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.