On September 15, 2009, Facebook CEO Mark Zuckerberg announced that the social network had surpassed the 300-million-member mark and reached cash-flow-positive status for the first time. Those milestones validated Facebook’s core concept of monetizing its service through advertising, and revived a lingering question that has swirled around social networking since its inception: Will users pay for content?
A close look at the social network landscape reveals that beyond mainstream sites such as Facebook and MySpace, paid content is alive and well. Networks that cater to market niches have particularly thrived on hybrids of paid models and ad-based systems. Some of these players, such as LinkedIn, Classmates.com and MyLife.com, are earning at least as much revenue from fee-based content and services as from advertising.
As the online ad market continues to struggle, paid services including membership fees, premium features and virtual goods will take on increasing urgency for social networks, either as primary revenue generators or ancillary income sources.
Key questions this report answers:
- Are social network users willing to pay for content?
- What is the revenue outlook for paid social networking sites?
- What are the prospects for Facebook and Twitter charging their users?
- What strategies work for paid-content providers when ad-supported competitors enter the fray?
On September 15, 2009, Facebook CEO Mark Zuckerberg announced that the social network had surpassed the 300-million-member mark and reached cash-flow-positive status for the first time. Those milestones validated Facebook’s core concept of monetizing its service through advertising, and revived a lingering question that has swirled around social networking since its inception: Will users pay for content?
Executive Summary
US Paid Social Networking Site Revenues, 2008-2013 (millions and % change)
Key Questions
Paid Social Network Content
US Paid Social Networking Site Revenues, 2008-2013 (millions and % change)
US Online Social Network Advertising Spending, 2008-2011 (millions and % change)
Best Way to Monetize Social Media According to Social Media Leaders in North America, February 2009 (% of respondents)
Social Media Service for Which Social Media Leaders in North America Would Most Likely Pay, February 2009 (% of respondents)
Social Media Service for Which Social Media Leaders in North America Would Advise a Business to Pay, February 2009 (% of respondents)
Competitive Strategies: Paid vs. Free
Will Facebook and Twitter Charge Users?
US Adult Twitter Users, 2008-2010 (millions and % of adult Internet users)
Paid Services on Niche Networks
Controversies over Paid Services
Conclusions
Endnotes
104968
US Online Social Network Advertising Spending, 2008-2011 (millions and % change)
101766 | 101767 | 101770
Social Media Service for Which Social Media Leaders in North America Would Most Likely Pay, February 2009 (% of respondents)
Social Media Service for Which Social Media Leaders in North America Would Advise a Business to Pay, February 2009 (% of respondents)
Best Way to Monetize Social Media According to Social Media Leaders in North America, February 2009 (% of respondents)
Related Information
Contact
Report Contributors
On September 15, 2009, Facebook CEO Mark Zuckerberg announced that the social network had surpassed the 300-million-member mark and reached cash-flow-positive status for the first time. Those milestones validated Facebook’s core concept of monetizing its service through advertising, and revived a lingering question that has swirled around social networking since its inception: Will users pay for content?
Abrams Research
eMarketer
Piper Jaffray & Co.