Web 2.0 social networks and the challenge of business model monetization

¶ … Fortune Magazine titled Web 2.0 Is So Over. Welcome to Web 3.0 (Hempel, 2009) the paradox of social networking sites have exceptionally high levels of traffic yet no discernable business model is discussed. The author comments on Facebook and MySpace not being able to progress beyond their advertising model-based approach to monetizing their businesses.

The point is made that advertisers have cooled on the idea of purchasing online advertising. Pioneered by Google, the online advertising model is now reflecting the dearth of spending on marketing in recessionary times. There are also the new Web 2.0 entrants to this online social networking market, Twitter and Friendfeed included both with no apparent business model today.

The secretive launch of Beacon by Facebook in the Fall of 2008 is mentioned by the author to highlight how these companies are grappling to find their business models, even clandestinely as Facebook attempted to with Beacon. The fatal error that Facebook made was not telling their users they were doing this. The author continues and reflects on the fact that any exit strategy to a dotcom is not feasible given these larger companies have many problems of their own.