Revenue Streams for Social Networks

Slide 1: Re ve nue S tre ams In Social Networks Laurel Papworth

Slide 2: Pre Ro ll Ad This presentation is *brought to you by Blizzard (World of Warcraft) and Coke *Not

Slide 3: If yo u do n’t find a re ve nue mo de l • Expect one to be found for you • Expect it to be traditional • Which means interruptive and irritating • Imagine a preroll ad before logging into facebook or Twitter or World of Warcraft. • Imagine ads plastered Banner, sidebar and embedded. • Find a better model!

Slide 5: S uc c e s s ful S o c ial Ne two rk • If you build it …(product development)? • Will they come …. (user acquisition)? • Will you make money …. (monetization) ?

Slide 6: S uc c e s s ful S o c ial Ne two rk • If you build it …(product development)? TIP: LOVE YOUR PRODUCT/SERVICE • Will they come …. (user acquisition)? TIP: LOVE YOUR COMMUNITY • Will you make money …. (monetization) ? TIP: LOVE THE MONEY

Slide 7: No te : • Gaming data taken from freetoplay.biz • August 2007 • Non-gaming data collated by me (Laurel) • Article by me (Investor Weekly, Dec 07) • Credited where possible

Slide 8: 1. Re ve nue : Virtual Ite ms

Slide 10: Re ve nue : Virtual Ite ms • ARPU can reach $10,000 per user - Would take a WoW user 55 years to reach that amount • Guesstimate: 2 Billion dollars in 2007, low figures because of the blockade gaming companies put on trades.

Slide 11: Pixe l pro duc ts in S Ns • SK Telecom “CyWorld” - $300,000 per day • 60m members, 83% of all Koreans in SK • $7.00 per user per year (non-advertising) • Habbo, tweens world, $16 per month (Oz) • 86 million avatars, 8 million visitors per month, 200k in Australia, $60M revenue • Avatar goods, “room” goods,

Slide 12: 2. Re ve nue : S ubs c riptio n Tie r …may be called “Freemium”

Slide 13: • Free - 6 million members • $5.00 per month – 1 million members For those who can’t count: • $60M annually • Second Life Freemium – free first account, $10 for second, $72.00 per year for premium

Slide 14: • 11 million members • $15 per month • 1.1 billion revenues, 560million profit • No Pay No PLAY model.

Slide 16: Ad Bre ak

Slide 17: Bro ug ht to yo u by…. Toyota trucks in World of Warcraft??????

Slide 18: 3. Re ve nue : Adve rtis ing • Massive, IGA and Double Fusion • EA, Activision, THQ and Microsoft Game Ubisoft, Atari, and Vivendi Universal • Static ads or dynamic ads. • Sports, racing, contemporary shooters GOOD NEWS/BAD NEWS • Currently $200M will reach $723M in 2010 • Suck in roleplaying.

Slide 20: • Solely Ads • Well over 100 million members • $2.17 per year per member - $900 Million deal with Google for Ads • Spotlight ad spots in “roped off” areas. • The Guardian $900M – Aug ‘06, CNN Money $2.17 per member, Jul ‘06

Slide 22: 4. Re al Es tate

Slide 23: • Purchase an island for $1675 • Monthly fees around $300 • 70% of Linden Lab revenue is from real estate WATCH OUT • Court cases

Slide 24: 4. Me rc handis ing

Slide 25: • $15 toy + secret code • April 2005 – Aug 2007 2million sold, 1 million registered online • More than $20m in 24 months • World of Warcraft CARD games

Slide 28: 5. Auc tio ns and Playe r Trade s

Slide 30: 5. Expans io n Pac ks “premium packages”

Slide 31: Eve rque s t Expans io ns

Slide 32: 6. Eve nt (viral s pike s )

Slide 33: S po rts and o the r g ame s • Usually free and/or ad-supported • Special zones or times for event • Lots of build-up and buzz • Pay to play during that time, receive leaderboard and other rewards • Ultimate Baseball Online, Shot Online (golf), Half-Life 2, Counter-Strike

Slide 34: 7. TrialPay

Slide 35: Trial Pay • Cost of Acquisition could be as high as $50 • But a WoW user will pay $15 p.m for 12 months? 24 months? Worth it.

Slide 36: 8. Do natio ns • Gaming – Kingdom of Loathing (1 mgr, 6 employees) • Wikipedia - donations

Slide 37: 9. Co lle c tible Virtual ite ms • Pixel Products plus Tournaments/Events • Not trading exactly…

Slide 38: 10. Pay As Yo u Go to Own • Pay 1c per minute until the entry barrier is reached. Rest free. • Banded or tiered?

Slide 39: Pay as yo u g o (c o nne c tio n) • Vodafone New Zealand – free to set up a “room” uploading content is standard mobile charge. • Internet meters in Asia.

Slide 40: 11. Lic e ns ing White Labe l • Build your network as a hub • License out spokes – CSS people! – Ning • White label = looks like theirs, but you manage (3eep) • eBay’s eco-community?

Slide 41: 12. S po ns o rs hip • Branding/Badging – blatantly or not • Pharmaceutical companies sponsoring health sites. BE OPEN! • Gonzo Marketing – Ford Utes sponsoring Gardening sites

Slide 42: 13. Mo ne tizing Us e r Ge ne rate d Co nte nt • User Generates Crap (UGC) • User sells crap • Host gets a clip of the sale • User is a distributor, advertiser, marketer • User signs up network

Slide 43: • Mobile videos (cost 25c, creator gets 5c) • Avatar housing in Second Life (Anshe Chung)

Slide 44: Re ve nue S hare • Member as distributor • Member gets income (Meraki mesh) • Member invests (social finance Zopa) • Member works (escrow projects eLance) • Member ahem… (p2p escorts, not media)

Slide 45: Laure lPapwo rth • Social Network Hostess-with-the-Mostess • +61 (4)32684992 • lpapworth (at) gmail.com • Sydney Australia • Blog: http://silkcharm.blogspot.com • Biz site: http://laurelpapworth.com • For BarCampSydney3 - developed while drinking and carousing excessively