Some comments about your post
> Problems:
> 1- On social networks in general the audiences are low value. These are kids spending money on a certain set of things: clothes, cell phones, food, movies & gasoline. Clicking on ads for other things isn’t that appealing.

- You seem to assume that SNS are all for kids. Read this about a SNS with only 120,000 members making 70 million USD a year (http://www.plus8star.com/?p=138). Oh, they are all medical doctors. SNS can mean disintermediation of a middleman, or a new media / sales channel. There are tons of business efficiencies to create that have nothing to do with kids and Mars bars.

> 2- The older demos are not installing applications. They have the money and/or provide money for their kids who are using the applications.
- What if the currently available applications were just uninteresting for older demographics? Could the on-the-go applications people installing on iPhone be an indicator of what could work on fixed SNS?

> 3- Saturation. There are now 100 million+ new page views a day that cubics, google adsense, lookery, etc…can provide ads for. That drive eCPMS down to ~$.10 or lower.
- This could show that niche SNS have a higher potential than “general” ones with little purpose and focus.

> 4- Scale. Your page views aren’t significant enough. Let’s say you can create 100,000,000 page-views a month. At $.10 / 1,000 pvs (eCPM) you are now making $10,000. Considering that might be 1-2 full-time people + hosting costs means you won’t be a trillionaire anytime soon.
- Pageviews is the metrics of advertisers, no user ever said they were happy to have done XXX pageviews. I guess this metric can be forced on the user’s experience as long as they are not clients…

Solutions:

>- Use your app as a marketing vehicle to your own destination site.
- SNS apps as media+marketing (“entertainment marketing”), I like this idea too

>- Reach out to brands (try hard) for individual sponsorships. Great but not too scalable.
- Unless you target specific sectors and quality members, for which the companies willing to advertise are usual suspects. The medical doctors SNS is one example among other industries.

> – Virtual Goods? It’s huge in Asia. Great read here. Thanks Dave.
- It’s getting big in Europe and US too (Habbo Hotel, some video games). Surprising it took so long.

>- Fun. Do it as a hobby or lifestyle business. Nothing wrong but this will be well suited for college students or part-time hackers.
- What if a FB app had a low entry barrier and as such, could simply not make millions for all?

We have created a new drinking game application on the Facebook Platform. It is called Party School and can be accessed here: http://apps.facebook.com/championship_cups/public

I am going to stew on Dave’s ideas to see if we can incorporate one of them into our application…thanks.

“Leveraging the social graph” is just a fancy phrase. It’s not like Facebook is managing to leverage its OWN social graph data, nevermind us sharecroppers.

ha.

dave,

great suggestions!

james,

perfect.

i think a fair amount of apps are profitable. the question is how much and for how long. most things get stale without updating / enhancements. the tops like scrabulous are likely making this much.

700,000 daily active users. at 10 pvs a person (likely lower but lets give them the benefit of the doubt = 7,000,000 pvs a day * 30 = 210,000,000 * .10 cpm = $21,000. for 2 guys in india that’s a shit ton of money. $250,000 a year salary for copying someone else’s intellectual property. in the words of borat, “i like, can i touch.”

however, if you were to work at Microsoft/Google you would like get that much in salary including stock/benefits/etc…

One way to solve this problem is by creating unique media(ads) and brand engagement that leverage the overall app and the community that is behind it. Jeremiah wrote up one of our campaigns we did with Dell and Graffiti(one of the three apps we work with in FB; hopefully one day we can work with more):

http://www.web-strategist.com/blog/2008/03/24/case-study-dissecting-the-dell-regeneration-graffiti-facebook-campaign/

Long term if you do want to go with brand/ad model, I think one way for developers to create value will be in plugging their apps into a brand’s platform. By effectively leveraging networks like Facebook, MySpace, etc. and driving people back to a brands platform and outside of the network’s walled garden, you can create real value for advertisers. If people’s actions on this app in a branded environment can still “talk back” to the networks; via profile updates, newsfeeds, etc. there is incredible engagement, “network effect” and scale there. Brands will pay for that.

1) turn games into shows, let other people watch/bet on players. might have to use virtual currency depending on where you’re located, but could probably monetize the skill-based component. also use this to create buzz, run contests. could also offer rev-share on bets with players.

2) create games that actually solve problems / do work for others, then monetize their finished game efforts. example: create a head-to-head game out of translating content / transcripting video or podcasts, sell the finished product. not sure this one scales as well, and limits the types of games you can create, but could be interesting. again, consider rev-share with high-scoring players.

3) enhanced version of #1: allow people to buy equity in players, and/or stakehorse them. Friends-for-Sale meets Hollywood Stock Exchange meets Nintendo. be the house, and collect fees for buying/selling player shares. again, create celebrities / rev-share high-scoring players.

4) add virtual goods add-ons to any of the above. boost your race-car with digital goods hi-test. buy virtual steroids / HGH for your players. buy extra lives / cheat codes, etc.

5) if all else fails, sell out / sell your installs to big dumb brands with cash who are trying to figure out social games

Why haven’t sites such as Facebook etc managed to install micropayment solutions? Do they just dismiss them out of hand or is it because they can’t see the forest for the trees.

What I mean by that is it because their valuation models (as well as analysis of the sites) are primary based on traffic “If we get hundred million users we can monetise them later” rather than thinking “well if I get 10 million users who pay 50cents each that might be not bad”.

All power to QQ, Cyberworld et al. I recommend everyone should read the ppt.