedIn users
profiles)
Figure 4 Online media revenue models
Charging for Access to content can be delicate in a social media environment. In most cases users
will resent being charged to access their own content. The more successful model has been to
provide free access to the content (MySpace, Flickr, Xanga, YouTube, etc). However, there are
opportunities to charge third parties to access to metadata generated around the content such as
tags.
Opportunities for charging for the placement of content are also limited. If the company charges
the users for placing their content online it will be limiting opportunities for positive feedback
and network effects. The way companies have approached this limitation is by versioning their
offer having a free version that allows everybody to upload content and to charge for Premium
Services in the form of extra space, placement in premium locations, etc. The fee LinkedIn
charges recruiters for listing jobs is an example. The Facebook premium account is another.
MySpace has been successful in enlisting media companies to pay for content placement,
although they could place their content for free.
The most popular form of revenue generation today is by charging third parties such as
merchants for access to the user base. The most common form is advertising. The use of
advertising is limited at the point where it deteriorates the user experience.
One form of monetization that is very well aligned with the social media environment is to offer
complementary services/products to improve the benefits provided by the online content. A
great example is how Flickr partners with Nikon to provide people with information and
discounts to buy digital cameras, with Nokia to provide a seamless way to upload their photos
on the road using their cell phones, with Target to print their photos in a convenient way, with
Zazzle to print their photos in t-shirts and stamps and with Englaze to provide DVD backups of
photos.
We believe that the best strategy is to combine the latter three revenue streams while controlling
the impact on the user experience. Figure 5 illustrates the components for Revenue Generation in
MySpace.
Partnerships
Relationship
Search engines
Community
Media /
Journalists
Capabilities
Activities
Large user base
Software
developement
Large UGC
Search
Business
development
Value
Proposition
People Search
Channel
Customers
Viral Marketing:
invitations
Teenagers
Reconnect with
classmates/
collegues
Website
Young Adults
Magazines
Authoring tools
Promotion
Find friends
Express identity
Photo Share
News Corp
Search Engines
rd
Music bands
Merchants
3 party develop
Music labels
Costs
Revenues
Media
SW Development
costs
Subscriptions
Business Admin
Advertising
Disk space
Bandwidth
Figure 5 Revenue generation in MySpace
5.6
How to create stickiness? Creating and managing lock-in
Social network offer various opportunities to create lock-in. There is a unique opportunity to
create significant user investments in “durable virtual goods”. Such goods are not limited to the
user content itself. These persistent investments can take the form of metadata that is created
incrementally, often in a collaborative way. A good example is collective photo tagging within a
friend network in Facebook. This collaborative investment creates a high switching cost. The
growth of the social connection network is also an important investment. Although one user
might switch provider, convincing the majority their friends to switch may be very difficult.
Learning how to use the interface creates another important switching cost in social networks.
Uploading large quantities of information in an incremental way such as photos can also create a
switching cost for users wanting to change providers and facing the challenge of moving their
photos. Sites have developed methods for easy batch uploading but that discourage batch
downloading. Figure 6 illustrates four opportunities for creating lock-in in social networks, while
Figure 7 shows how LinkedIn uses recommendations to create lock-in.
Network Effects
-Individual
-Community
Complements
Dynamic, good,
unique content
Stickiness
Permanent CrossUser Actions
Figure 6 Lock-in within social networks
Partnerships
Relationship
Job listing
Community
Capabilities
Activities
Large user base
Software
developement
Business
development
Value
Proposition
Recommendation
Reconnect with
classmates/
collegues
Channel
Customers
Viral Marketing:
invitations
Professionals
25-65
Website
Company
recruiters
Toolbar
Find Jobs
Software tools
Headhunters
Outlook Plug-in
Upgrade e-mail
Ad Placing
Costs
Revenues
SW Development
costs
Subscriptions
Business Admin
Classified: Jobs
Advertising
Figure 7 Lock-in within LinkedIn
5.7
Conclusions: Social media will emerge as a real economic opportunity.
We believe social media will emerge as a real economic opportunity. Our conclusion is based on
the availability of good solutions to the three major challenges of growth, revenue generation and
stickiness. Our recommendation is that social media sites should focus on three areas: 1) value
propositions that create network economies by providing features that are enjoyed fully when the
community is large such as meta-tagging that is relevant at the local network level. The paradigm
of Storing-Sharing-Organizing is a model that fits many cases, 2) revenue generation based on a
combination of advertising, subscriptions and extending the user experience beyond the content
through partners providing value added products/services, and 3) develop an ecosystem of
partners to provide complements that create lock-in and at the same time act as a distribution
channel. Providing API’s to partners developing Mash-ups is a good example.
We applied our conclusions to analyze YouTube and detected interesting opportunities in the
three areas. Figure 8 illustrates such opportunities in: a) Complements, real-world goods, b)
Value proposition that includes permanent cross user activities and c) Partnerships for
monetization and the use of subscriptions.
Complements,
Real-world goods
Relationship
Partnerships
Direct
Capabilities
Activities
Huge User Base
Video Host
Folksonomy
Community
Value
Proposition
Store/Org/Share
Videos
Search
Create future
stars/directors
Ad Placing
Communicating
Costs
Disk space
Customers
Website
Individuals
Viral Marketing
Advertisers
MySpace/
Facebook
Linking
Affilliates
Revenues
Development
costs
Business Admin
Channel
Permanent Advertising
Cross-user activities
Bandwidth
Figure 8 Business Model Opportunities for YouTube
Partners, subscriptions
6. Appendix A: Social Networks Revenue Model Components
6.1.1
MySpace business model
Partnerships
Relationship
Search engines
Community
Media /
Journalists
Capabilities
Activities
Large user base
Software
developement
Large UGC
Search
Business
development
Value
Proposition
People Search
Channel
Customers
Viral Marketing:
invitations
Teenagers
Reconnect with
classmates/
collegues
Website
Young Adults
Magazines
Authoring tools
Promotion
Find friends
Express identity
Photo Share
News Corp
Search Engines
rd
Music labels
Media
Costs
Revenues
Subscriptions
Business Admin
Classified: Jobs
Bandwidth
Merchants
3 party develop
SW Development
costs
Disk space
Music bands
Advertising
6.1.2
Flickr business model
Partnerships
Cameras
Wireless phones
Relationship
Printing
Community
Backup
API / Mashups
Travel
Capabilities
Activities
Value
Proposition
Channel
Customers
Large user base
Photo hosting
Store photos
Website
Individuals
Large UGC base
Tagging
Organize photos
Viral Marketing
Advertisers
Folksonomy
Organizr
Share photos
Y! Properties
Affilliates
Software tools
Search
VAS
3rd party
developers
Ad Placing
Business
development
Partners (Nokia,
Flock, etc)
Flexible API
Provide VAS
Costs
Revenues
Development
costs
VAS
Subscriptions
Business Admin
VAS revenue
share
Disk space
Advertising
Bandwidth
6.1.3
YouTube business model
Relationship
Partnerships
Community
Retail
Direct
Capabilities
Activities
Huge User Base
Video Host
Folksonomy
Value
Proposition
Store/Org/Share
Videos
Search
Create future
stars/directors
Ad Placing
Communicating
Costs
Development
costs
Business Admin
Disk space
Bandwidth
6.1.4
SixApart business model
Channel
Customers
Website
Individuals
Viral Marketing
Advertisers
MySpace/
Facebook
Linking
Affilliates
Revenues
Advertising
Relationship
Partnerships
Community
Retail
Direct
API
Capabilities
Activities
Large user base
Blogging
Folksonomy
Value
Proposition
Store/Org/Share
Photos
Communicating
Channel
Customers
Website
Individuals
Viral Marketing
Advertisers
IM (links)
Affilliates
Publish Self
Online Social
Ad Placing
Search
Create online
presence
Provide VAS
Photo Share
API
Revenues
Subscription
Costs
Development
costs
Advertising
Gift Certificates
Business Admin
Virtual Gifts
Disk space
Merchandise
Bandwidth
6.1.5
LinkedIn business model
Partnerships
Relationship
Job listing
Community
Capabilities
Activities
Large user base
Software
developement
Business
development
Value
Proposition
Recommendation
Reconnect with
classmates/
collegues
Channel
Customers
Viral Marketing:
invitations
Professionals
25-65
Website
Company
recruiters
Toolbar
Software tools
Find Jobs
Ad Placing
Upgrade e-mail
Headhunters
Outlook Plug-in
Costs
Revenues
SW Development
costs
Subscriptions
Business Admin
Classified: Jobs
Advertising
7. Appendix B: Social Media Sites overview
Interest Driven




