Oh God! I'm talking shop again. Probably not very coherently.
Oh well. Speaking as someone who has had to fight, for years, because the benefits of community based applications / functionality within web sites are not primarily indicated in the short term ad revenue results, it is not without a sense of "...and the news is...?" that I read about Facebook's leaked results . Shock news! For all of Facebook's desperate dissection of the advertising based model, based on their amazing, intimate knowledge of their customers...
...er, there's not much cash in it. Social networking, that is.
So, this will be the herald to another slump in interst in "UGC", and this year's bling concept will turn all the marketing and advertising heads away on to some other 'shiny-shiny'. Someone had better come up with some more phraseology, quick, to get their attention. Oh! Ot's the semantic mobile web, you see? It's the targetted breakdown of web 4.5! mobi-web to go! API driven data flows to local social... no, damn, said the social word, I mean it's all about localisation 5.7. We haven't done that and pissed it to death for a couple of years, have we? No, it's new wave, 21st century "push". Multi-surface outputs over a never ending profile of new end-to-end devices!
What people in the "UGC" rush failed to hear, from their in-house social people is that social has 2 sides to it. The voyeur, and the participator. The latter constitutes what, 10% of the overall figures? So when only x thousand people per day join your new fangled, pointlessly Ajaxed interface, no focus of attention, SN "me-too" product, you may be shocked to find that it does not offer you a cash cow to retire onwithin 5 years. If you're very lucky, like FB, you may capture a zeitgeisty moment for a while, after which the actual product is so tedious, the customer base will settle down to a steady growth curve, and a monthly interaction level which is even steadier, and involves far, far fewer people than you would like. Without a differentiator, you're screwed. Luckily, FB, although it's differentiator is "we're posh, and boring looking, compared to the anarchy of Myspace, so you probably won't get bothered by the screaming hordes", does have alternative differentiators, handily built for it by external people (such a magnificent strategy - despite all their privacy issues and continual need for improvement, I take my hat off to them). For that reason its membership will continue to rise, even if its usage figures begim to flatten out (within a continued growth pattern, if you see what I mean).
Meanwhile, the voyeur does boost your advertising figures, but, BUT! Who the hell are they? Other than what they last looked at" unless they've registered and logged in, you're just looking at bulk run of site type advertising, with a bias toward the page their looking at. Unless the Google model is used, but even then, it's all a bit random.
The point is, they're visiting, but they're not buying clothes and music. You offer a free model to attract an audience, it *is* attracted so you have to invest in growth, and then you find that their ARPU is pathetic.
Differentiated products which have a niche, which do it very well, can pitch a pay-for subscription as a massive benefit to your use of the product. Step forward Flickr, obviously. Would people pay to not have to see advertising on Facebook? Some, maybe, but it's a major shift away from existing policy. Personally, if they really want FB to spew money in the way that all the analysts, being stupid, thought it would, I think it's not a bad idea. It already has the "We're a bit posher than you" profile against the competition. Offering really decent service amends for a monthly / annual fee would mean for example, you could remove advertising, but you could keep the customer data in your extrapolations. You still get to maximise that person's potential in ways other than MPU's and banner ads.
Making mobile networks cough up some of the revenue they're making from data charges to your favourite SN is the other way to go - but given mobile data is becoming cheaper and will end up as un-differentiated as home-based broadband this is a short term hit.
But what all this is missing is, the core reason for SN's, for community, and for social applications is that they're human. They glue people in, even if it's only for 6 months, until the next shiny shiny comes along. Community will always be worth investing in, because even the voyeurs will think twice about leaving. They may not jump in every day, but they'll be hacked off if you remove their username and password through lack of use. Because people like to feel embedded, and they like to know they belong somewhere. As mobile connectivity in particular starts to increase, more and more people will find themselves bolting in to niche communities, for sometimes micro-interactions, on an irregular basis. But if you offer them a decent, interesting, differentiated way of doing the thing they love, and of meeting the people that they like, then a different part of your budget will be quids in, and for a long time, too.
Hopefully, the second wave of enthusiasm for community won't end up flat as a pancake, as before (6 Degrees, anyone?) but they'll remember to partner with people-providers and downgrade their financial expectations to a slightly more sensible level.
I always caveate my stream of consciousness rambling if only* because actually saying anything always freaks me out a bit, given so many of you lot are also in the same profession. I'm a useless blogger in this respect. Unless it's about how much I hate religion. In which case I reserve the right to spout any old bollocks, whenever I feel like it.
*if only because I'm so hilariously insecure, I think you'll find. Erk.