Monday, January 19, 2009

Monetization and social media 

by Christopher S. Penn Awaken Your Superhero January 19, 2009

Excerpts: If you are a social media practitioner interested in earning money for your skills, you have to deeply understand money first.

First, money is a medium of exchange for other goods and services. Money doesn’t solve the value equation - that is, what you do must have value to someone. Money only makes trading value easier. If what you do is of no value to anyone, then like the farmer facing no demand for chicken, no matter how skilled you are, no one will trade with you. As a social media practitioner, your work has to have value.

The most successful social media practitioners recognize that social media in and of itself is of relatively little value. It’s a communications channel. What is of value is what you deliver to your audience. I deliver, for example, financial aid information on my Financial Aid Podcast. The fact that it’s a podcast has no inherent value; what has value is the quality of the information.

If you’re considering offering up your services to someone else as a social media practitioner, make sure that they have something of value to offer their customers, or both you and your client will fail to generate any business. Your own track record must demonstrate that you understand underlying value and how to present it in a social media context.

Second, money as a store of value is vitally important to social media practitioners. Like all industries, social media, new media, online media, etc. all have trends. There’s a new shiny object every day, and that presents new opportunities for you to demonstrate your skills and earn some money in doing so. You have to not only capitalize on trends, but sock those earnings away. You have to be able to store the value of a trend so that when it cools - and it always does - you have a strong base of capital to operate with.

Equally important is your ability to recognize value and trends ahead of time so that as a platform matures - as blogging has - you’re ahead of the curve and in new spaces. This is the often referenced blue ocean strategy, where there’s virtually no competition in any vertical in a new area. Blue ocean was podcasting in 2005, blogging in 1997, Twitter in 2006, Facebook in 2004 and so forth. As a social media practitioner looking to earn a living at your craft, you need to be able to spot new blue oceans and move in long before others do, while recognizing that it will be some time before that space is highly desired by a large population.

For companies looking at social media, recognize that the store of value means you need operating capital and strong revenue streams today from your social media efforts, but you need to be investing for the future as well. Your internal financial health will dictate how you prioritize investing for the future vs. banking on what’s hot today.

My Take

It strikes me as strange that attempts to monetize Web 2.0 have used Web 1.0 tactics. Web 2.0 supports actual, personal relationships. These relationships have natural, tangible, financial value.

Example - there are relationships that either save you money or make you money every day. Whether you are looking to buy something or sell something - your network enables you to do this more efficiently by filtering out bad choices through communal experience.

First, we need to understand the economic value of personal relationships. Communites have always been built around the value that these relationships produce. It is why we people band together.

In this sense, social media communities are no different than physical villages, towns and cities. Then we can replicate the process and create true value that can be converted to cash.

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