Social Networking Sites Face Revenue Reckoning

As social networking sites mature, the need to establish consistent and reliable revenue streams will drive site operators to explore and develop a full range of options, including more sophisticated mobile computing and targeted advertising applications, according to the latest report published by Contentinople Insider , an industry-leading provider of news and analysis covering the emerging digital media industry.

Monetizing Social Networking Sites: Fact or Faith analyzes the revenue-producing options available to social networking sites. The report assesses how applications such as mobile delivery, digital rights management (DRM), and premium content can help to churn out profits. Finally, this report identifies the top ten social networking sites (chosen from hundreds of sites distributed across the Web), providing profiles of their focus and business model.

“Large online retailers are likely to lead the way in using in-depth Web analytics to form a common methodology for evaluating how much money ads on social networking sites can bring through direct sales, brand recognition, or market intelligence,” notes Martin Courtney, research analyst with Contentinople Insider and author of the report. “As the true picture emerges, social networking sites may have to downgrade their market valuations.”

Providers seeking new revenue streams for their social networking Websites aim to use methods that users will be drawn to, Courtney says. “A host of extra paid-for content aimed at consumer, business, markets around gaming, virtual gifts, community tools, and software downloads will offer more concrete revenue streams than advertising for many sites,” he adds. However, advertising will not be pushed by the wayside: “Location-based information will be increasingly incorporated into social networking sites, so users can advertise their position to friends and buddies to arrange social events or schedules.”

Many social networking sites feature new technologies, such as application programming interfaces (APIs) and DRM, to add features that will help generate more revenue by attracting more users.

Sites that have not yet taken the plunge will move into mobile phone delivery as soon as possible to reach those who use mobile devices over laptops or PCs.
Social networking sites, advertisers, search engines, and portals will find new ways to exploit information contained in user profiles to sidestep fears and legal debates about using the information for commercial purposes.

Contentinople Insider is a brand-new research service that tracks, analyzes, and evaluates the key market and technology developments that will have the biggest impact on the digital media and communications industries in the months and years ahead. Starting with the first issue, each edition of Contentinople Insiderwill offer deep insight and hard-to-get market data and intelligence on the core issues facing industry participants and investors.

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