Paying for Social Networking

NPR interviewed Denise Paolucci, one of the founders of the new journal/blog site Dreamwidth, last week.

She’s skeptical about advertising-supported social networking sites, and wrote a multipart essay last year walking through the problems with it (the essay was originally posted to her Live Journal account, but has been moved to Dreamwidth.)

The primary problem she argues, is diminishing returns on ads, resulting in lower prices, and lower prices requiring replacing more editorial content on the page with ads. The reason why there’s a diminishing return for ads on a social networking site: people come there to communicate, not shop. Unless you have the capability (like Facebook) to place a narrowly targeted ad with a high likelihood of getting some sort of conversion into sales or action, then trying to fund your site through ads will not succeed.

That skepticism, and Live Journal’s switch to an advertising-supported model, spurred her to take a branch of the open source Live Journal code, and start Dreamwidth.

Dreamwidth supports itself through a paid accounts system. Users pay as little as USD5 a month up to USD50 a year.

Disclaimer: I am a charter subscriber to Dreamwidth with a lifetime account. If you’d like to try it, please comment on this post. I have a small number of free invite accounts I can share.

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This entry was written by Bill Humphries, posted on June 29, 2009 at 10:56 pm, filed under culture, media, technology and tagged , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.
  • enerhax

    interesting post and i will head over to read her views on adverts. it's a tough go. a little person like me runs some google ads and makes a little each month (little means very little – i make more with people that use my second life link to set up an account, comes out to about $7.61 per new paid account)

    the ads that end up running on my blog are all over the place because my content is all over the place. fallout shelters, which i talk about a lot, attract some interesting ads (at least my zombie paranoia is only in second life . . . well, for the most part)

    i suppose that ads on blogs reflect more on the perceived value the readers of that blog portray. i use dooce.com as my poster child example. she writes a post daily and has McDonald's are her one big sponsor. in fact, it may be the only ad. but that brings her $40K a month (lol, not Lindens, the real USD)

    another blog i use as example is doshdosh.com, mainly for those looking at how to monetize their blogging efforts. Maki (at doshdosh) writes very informed and helpful posts on everything from affiliate programs (like threadless which will pay you like $4 or 5 for any t-shirt sold via your ad) to how to blog effectively

    i'll go to her post now and check out Dreamwidth. it's a neat name and I want to see how it compares to hosting your own blog. thanks for the interesting read =)