Social Media Monetization via Acquisition at FIM

Om Malik wonders “why did Fox buy Strategic Data” saying that “It is becoming obvious 2007 is the ‘show me the money’ year for MySpace and other FIM acquisitions.” At face value, this deal is a notable move of taking important vendor technology in house that will help bolster the revenue base of the property within a larger corporate entity. However, I see this as a larger step for the industry as a whole piecing together what will eventually be a myriad of ways that social software will be significantly monetized.

While the executive quotes talk about the replacement of existing ad network vendors towards in house technology, it is really an acknowledgement that innovation in driving real revenue must (at least partially) come from outside the company. And while the largest social networks like MySpace are indeed media properties (and therefore ad supported), I think that it’s likely we’ll see other valid revenue models emerge as well, whether it’s transactional based, facilitating commerce, etc.

Even in the past couple weeks, we at Masthead have seen a couple interesting startups taking a unique approach to monetizing this type of traffic going beyond ad supported. I believe the key for these endeavors is to fit into an existing revenue model applied elsewhere, be applicable across many niche demographics, and of course scale. We’re still seeing vertical social networks pitched to us without little plans for revenue generation, which is more than a little troubling in my opinion.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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