Cool is a commodity no business wants to lose, especially when its clientele reside in the unforgiving world of youth culture. Mark Zuckerberg knew this when Facebook launched in March 2004. He didn’t know what cool was, but he knew what wasn’t cool – money, especially advertising money.
The web has been plagued with monetisation dilemmas since Tim Berners Lee famously ‘took the idea of hypertext and linked it to TCP and DNS and ‘ta da – created the internet’. Initially the web was kept free of commercialisation, and the early-adopter internet community has continued to support those who don’t put investor dollars at the forefront of their business ideals.
In an online landscape where display advertising has failed, the best bet for leveraging an income for social start-ups comes from introducing a form of native advertising to their platform. Either that or selling out to a larger business whom, will more then likely introduce native advertising to their platform anyway.This perpetual drive towards the dollar signs and fat cats of commercialism eventually leads to a head on collision with Wall Street, where hungry investors snap at the heels of young tech start-ups, insisting on detailed revenue models and larger dividend payouts.
This morning another social media ‘shit-storm’ erupted as users of the Tumblr platform were told the business has agreed a buyout of $1.1billion by Internet giants Yahoo. Even after Yahoo promised not to ‘screw it up’, it seems that once again users of social media are lashing out at monetisation proposals. Comments like this one are currently making the rounds on Tumblr and appear to be galvanizing a great deal of the support from the community.
So how do social media companies retain their cool, keep their user-base, and still keep the money-men smiling? The truth lies in a very fine balancing act that only some start-ups have managed to pull off. The crux comes in deciding when to make the move. If its done too soon, and there aren’t enough users already on the platform all efforts to create revenue will fail. The social media start-ups that have successfully created powerful revenue streams have always reached a critical mass of users before they have announced a monetisation program.
The truth is advertising isn’t cool, platforms that think too much about money and not enough about user experience will never succeed. They’ll lose their chance at being cool before they’re even off the ground. Facebook didn’t lose too many users when they started adding native advertising. Yes, there were 100’s of Facebook pages set up in disgust and anger, but the majority users stayed, they even chose to vent on the same platform they now ‘hated’ so much.
Without critical mass users will disappear in droves at the first hint of monetisation. Social media is particularly sensitive to this because users are aware that their data, the data they volunteered to the network is being used to sell products back to them. Not cool! However, if users still need the platform to interact with an already well developed network, a network they have invested a lot of time in building, they’ll most likely let a little bit of advertising slide here and there. They’ll even most likely let Yahoo take the helm, as long they don’t screw things up too much.