Article review and analysis

¶ … Tail of Social Networking

The social networking websites defined and detailed by the authors in this article create value for their customers in a variety of ways. Primarily, however, the authors contend that modern social networking sites -- those that arose as a part of the "Web 2.0" generation of sites and applications create value in two ways: by providing new means of getting to know new people and by providing a new avenue by which to stay in touch with/keep up-to-date with people already known. It is the social aspect of these sites themselves that provides the value to the customer, in much the same way that the increased connectivity of the phone -- and then the cell phone -- was the primary source of value to customers of previous eras. The possibilities for social networking sites are far more extensive, however, and provide the ability to communicate both personally and en masses, as well as allowing users to meet new people and not simply communicate with those that are already acquaintances.

Unlike sites that might be more familiar to readers of this article such as Facebook, the sites discussed by these authors do not make the majority of their revenue through advertising, but rather through membership fees. Due to the minimal operating costs for some such sites, these membership fees do not need to be inordinately high, though for business networking sites people are more prepared to pay premium prices -- there is the possibility of greater profit potential through greater networking at a properly oriented and maintained business site. Still, charging customers subscriptions fees seems to have limited growth potential for these companies as a source of continuing revenue, especially with larger free sites.

As mentioned above, advertising is an excellent way to create revenue, and sites like myspace and Facebook have made great use of this revenue source. Many of the sites on the Internet, in fact -- perhaps even the majority, though this claim cannot be made with any certainty here -- rely solely on advertising revenue for their operation. Many sites and Internet services that have a tiered membership system like those mentioned in the article, with basic membership or services offered for free and more complete and/or extensive benefits offered for a fee, are often supplemented by advertising as well (with the lack of advertising offered as one of the perks for paying for membership). The email/search engine site Yahoo! Is a non-social networking site example of this type of tiered-membership/advertising supplemented system, with free Yahoo! Mail available but with the option to purchase upgraded email options from the company for a monthly or yearly fee.