Social Networking's Business Model Is A Dinosaur With A Pacemaker
“50% Off”, “Buy 1 - Get 1 Free” and “1/2 Price” are all the same offer...but “Buy 1 - Get 1 Free” pulls significantly better. The reason is simple: the word FREE. Note in all the aforementioned offers, however, something was paid for in the transaction.
FaceBook, YouTube, Twitter and other social networking sites are called “Freemium Companies” because they don’t charge for their services. This business model is a digital dinosaur and extinction inevitable.
Freemium companies need to understand they're in the INFORMATION business first and foremost and if the information provided has value, revenues prevail. If you're not making money, here’s a clue: the information you're providing is of little to no value. That said, I don't think any Freemium company will exist in the next 36 months. There's no such thing as a "free lunch" and if the Freemium folks think there is, .com bust [Version 2.0] is about to occur.
