The Missing Fork in Social Monetization

Bernard Lunn started a good conversation on where social sites go from here. He touches on one scenario of monetization that doesn’t get much attention: Group Buying. The way it is generally thought of it probably doesn’t deserve much attention. But part of the idea is what I think could be the long term success of large social networks.

What social networks need to do is look at how other groups of people have monetized themselves. Here I am thinking of all the Associations that find ways to make money. To illustrate my point I’ll share one of the big possible examples.

One way associations entice people to pay membership fees is by offering them discounts on things they already buy. The goal is to make the cost of membership an obvious choice because it saves you money overall. So let’s think of one of the biggest expenses and problems that face the large number of Facebook users: Health Insurance. This growing crisis presents an entity that has access to a large group of people a very interesting opportunity. If Facebook could partner with health insurance carriers to offer its group members a discounted policy the return to Facebook could be significant. 

Let’s assume that they could get 25M of their users to signup for this discounted plan. Given the average demographic let’s assume that this plan charged each person $200 per month. Assuming Facebook could keep a 10% cut run the numbers: That is $500M to Facebook, not counting the membership fee Facebook would charge. Now multiply that by all the other similar products they could offer.

The strengths of this are that it enables the freemium model in a way users are likely to respond. As opposed to the suggested “Black Card” approach which I do not believe would work. Who would want to be identified as paying to use Facebook? Its just like using the Black Card – 9 times out of 10 it causes an uncomfortable scene when you hand someone a card made out of titanium.

Obviously this path is long and filled with obstacles. But the potential return is significant both to the network and to the users. So why not?

Why it isn’t about the number of friends

Josh Catone wrote this morning How Many Friends is Too Many? on RWW. The problem that a few commentators highlighted is that social networks have changed social norms. What Facebook calls a friend isn’t what everyone would call a friend. Most people wouldn’t call the people they follow on twitter friends.

What has changed is the ability to easily maintain a loose social connection – whatever you call that is secondary. The real change is in the amount of work it takes to maintain these connections. In the past it simply wasn’t worth the effort to maintain loose connections – the opportunity cost simply made it prohibitive. The typical real world fall out was something like: 

“Oh I think I know her,”

“Who is it?”

“I can’t remember her name – quick look the other way.”

What has changed is that not only am I more likely to remember her name, I probably have at least one thing I can talk to her about. In the example of Facebook I might know that her birthday was last week.

Now that might seem pretty unimportant. I would agree with the general premise that we can’t be “friends” with 5,000 people.  But the change is significant. Now I can strike up a conversation with a loose connection when I see them at some random place and begin a real conversation, as opposed to starting and ending with the standard awkwardness.

A great example of this would be to analyze the conversation of a group of people at their 10 year high school reunion. If you could compare the conversation of a group that had stayed loosely connected through Facebook to one that hadn’t what would the results look like? Does it matter?

The Average College Student?

An interesting video on the “average” student attending college today. Luckily, JP Catholic is anything but “average”. Here are some of our averages for comparison:

- Average Class Size: 22

- 100% of our teachers know every students’ name

- Any wonder why most of our professors do not allow laptops during class?

 

Harvard, Facebook, and the Future of JP Catholic

There is an interesting article in today’s WSJ by Vauhini Vara. The article discusses the impact that Facebook is having on Harvard students. It does not focus on how kids spend excessive amounts of time on Facebook, instead it looks at the effect Mark Zuckerberg (co-founder) is having on the entrepreneurial ambitions of students at Harvard. There are many aspects of the article that relate to what we are trying to accomplish at JP Catholic. My favorite however is:

Indeed, Mr. Zuckerberg has quickly become a Harvard celebrity. Graduate Matthew Siegel remembers a college-holiday ski trip to Colorado that Messrs. Zuckerberg and Mockovitz went on during Facebook’s early days. Instead of skiing, Mr. Siegel recalls, the Facebook co-founders spent their days camped in the lobby of a nearby Ritz-Carlton hotel where they went online and worked on Facebook.

“I was like, ‘Why are those guys just sitting around working?’” Mr. Siegel recalls. “Now, I’m like, ‘Oh. That’s why.’”

This clearly illustrates the level of passion a student entrepreneur needs to bring to their business (which resonates with students more effectively than anything I could say in the classroom). At JP Catholic we try to instill the importance of entrepreneurial passion in our students. We teach students that in order to successfully launch a business (which they all must do before they graduate) they must be passionate about it. Ideas are not in short supply, students willing to forgo skiing in Colorado to build a business are.

A little about JP Catholic

This video provides a great overview of what we are trying to do at JP Catholic.