Tag: business models

Possible revenue source for Facebook – copy Linkedin and Mercado Libre business model

Today I was updating my Facebook profile with my current and latest jobs. Facebook has become even more important than Linkedin when it comes to networking for job opportunities. Since the connections are very personal the level of trust between the connections is very high. For the work market this has made it easier to use real world network to find a job. I just wish the way my information is shown could have been more clear. I hope Facebook implements this soon.

Even though Linkedin is less personal the network aloud you to look for new talents on the whole new level. Here you can find and connect with people in very particular areas on very high levels very far out of your own sphere.

But as with Facebook, you had to know the person to connect with them. You could still send a request to anyone but you had to await their approval to connect with them. Now what Linkedin has started to charge for connecting with people. If they are connected to you more than three connections away on Linkedin, you have to pay to become a premium member to be able to send requests.

The same business model is also recently implemented on Argentine sites Mercado Libre and Comparto Depto, the first one the Argentine version of Ebay and the second the Argentine version of Craigslist.

At Mercado Libre your add will be shown to more people the more you pay.

At Comparto Depto you can send people that rent out apartments messages and by that apply for the apartment.

Both these sites charges for a service that people truly needs. The price is pretty low compared to what you get access too, and therefore the entrance to enter is low. People in Argentina are ready to pay for this service.

We could see Facebook take the same direction but that would be a risky step. This could mean that the users have to decide who they are prepared to pay to become a friend with. But if the price is low and the value of what the service provides to you, people would pay for it.

Spotify is an example of a monthly subscription app that has succeeded in gaining a big loyal group of users that finds the value created by the service worth paying for.

Facebook has managed to make people sign up and visit the service regularly. Brands marketing on the site has also started to become more intrusive, lately with sponsored status updates in the news feed. People definitely start to become ready to pay to avoid this.

I remember myself how intrusive the ads on Spotify had become shortly before myself and everyone I knew in Sweden started to pay for Spotify. During one spring, in the student block where I was living at the time, between the songs people played on speakers placed on their balconys the music was regularly cut of by advertising. This was annoying enough to make us pay. We had all for a long time been treated to free access to the app, and it was good enough to one of those added on costs that sneaked into our lives. But unlimited access to music made us at least download music illegally.

I think we are almost at that point where we are ready to start to pay for social media the same way we pay to use our smart phones to call, surf and text our friends. The maturity period is over. Lets see if Facebook are ready to show some balls.

What is the next big thing in music?

The most discussed topic in music during the last couple of years have been what their income source will be in the future. The digitalization of music has taken away the musicians regular revenue streams. I think we can find their solutions within the same force that took their income.

I think a new major income stream for artists will be sponsoring. To finance the production of a track and video a company will go in and pay the production cost in exchange of being co-producer. Brands and artists will look for a partner with similar values. The artist will release the album with the brand who pays for it. The artist gets to produce their music and get it out there and the brand gets good content to share online. Video get a lot of attention when shared online.

Why I see the opportunity in the combo music and video is because I see how the use of YouTube is maturing. I more often find the music I like on YouTube than on Spotify, I have seen street restaurants play music from YouTube playlists and the social functions of YouTube are just getting better, keeping people on the platform by helping them talk to each other on YouTube. Yes this is happening since a long time but I feel that we are more ready now to see it really kick off! How people are now sharing their experiences and answering others shows that we are now more used to this way of communicating.

A great opportunity I see in commercials on YouTube is to create content that manage to catch the attention of the user during the first 20 seconds the commercial is showing before your video clip starts and make them watch the whole video. I think teaming up with artists here as well is a great way for brands to manage to connect with their audience. If you instead of a commercial get to see a really great video with an artist you really like, why would you then skip to see your video? If YouTube can track what videos we want to watch we can show people the advertising they want to watch as well.

An example of a music production that works this way is the group Hifana from Japan. They are released on the ad agency Wieden+Kennedy. A cool group records a real great song with awesome production. They get a real huge budget to make an awesome video. In the end you get to see that the video was sponsored by a brand. The viewer has to wait the whole video to see the sponsor! If they are prepared to watch that long they will most likely watch the brand because the brand is not forced on them. Most people would never watch a whole commercial of 10 seconds. A music video is at least 3 minutes.

This raises questions about brands gaining more control over our minds. If we like these videos so much so that we are prepared to watch a companies message for three whole minutes, how will they be able to manipulate us? This sounds like the type of objections that arose when advertising was new. And we are still fighting the same problems. Read an interesting article on advertising ethics here! —> http://www.wwf.org.uk/wwf_articles.cfm?unewsid=5374

Another objection to this business model might be that musicians would have to sell their souls to present something that they don’t stand for or start working for evil multinational companies. But with the pressure on companies to be more transparent that we have seen thanks to social media in the last couple of years I don’t think we have to worry about that. It is still quite far in the future but it will be harder and harder for companies to keep doing bad things in the shades. This is also why it will be harder for companies and politicians to get away with cheap propaganda.

But then we come down to an even deeper problem. Every message we hear could be propaganda. And everyone has different perception on what’s right and wrong. And who decides what side is right?

The fact that artists are opening up for new revenue streams by letting brands sponsor their music and videos still raises the same types of questions that advertising did in it’s beginning, and I still believe that the development is nothing we can stop. We can only try to adapt to it.