I came across this well-researched article on the Brooding Savage discussing the fact that social networks may not ever make significant money.
Why? Well, part of the reason may have to do with the success of these networks… There is actually a glut of eyeballs and pages viewed — putting supply way out of whack with demand.
Here is a salient excerpt from the article:
Here’s my point, when the Social Networking bubble bursts, analysts will recognize Social Nets for what they are: a communications utility. They are a robust combo of mail, messaging, and personal profiles – innovative, but not earth-shaking. And these types of utilities have always underperformed as revenue generators. Instead, profitable businesses have historically used communications to attract users, who are then monetized via branded content franchises like news, sports and entertainment.
One wonders — if this is an accurate viewpoint — is the coming social network bubble burst inevitable?
This is not to say that social networks aren’t important and that these viewpoints are written in stone. In reality, social networks may still come up with an advertising model that is new and more successful than what is in use today. If this happens, it may be that these networks are worth more than some give them credit for.