Facebook: Offers a social networking service for students, corporate, and geographic
communities. Features include news feed, social time line, and weblog options.
Flickr: Photo management and sharing application that helps people make their photos
available to the people that matter to them and enables new ways of organizing photos.
Friendster: social network emphasizing genuine friendships and the discovery of new
people through friends.
Gaia Online: Community roleplaying site with anime, manga, and video game
discussions as well as a links database and a fan-art gallery.

Google Groups: Enables users to search and browse the Usenet archives which consist of
over 700 million messages, and post new comments.

Last.fm: The world's largest social music platform. Show off your taste, see what your
friends are listening to, hear new music, get personal radio, and recommendations.

LinkedIn: Business oriented social networking site, mainly used for professional
networking. As of January 2007, it had more than 9 million registered users, spanning 150
industries and more than 400 economic regions (as classified by the service).

Live Journal: Service for all your journaling and blogging needs, offering privacy
controls, photo storage, publishing tools, and style templates.

MySpace: Meet people from your area in the country and keep in touch. Includes blog,
forums, email, groups, games and events.
Second Life: An online society within a 3D world, where users can explore, build,
socialize, and participate in their own economy.


Vox: Social blogging service that lets people connect through privacy controls, design
templates, publishing tools, photos, videos & online content.

Xanga: A community of online diaries and journals.

Yahoo! Groups: Yahoo! Groups offers free mailing lists, photo & file sharing, group
calendars and more. Discuss hot topics, share interests, join online communities.
Yelp: Yelp is a fun and easy way to find, recommend and talk about what's great - and
not so great - in San Francisco and beyond.


YouTube: Hosts user-generated videos. Includes network and professional content.
References:
Boyd, D. "Social Network Sites: My Definition." November 10, 2006.
URL: http://www.zephoria.org/thoughts/archives/2006/11/10/social_network_1.html
Scoble, R. "What is Social Media?" February 16, 2007.
URL: http://scobleizer.com/2007/02/16/what-is-social-media/
Butterfield, S. Talk at New Paradigms in User Computing 2006 Workshop. From notes taken by
Matt Chew Spence
Calore, M. "Ten Best Flickr Mashups." Webmonkey. February 24, 2006.
URL: http://www.webmonkey.com/webmonkey/06/08/index4a.html?tw=commentary
Carr, D. "Inside MySpace.com." Baseline Magazine. January 16, 2007.
URL: http://www.baselinemag.com/article2/0,1540,2082921,00.asp
Grimm, S. "The Spirit of Openness." Facebook Blog. December 12, 2006.
URL: http://blog.facebook.com/blog.php?post=2223862130
Layton, J. "How MySpace Works." How Stuff Works.
URL: http://computer.howstuffworks.com/myspace.htm
Netcraft. URL: http://www.netcraft.com/
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