Thursday, August 13, 2009

Customers will pay for services but not for features

The debate will long continue about whether social media can transform itself into a valuable business model for some time to come.

Facebook's $50m acquisition of Friend's feed shows that at least the industry is still operating on a business model rational.

According though to Rich Karpinski the philosophy of social media will restrict its business potential.

He argues that

it’s extremely difficult, if not impossible, to build a real business around these things. Advertisers don’t really want to sit alongside social media content and social media users have proven they don’t really want to pay for these features. Why? Well once the free genie is out of the bottle, it’s hard to shove it back in and start charging even small fees.

To Rich social media is a faeture and not a service for which users can see an intrinsic value.Customers will pay for service but not for features.

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