ESPOO 2007 Publikationen distribueras av This publication is available from VTT PL 1000 02044 VTT Puh 020 722 4404 Faksi 020 722 4374 VTT PB 1000 02044 VTT Tel 020 722 4404 Fax 020 722 4374 VTT P.O Box 1000 FI-02044 VTT, Finland Phone internat + 358 20 722 4404 Fax + 358 20 722 4374 ISBN 978-951-38-6917-5 (nid.) ISSN 1235-0605 (nid.) ISBN 978-951-38-6918-2 (URL: http://www.vtt.fi/publications/index.jsp) ISSN 1455-0865 (URL: http://www.vtt.fi/publications/index.jsp) "Ads by Google" and other social media business models Julkaisu on saatavana VTT RESEARCH NOTES 2384 Social media is becoming more and more attractive to Web users However, the majority of social media services not have a clear business model Typically an innovative idea gives birth to a service, which people can use free of charge The most common way to create revenue is via advertisements: Google ads appear in many services In the long run, however, social media has to adopt alternative means for making money At the moment there are a few alternative business models, of which four larger themes are reported: Crowd-sourcing, revenue sharing between services and users, developing and selling underlying technologies, and adopting social media tools and approaches for professional use Some examples of these approaches already exist The report also identifies and defines some core concepts of social media, as well as investigates various phenomena co-occurring with social media, namely user activeness, identity, copyrights, mobility, trust, and side-effects These phenomena should be kept in mind when designing and launching social media products and services "Ads by Google" and other social media business models VTT RESEARCH NOTES 2384 VTT TIEDOTTEITA – RESEARCH NOTES 2384 “Ads by Google” and other social media business models Petteri Kangas, Santtu Toivonen & Asta Bäck (eds.) ISBN 978-951-38-6917-5 (nid.) ISSN 1235-0605 (nid.) ISBN 978-951-38-6918-2 (URL: http://www.vtt.fi/publications/index.jsp) ISSN 1455-0865 (URL: http://www.vtt.fi/publications/index.jsp) Copyright © VTT 2007 JULKAISIJA – UTGIVARE – PUBLISHER VTT, Vuorimiehentie 3, PL 1000, 02044 VTT puh vaihde 020 722 111, faksi 020 722 7053 VTT, Bergsmansvägen 3, PB 1000, 02044 VTT tel växel 020 722 111, fax 020 722 7053 VTT Technical Research Centre of Finland, Vuorimiehentie 3, P.O.Box 1000, FI-02044 VTT, Finland phone internat +358 20 722 111, fax + 358 20 722 7053 Technical editing Maini Manninen Edita Prima Oy, Helsinki 2007 Kangas, Petteri, Toivonen, Santtu & Bäck, Asta (eds.) “Ads by Google” and other social media business models Espoo 2007 VTT Tiedotteita – Research Notes 2384 59 p Avainsanat: social media, Web 2.0, Internet, business model Abstract Social media is becoming more and more attractive to Web users However, the majority of social media services not have a clear business model Typically an innovative idea gives birth to a service, which people can use free of charge The most common way to create revenue is via advertisements: Google ads appear in many services In the long run, however, social media has to adopt alternative means for making money At the moment there are a few alternative business models, of which four larger themes are reported: Crowd-sourcing, revenue sharing between services and users, developing and selling underlying technologies, and adopting social media tools and approaches for professional use Some examples of these approaches already exist The report also identifies and defines some core concepts of social media, as well as investigates various phenomena co-occurring with social media, namely user activeness, identity, copyrights, mobility, trust, and side-effects These phenomena should be kept in mind when designing and launching social media products and services Foreword In early winter 2006, a decision was made at VTT that social media business opportunities should be studied and identified YouTube and MySpace received major media coverage almost every day It seemed that enthusiasm about the possibilities of new technology intensified to a level comparable to the turn of the millennium When Google acquired YouTube in October 2006, there was even talk of a “mini-bubble” in Silicon Valley with reference to the events at the turn of the millennium However, very few had any idea of the business models on which the new social media applications were based Is “Ads by Google” the only viable method of earning, or could some novel and different ways of making money be found? During the work, we identified the business models presently in use and got some hints about the kinds of workable models that might be introduced in the future Work with social media will continue at VTT, and the aim is to utilise the findings from this publication in the development of new technologies and services This publication was compiled in the spirit of social media: The publication was written in a wiki environment Only the final version was transferred to a word processor This publication was firstly published as closed beta version for a Finnish audience It was written in Finnish in order to get better feedback Based on the comments of the closed beta version, some modifications were made in this public version, which is written in English The changes are mainly in the analysis of the future possibilities In addition to the editors, Jukka Kiviniemi, Jukka Hemilä and Matti Penttilä have contributed to the authoring in the wiki Espoo, April 2007 The authors Contents Abstract Foreword Introduction Definitions 2.1 General concepts 2.2 Core concepts .9 2.2.1 Web 2.0 2.2.2 Content 11 2.2.3 Communities 12 2.2.4 Social media 12 2.3 Derivatives 13 Present business models 15 3.1 Analysed services .16 3.1.1 MySpace .20 3.1.2 YouTube .22 3.1.3 Wikipedia .24 3.2 Identified business models .27 3.2.1 No business model .27 3.2.2 Advertisements 28 3.2.3 Subscription-based services 30 3.2.4 Merchandise 31 3.3 Risk financing 33 Specific issues 36 4.1 Activeness 36 4.2 Identity 38 4.3 Copyright 38 4.4 Mobility 40 4.5 Trust 41 4.5.1 Trust in general 41 4.5.2 Trust and social media 41 4.6 Advertising .44 4.6.1 Ads by Google 44 4.6.2 Product placement 45 4.7 Side-effects .46 5 New business opportunities .48 5.1 Crowd-sourcing 48 5.2 Revenue share 49 5.3 Underlying technology .52 5.4 Social media in professional use 54 Conclusions 56 6.1 Specific issues 57 6.2 New models 57 Introduction There are more than 70 million blogs in the world The