FaceBank, MyBank and BankedIn
If you have been following the thread of the MobCon theory you won’t be surprised to discover that the two most popular business model for web apps are Free or Freemium. (See The Long Tail Terrific survey of free business models online).
Free is web speak for putting Ads on the menu. Freemium is web speak for building large volumes of traffic and then putting ads on the menu.
A distant 3rd comes the almost archaic idea of having people pay for something. We are talking about those survivors of the dot.com era like eBay and Amazon.
While everybody was talking about Freemium Amazon was quietly expecting to post 5+ Billion in sales for the July-Sept 09 quarter. eBay should also have seen 1.6+ Billion in online auctions and sales. Not surprisingly, even during the Global Financial Crisis, eBay’s shares have doubled and Amazon’s have tripled of the past year (see Business Week Oct 09 Amazon vs. eBay: Which Stock Is a Better Bet?).
Both eBay and Amazon have about 75 Million uniques per month. They are ranked the 6th and 8th most popular web sites in the world today.
You may be surprised to discover that the web’s number 3 (Facebook) is growing so rapidly it will soon be equal to the combined traffic these two ‘antique’ eBusinesses. (See Compete Traffic Stats).
The comparison in revenues could not be more revealing. Facebook’s “ads on the menu” startegy delivers an estimated $0.25 per unique per month. (See What’s on the MobCon Radar for the Social Networks?) Amazon an estimated $21.80 and eBay $7.20. So I guess the question has to be asked: Can Facebook, or for that matter mySpace and LinkedIn, become the next eBay or Amazon?
You may recall from an earlier post the idea that all media (online at least) is now advertising. This means the new MobCon retail and media convergence model looks like this. (See Point, Click and Discover the Future of Retailing.)
The MobCon Triumvirate
At the moment Google owns Find You. Twitter and Facebook dominate Find me while eBay owns the exchange. The future will be dominated by whoever is capable of owning all three simultaneously.
If Facebook, or any one of the other social networks, can evolve and become both simultaneously a social network and an exchange then it will have acquired a proven revenue model and will emerge as the dominant player across the Mobile Content convergence landscape.
The question is what would social exchange network look like?
Actually I don’t think it would look like eBay or Amazon. I don’t think Facebook, mySpace or LinkedIn need to build the market or the shop fronts. What they need to do is build the platform that will allow 3rd parties to build the plug-in apps with a level of confidence in the transaction being managed and secured by the owner of the platform. They need to build a social banking platform.
The idea of Facebook or mySpace operating a micropayments platform is not new (see iPhone, MySpace, Facebook Race To Micropayments In 2009). Indeed one of the mistakes the social networks have made so far is to allow 3rd party providers (e.g Spare Change On Track To Process $30 Million In Micropayments On Social Apps This Year) to service this requirement on an ad-hoc, as needs basis.
Nor for that matter is the idea of leveraging social networks as a social lending platform. After all Lending Club started in May 2007 as a Facebook application that has since expanded to other social networks.
What is radical is the idea that this is the primary reason why the social network exists. To find you, find me and to exchange not just words and ideas but gifts, products, services and most importantly financial credits.
The problem so far is the social networks have simply been “toying” with the idea of a payments platform. All their efforts to date amount to plug-ins designed to support or add value to the “Free” business model. If they radically rethink their strategy and concentrate on becoming the banking and financial services platform that supports the discovery, exchange and transaction of their member’s online and mobile experience then they would emerge with a truly revolutionary and extraordinarily profitable business model.
Don’t believe me? Then re-read my earlier post on How to arrange to have somebody else provide your customers with a free lunch.
More posts in this series on the monetization of Social Networks
- AdBook, AdSpace and AdLinked
- Facefone, myPhone and LinkedTel
- FaceGames, MyGames and GamesIn
- FaceCover, myProtection and LinkedIndemnity
- FaceCenter, myBrand and the LinkedInLounge
- What’s on the MobCon Radar for the Social Networks?
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