Why social networking sites need a business model first

February 19th, 2009 • 7 comments Social Media

Yelp.com Scam:

I have written previously about monetizing online communities. To sum it up, my point was that communities do not convert into paying customers unless the expectation is set at the very beginning. The recent Yelp.com extortion scam further strengthens my point. Yelp.com is not yet a profitable company – its primary source of revenue is advertising. As the primary user-review site, I did trust yelp.com implicitly with its customer recommendations. However, having learned today that yelp.com actually tampers with the reviews (pays employees to write reviews, gives a negative review to business who decline to advertise with yelp.com and gives positive reviews to companies that advertise with them) – I will never again trust the veracity of the reviews on that site.

It is a mockery of consumer trust and the implicit rules of social networking and social technologies. Like the Creative Commons Act – this may not yet be written in stone, but dude – tampering with user reviews is dishonest, faulty and plain despicable.

Social networking/ social media companies – I beg you. Please have a business model in place first. Then go attract your users.

Don’t get me wrong – I do think that as a community of thinkers and entrepreneurs, we will only learn by taking risks and making such mistakes. But personally, I’m becoming less and less enchanted by social networks that essentially offer variations of the same service – but do not do the right due-diligence and research to have a sound plan behind it.Ultimately, this is what happens then. Oh yes, we’ve generated a terrific user base- NOW- lets go to investors and get the money. And THEN lets figure out how to make money off this. How can you do business like that?!

We talk so much about old business models dying and how social technologies is re-defining how we do business. Agreed- but I still think there’s a lesson or two to be learned from the old-school folks. For Yelp.com -what’s the point of bringing in thousands of users, establishing trust with your users and then fooling them like this? The sad thing is, unless this story reaches critical mass – users will continue to flock to yelp.com, trusting its recommendations.

I wish brands would understand that a social network is not a solution to their problem. Heck, most brands don’t even do a good job of properly identifying the problem first. As I see it, they find a new media solution first (whether it is a facebook fan page, a social network or even twitter) and then they frame the problem around it.

Facebook – the savior

Yes. I sincerely believe this. At work, I have two windows constantly open other than my work email: my personal email and Facebook. With their new “Like and Share” features, it is diminishing my need to go to a digg.com or a reddit.com – and instead derive satisfaction from sharing items with MY friends. There has been a lot of debate abou their TOCs lately – Give those guys a break. They are doing their best too – to figure out how to make money while staying true to the community. What I love most about Facebook is that while they experiment with different business and revenue models, they are quick to react, communicate and apologize to their community as and when need be.

Anyways, these were totally unfiltered thoughts brimming around in my head after reading that Yelp.com scam news today. Feel free to agree/disagree.

Have a safe trip home

February 5th, 2009 • 3 comments Culture Briefings

I love this so much that I have to share it every possible way with everyone I know. This is a topic so dear to me, and so close to me that its amazing to see other talented people explore it – all across the world.

Dido asked film directors across the world to create video pieces/ short films on what their idea of what home means to them, using a song from her new album, ‘Safe Trip Home.’

The resulting montage of videos, emotions, moods and explorations of what home means to people of all ethnicities, cultures and beliefs – is nothing short of brilliant. Colorful, vibrant, poignant — I have felt twenty-five different emotions in the last 15 minutes alone as I waded through this pool of rich, feelings.

I love this – also because it is so close to my heartfelt project, ‘Dsplaced,‘  The collective storytelling experiment that I launched with my friend Mansi to do just that – explore people’s relationship with their cities, and the idea of what home and memories mean to people.

You have to take 10 minutes out of your day and spend it immersed in this site. If you have ever wondered about the significance of home, or displacement – you will lvoe the site. And of the hundreds of stories shared, I am sure you will find the one you most relate to.

Here’s one from Mumbai that I love – please enjoy it and pass the word around. And if you would like to share your story, do it here, dsplaced.com