Another social network struggling to make money

As marketers, advertisers and PR practitioners are all scratching their collective heads looking at ways to benefit from using social networking it seems the very networks themselves are still struggling to figure out what to do.

Yes hot on the heels on ITV looking to sell Friend’s Reunited, Facebook and more recently Twitter having a difficult time to bring in the cash from users.This morning YouTube has been tipped to make a loss of around £321m in 2009.

Revolution magazine reports:

“The cost of bandwidth, content licensing, ad-revenue shares, hardware storage, sales and marketing and other expenses will reportedly total about $711m (£486m), equating to a yearly loss of about $470 million (£321m), according to the report.

Bandwidth alone accounts for around 51 per cent of YouTube’s costs, claim the analysts, with content licensing accounting for 36 per cent, or $256m (£175m) in 2009.

Google has reportedly already begun planning an extensive redesign of YouTube to give advertisers more prominence on the video sharing site, according to industry insiders.”

Interestingly, the article also states that only 3% of clips on YouTube are actually monetised. I have seen people on Twitter have discussions about the advertisements on Spotify as some people find them intrusive but these networks need to get some form of revenue.

I think the trick to these networks making any real money is giving their users good content which is both desirable and worth our extra spend. For instance, what would you pay for? Would you pay if you knew you could get exclusive behind the scenes clips of your favourite artist? How about if you could get involved in a direct online interview with your favourite sports star?

I think this is an interesting area for debate. How do you think social networks should go about funding themselves? Is the answer intrusive advertising or just stronger desirable content?

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