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Can Friendster Type Social Networking Make Money?

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Can Friendster Type Social Networking Make Money?

Google launched Orkut, Lycos is dropping normal search for friend networking, and Friendster is popping up clones all over the place. Social Networking has become the hottest thing on the web since, well blogs (is there some connection here?). With search firms dipping into the friend-making portal business, one has to stop and think… can these sites bring in revenue?

Reuters Wire Service reports:

Analysts are scratching their heads and puzzling over how Friendster — and the other so-called social e-networking companies that have emerged as the upstart Internet success story of the past year — can make money.

Friendster, which is known as a dating site that hooks up friends of friends, last year pulled in $13 million in venture capital — a significant amount considering the tough climate for new venture funding. Business-oriented Spoke and LinkedIn picked up $20.5 million and $4.7 million respectively.

Investors in those companies include the backers of such blockbusters as online auctioneer eBay Inc., Internet services company Yahoo! Inc. and No. 1 Web search provider Google Inc.

Some funders say the market opportunity for social networking is huge, in part because there is almost no cost associated with populating the sites since existing users prompt friends and work associates to sign up.

It seems that some social networks have already found a place for search and contextually targeted advertising. InternetNews.com adds

Reid Hoffman, the former PayPal vice president who founded LinkedIn [a business oriented social networking portal], sees a hybrid business model for his company. Once the service expands, Hoffman said money will be made in paid subscriptions from members and an advertising service resembling Google’s content-matching AdWords service.

What will this bring about? Will more sites follow suit and there be a transfer of portals into social networking? Seems logical for AltaVista.Or will Yahoo get into the networking craze- transforming Yahoo Groups from the old Topica newsletter platform into a new “meet the friend of a friend” way of spreading your 6 degrees. What’s the use of Google getting into this?

Just imagine.. millions of registered users doing niche market searches in specific groups… serving paid search engine advertising, looks like there’s something to social networking yet.

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Loren Baker

Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing ... [Read full bio]

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