Wednesday, July 26, 2006
Cracking the social network code - MarketWatch:
"...Back in 2000, I recall sitting down with Internet executives at one of those ancient Internet Summit conferences, run by John Battelle, famed author of 'The Search.'
The discussion: 'How will Google make money?'
Back then, sponsored search was hardly a money maker, online video was running at a painful 15 frames per second on the Web, the word 'iPod' would have raised an eyebrow, email marketing seemed really promising, my space was typically used to describe an area around someone's physical presence, Lance Armstrong had only won the Tour de France twice, and the big debate was whether subscription or branded ad-supported models worked best on the Web.
One possibility raised years ago was that Google could charge $5 a month for usage. Many said that if Google were to charge, its popularity would be usurped by a free alternative. As most observers know, Google eventually copied Overture's (now part of Yahoo) brilliant paid-per-search business model. Some say Google even serendipitously tweaked its model by factoring in the number of clicks as well as price per click to determine the ranking of the ads. Today, sponsored search based on the price an advertiser pays and the popularity of an ad -- in other words, the Google way -- is the No. 1 way to make money on the Web.
Google reported last week that it generated $2.46 billion in sales in the second quarter. Of that amount, just over $1 billion dropped to its cash-flow line, estimates Goldman Sachs. No one fathomed this possibility five years ago. Good thing Google didn't charge. Its quarterly revenue is more than what people paid for all Web content last year. Its cash flow alone in the latest quarter is twice the $503 million that all the Web dating sites generated in sales in 2005. And, online dating from popular sites, such as InterActiveCorp's (IACI : iac interactivecorp com new Match.com or Yahoo Personals, were the No. 1 service people paid for between 2002 and 2004, according to the OPA.
What about social networks?..."
"...Back in 2000, I recall sitting down with Internet executives at one of those ancient Internet Summit conferences, run by John Battelle, famed author of 'The Search.'
The discussion: 'How will Google make money?'
Back then, sponsored search was hardly a money maker, online video was running at a painful 15 frames per second on the Web, the word 'iPod' would have raised an eyebrow, email marketing seemed really promising, my space was typically used to describe an area around someone's physical presence, Lance Armstrong had only won the Tour de France twice, and the big debate was whether subscription or branded ad-supported models worked best on the Web.
One possibility raised years ago was that Google could charge $5 a month for usage. Many said that if Google were to charge, its popularity would be usurped by a free alternative. As most observers know, Google eventually copied Overture's (now part of Yahoo) brilliant paid-per-search business model. Some say Google even serendipitously tweaked its model by factoring in the number of clicks as well as price per click to determine the ranking of the ads. Today, sponsored search based on the price an advertiser pays and the popularity of an ad -- in other words, the Google way -- is the No. 1 way to make money on the Web.
Google reported last week that it generated $2.46 billion in sales in the second quarter. Of that amount, just over $1 billion dropped to its cash-flow line, estimates Goldman Sachs. No one fathomed this possibility five years ago. Good thing Google didn't charge. Its quarterly revenue is more than what people paid for all Web content last year. Its cash flow alone in the latest quarter is twice the $503 million that all the Web dating sites generated in sales in 2005. And, online dating from popular sites, such as InterActiveCorp's (IACI : iac interactivecorp com new Match.com or Yahoo Personals, were the No. 1 service people paid for between 2002 and 2004, according to the OPA.
What about social networks?..."
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