Listen, I understand that this is the kind of thing you might expect to read in a 1998 edition of Wired and does not fit with the 'getting real' mantra, but (at the very least) eyeballs are monetizable trough advertisement. It's a time tested strategy that has worked just fine in other mediums.
Sites like youtube and myspace did not need to worry about the monetizing part as they got acquired quickly, had they not, maybe the story would be different. I still can't think of sites with a huge and active userbase that failed.
Ugh that getting real shit makes me barf. Applying blanket statements like "you shouldn't need to take VC money" only demonstrates the tunnel vision of working on one business for so long. Much of their advice is very good, but there's too many absolutes for my liking..
Anyway, all I'm saying is too many people are applying the blanket statement "worry about monetization later" when not all of them should be.
In my opinion, it can be easier for businesses to reach the tipping point of paying customers (i.e. break even) vs. the tipping point of users (???, profitability?, acquisition?). I think MM touched on this.
Myspace hasn't show itself to be a real business yet and either has Youtube. I still can't think of user based acquisitions that have quantifiably proved themselves to be a wise decision, though I think Youtube will.
>In My opinion, it can be easier for businesses to reach the tipping point of paying customers (i.e. break even) vs. the tipping point of users (???, profitability?, acquisition?). I think MM touched on this.
Completely agree, but the possible payoff in the latter case tends to be quite higher.
>Myspace hasn't show itself to be a real business yet and either has Youtube. I still can't think of user based acquisitions that have quantifiably proved themselves to be a wise decision, though I think Youtube will.
I think that's hard to say. Take hotmail for example, while it might have not generated a $100 mil in revenues yet (or maybe it has?), I would doubt that the purchase was a strategic decision they regret over at Redmond. I think the same could be said for Youtube. If NewsCorp has regrets over the MySpace purchase, they are quite likely much more due to FB´s growth than to MySpace's current revenue.
If all these companies decided to grow users before revenue when they where a startup, it makes little sense to try to squeeze revenues quickly out of them, at the expense of user growth, once they've been acquired by a company with much larger pockets. I think the logical thing to do, in those cases, would be to continue the same growth strategy for a few years while calmly exploring ways to monetize them.
Startups that don´t get acquired are obviously more pressed to find a way to monetize quickly.
" Take hotmail for example, while it might have not generated a $100 mil in revenues yet"
I'd bet it's way more than that due to volume, brand recognition and since it directly circulates hotmail users to microsoft properties. But similar to you, I don't know either. However, I think that's a great example of a user acquisition that has worked so far - thank you - I was having problems thinking of examples.
Not to sounds too 37signally, but what about the freemium model?
I think it's great, but don't see it as a viable option for some products.
I also think micro-payments can be an option one day when someone gets around to making it less painful and more available. I think this will probably involve cellphone companies but I digress.
In any case, I think selling ads can be a very profitable route for others.
Sites like youtube and myspace did not need to worry about the monetizing part as they got acquired quickly, had they not, maybe the story would be different. I still can't think of sites with a huge and active userbase that failed.