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Can Closed-Door Exclusive Social Networks Make Money?

  |  August 16, 2010   |  Comments

Private clubs that cater to the elite are popular offline. Will the same concept work online?

So far, most of us have been thinking about social media as a marketing tool. But have you thought about it as a product?

“A product?” you might be asking, “Do you mean something like a new Web service or app?”

Astute question, but no: I’m not talking about creating the next Facebook or Twitter. I’m not talking about giving everything away. I'm talking about actually making money from what you’re probably giving away for free right now.

Think about it: even if you sell widgets, there’s probably value you can add for your customers by supplying information about how to better use those widgets. If you’re a service business, information itself is your business. And if you’re your own personal brand - I’m talking to you celebrities or digerati out there - then information about you is your business.

But yet we give it away. Heck, many consumer packaged goods companies don’t just give it away…they actually pay their customers (through coupons, promotions, etc.) for the privilege of accessing information. Service businesses - ad agencies, consultancies, etc. - regularly give away valuable information (that many of their customers pay for) through tweets, blog entries, and Facebook updates. Celebrities - see Kim Kardashian or Justin Bieber - also give away information about themselves by tweeting, posting photos, etc. Sure, this information does have a purpose: advertising and building their fan base. There’s also the side benefit of advertising sold on sites like Twitpic that become the recipients of huge amounts of traffic when folks like Lady Gaga or the Jonas Brothers post some new “exclusive” video/picture/bon mot. According to this article, the Jonas Brothers can generate 2 million views when they post something new on Ustream, and Lady Gaga has attracted 390,000 views of a photo she tweeted about. All those eyeballs mean more advertising dollars to the sites the fans visit. In fact, the same article mentions that Ms. Kardashian has been paid as much as $10,000 per tweet because of her traffic-generating capabilities.

Overall, most of us have looked at social media as a marketing tool, a way of driving traffic, building awareness, or building brand loyalty. But what if we looked at it as a way of driving revenue through access?

Technology guru George Gilder has been quoted as saying that “every economic era is based on a key abundance and a key scarcity.” Value is created or destroyed because there’s not enough of something that people want or because there’s too much of it. Right now the social media economy is one of extreme abundance. There’s certainly no lack of tweets, status updates, or blog postings last time I checked. In fact we’re awash in abundance and spend enormous amounts of time trying to wade through it or we pay other people to edit the datastream for us. Some of the most popular blogs (Boing Boing and The Huffington Post come to mind) exist specifically for this reason: they filter the noise so we don’t have to.

But scarcity itself can create value if the scarce commodity is something that people want. Look at Google’s long history of “closed invitation-only” betas: people go ga-ga over these things, trading invitations like currency. It’s like the old “velvet rope in front of the club door” trick: if you can’t have something you want, it just makes you want it more.

That being the case, what if we began to monetize social media access not by seeking more followers or subscribers or “friends” but by restricting access? What if Justin Bieber charged a subscription fee for his tweets? What if you could only get “exclusive” Lady Gaga pictures when you paid for the privilege? What if you could only become a fan of a brand (with access to insider information, special deals, etc.) if you were either invited through some exclusive process or had to pay to get in?

It’s not an idea without precedent. Private clubs have existed ever since Zog decided that he only wanted Ugga and Snork to hang out in his cave at the exclusion of the rest of the smelly group of cave people. They have existed because they have benefits: they build trust among the participants, allow for conversations that couldn’t be had in public, and they give people a place to hang without having to deal with the great unwashed (or maybe in the cave-people’s case, washed) masses.

There have been a number of “exclusive, invitation-only” social networking experiments to date, and they’ve been met with varying success. They usually cater to a highly-exclusive (and wealthy) clientele and trade on their snootiness to build cache. There are also exclusive groups for leaders in industry, often tied together with real-world networking events. Not a totally new concept.

But for marketers outside of the Learjet set, taking a look at exclusivity (either through invitation or pay-to-play/read/tweet models) might be an interesting way to generate additional revenue and build a more fiercely-rabid base of brand loyalists. Look at the TED Conference: there are plenty of us who’d love an invitation not just because it’d mean we “arrived” but because we also would gain access to some really smart people. In this case, the network itself has become the product.

For marketers who now blog and tweet as a way of promoting yourself, keep it up. It’s a proven way to build your brand and generate awareness. But why not make another level of information - the extra good stuff - a benefit of being a client? And better yet, if you have a set of clients who might want to talk to each other, why not make access to that network part of the benefit, too? Why give it away?

Reversing the open social networking paradigm might, in certain cases, allow you to extend value far beyond the limited contact that you might otherwise have with your clients or customers. We all go to conferences so that we can hear smart ideas and network with others like ourselves. We also go to have the chance to go up to the podium after the speech and talk one-on-one with the expert we just listened to. Afterwards we just go home.

Why? Why not make ongoing network part of the product? Wouldn’t you pay extra to go to a conference where one of the benefits was a year of continued access to a private network of your colleagues where you could discuss issues and share ideas in a safe place along with ongoing participation from the experts who gave the talks that you attended? I bet you would.

As for consumer products, much of the same model applies. In fact, toy company Ganz has made a pretty penny with its Webkinz line of stuffed animals that also provide access to a kiddy social network and game world. In fact, based on the kids that I’ve seen who are into Webkinz, it’s the information - the network - that’s the real draw. The stuffed animal is just a nice side benefit.

Would this work for every business? Maybe not, though how much would you pay (and how loyal would you be) if you could get exclusive online tech support from your own personal plumber or could get breaking news from your favorite sports teams before it hit the rest of the Web? Are there obstacles to this idea? Yes: the most important of which is that the big social media services aren’t set up to allow for this pay-to-play model right now. I’d imagine, however, that there are some people out there who could probably build a work-around.

Social media: we all know that it’s a great marketing tool. Maybe it’s now time to start thinking about how to turn it into a revenue generating tool by making it less accessible to your audiences, not more.

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ABOUT THE AUTHOR

Sean Carton

Sean Carton has recently been appointed to develop the Center for Digital Communication, Commerce, and Culture at the University of Baltimore and is chief creative officer at idfive in Baltimore. He was formerly the dean of Philadelphia University's School of Design + Media and chief experience officer at Carton Donofrio Partners, Inc.

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