Archive for August 11th, 2009

$50 Million Reasons Social Media Is A Feature, Not A Business

Today, my colleague Sarah Reedy described how social media sites like Twitter and Facebook are adversely affecting personal relationships.

Maybe more importantly for our service provider readers, it appears social media platforms have only moderate ability to affect the bottom line.

The proof? Cutting-edge social media site FriendFeed — which pioneered many of social media’s most compelling features — was sold to Facebook for a mere $50 million.

Now $50 million isn’t pocket change — but it’s not serious change either. The swallower here, Facebook, is probably worth at least ten times that much, once again, a nice round figure but not exactly the size of the companies Facebook ostensibly threatens, including wireless operators and Web companies like Google.

So what’s the deal? I’d argue that what FriendFeed — and, one could argue, the even more popular Twitter — have going for them are features, not services. Features are things people like and use; services are things customers pay for. FriendFeed did the first and in many ways best implementations of important new features, things like activity streams, content aggregation, distributed conversation tracking, real-time search and more.

Unfortunately, it’s extremely difficult, if not impossible, to build a real business around these things. Advertisers don’t really want to sit alongside social media content and social media users have proven they don’t really want to pay for these features. Why? Well once the free genie is out of the bottle, it’s hard to shove it back in and start charging even small fees.

How can such features be monetized? The best avenue may be the mobile world, where operators can add such features to existing revenue-generating text messaging/mobile IM services and either boost fees or use the extra features to hold current (and lucrative) fee levels steady. The app store paradigm also offer a path to charging for software clients that support such services, but once again, the prices for such mini-apps tend to swiftly move toward free as well.

It’s not completely game-over for companies building social media businesses. Twitter, with its real-time conversation and search capabilities, holds major promise. With Facebook swallowing rivals, as well as getting ready to launch its own search feature shortly, that social media upstart is still positioned to cash in as well. It remains to be seen, however, if the real value in both of those businesses will ultimately devolve into features or evolve into real, revenue-generating services.

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Harris Stratex adds WiMax customer in India

Networks solutions provider Harris Stratex Networks (NASDAQ: HSTX) announced today it has inked a deal with India-based telecom service provider ICOMM to provide an end-to-end mobile WiMax network for its subsidiary, Bharat Sanchar Nigam Ltd (BSNL). Through the partnership, Harris Stratex will extend BSNL’s public wireless network to enterprise and retail customers in urban areas across the southern Indian state of Kerala. more

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