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Thursday, April 06, 2006

LinkedIn Profitable - Is Social Networking A Business Model?

Social Networking Site LinkedIn Has First Profitable Month

Konstantin tells me that March was the first profitale month for LinkedIn, the social networking giant. At first pass this may not sound like a big deal, after all it doesn't mean the company is profitable across the board, we're just talking about one month here. But there are some interesting observations to be made based on this event.

One of the most obvious questions is, Can social networking sites make it if their business model is just that? Personally I don't believe social networking is a business model, there has to be a reason for birds to flock together. The saying goes like this "birds of a feather flock together". The key words here aren't birds or together, the key phrase is, "of a feather". People need a reason to connect to other people and I believe this is one of the main reasons LinkedIn is beginning to hit it's stride in the social networking world. They've found reasons for people to join and find other like-minded individuals. Konstantin does a good job of breaking it down in his email to me so I'll let him take it from here.
"...Our average subscription is $200-300 per person per year (range is $60 to $2,000 per year). I think it proves that social networks are valuable to some people . . . or, hold that, I think it's *business" networks. Of course, the social network have plenty of opportunities to drive revenue via page views.

The people paying up at the $2,000 per year level are primary recruiters, investment bankers and management consultants. They may not generate many page views, but if they run three searches, find eight good people, contact four and hear back from four, that can yield unique information on a multi-million dollar investment or result in a $30,000 placement fee.

At the $200/year level, it's a pretty broad mix of people--mostly around business intelligence, sales, market research, bus dev, etc. The $60/year level is bought primarily by people who want to be found, like professional service providers, job seekers and networkers.

As for this year, I believe in the next 3 to 6 months, people search is going to emerge as a major search "vertical." There will be competition for where people go to look up people (e.g. Google, Ziggs or LinkedIn) and also for where people publish their profile (e.g. GoogleBase, Ziggs or LinkedIn).

We now allow people to search LinkedIn even if you are not a member, so it is much more like a search engine (you can see it by logging out). Also, we are enabling users to publish their LinkedIn profile to the Web (inlcuding a customized URL):"
LinkedIn has also given people the ability to find their classmates online and I think that's a big factor contributing to the rise in their subscription revenues as well.

I smell social networking mashups fast approaching.

By Jason Dowdell at 10:28 AM | Comments (0)

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