online video service YouTube was sold to the search engine giant Google for more than one billion dollars after one year of operation Time Magazine nominated Internet users as Person of the Year Social media made a breakthrough during 2006 Is this just another Internet bubble or can ways of earning money be found behind the services? The objective of the Resome1 project is to create a clear idea of how social media is commercially exploited at present The project surveys various business models surrounding social media The objective is to answer the question: Is advertising, Ads by Google, the only business model for turning content into money? Our hypothesis is that there must be other viable business models surrounding social media besides advertising Furthermore, we aim to uncover the opportunities that Finnish industry and the research world have in the domain of social media A further objective of the project is to define a clear and unambiguous glossary of social media terminology Resome = Revenue from social media Definitions “Social media, collective intelligence, content, community, sociality ” This chapter defines the concepts surrounding social media that will be utilised later in this publication 2.1 General concepts Media refers to a means of communication, a carrier of information Usually we refer to mass media regardless of whether it actually is the TV, radio, newspapers or advertisements in the cityscape The Internet is one of today’s most important media2 Sociality refers to3 • interaction between individuals • belonging to a group • caring for others A business model answers the questions: what does an enterprise offer, how and to whom A business model is described by at least the following: • • Who are partners? • Which are the enterprise’s areas of core competence? • What are the costs? • Who is the customer? • What is the product’s value to the customer? What is the revenue – that is, how does the product make money? Wikipedia: http://en.wikipedia.org/wiki/Media (12 January 2007) Wikipedia: http://en.wikipedia.org/wiki/Social (12 January 2007) New business opportunities This report has so far dealt with present business models and their deficiencies The majority of social media services operate without a business model or have at least started their operations without one The most popular actual model today is advertising A smaller proportion of the services have more advanced business models such as subscriptions or the sales of products Picture New identified business models for social media services along with a few examples of each category This chapter aims to identify new business opportunities that could be used in the field of social media Picture outlines some of these opportunities References concerning the functionality of these services already exist in the form of some services Crowdsourcing is used in several services A few technology development enterprises in the background of services have succeeded along with social media When transferred to professional use, social media tools and methods provide a new lightweight operating model Revenue sharing among services is an interesting opportunity: Users have begun to get paid for producing content 5.1 Crowd-sourcing Social media and the power of the masses are already being utilised in several services This is commonly called crowd-sourcing Users can be used for creating content, for 48 product development and design, or even for doing some virtual tasks requested by companies or other users User generated information is made a part of mainstream media Examples of this amateur media are: The users of You Witness News71 can send their own images and video clips to the service The material is evaluated by Reuters’ journalists They pick the best pieces that can be used as part of the news flow of Reuters and Yahoo The original source of the material is mentioned The user gains reputation but no monetary compensation Perässähiihtäjä – the elections blog of Helsingin Sanomat72: An elections blog that was in use for the first time in the Finnish presidential elections in the spring of 2006 as part of the product package of the Helsingin Sanomat daily newspaper The objective is to create a community supporting the newspaper within which the parliamentary elections in the spring of 2007 will be actively discussed Helsingin Sanomat is reinforcing traditional print media through new means provided by social media The Wikileaks73 service allows users to anonymously upload sensitive material to a server The objective is to create a channel for civil activism, a site on which anyone can report the grievances of the world The reliability of material remains a question Wikileaks might be an easy place to defame people However, it is an indication of increasing citizens’ journalism A marvellous example of crowd-sourced product development is put forward by the Lego Company Lego provides tools for the customers to build a custom designed Lego models in Internet After a design is ready, the newly designed model is sold, produced and shipped to designer and all the other potential customers 74 5.2 Revenue share In the future, a model in which revenues are share between users and services will become more common The best user generated content corresponds to that created by professionals In this context, content must be viewed extensively: in addition to purely digital content, “physical” products can also be included in this model In this case, social media also covers products and services in which the role of the Internet is to serve merely as an introducer and a marketplace 71 You Witness News: http://news.yahoo.com/you-witness-news Perässähiihtäjä: http://blogit.helsinginsanomat.fi/unski/ 73 Wikileaks: http://www.wikileaks.org 74 Lego Factory: http://factory.lego.com/ 72 49 At best, the skills of amateurs are available at a clearly lower price compared to professionals Examples of revenue sharing between services and users: The iStockPhoto photo agency allows amateur photographers to solicit their photos The prices are clearly lower than those of official photo agencies, and the service hosts a large number of photos Newspapers, magazines, advertising agencies, journalists or speakers, for example, can buy photos from iStockPhoto to use in their own works The Scoopt75 service allows users to sell images and texts to newspapers and magazines A user notifies the service where to find his/her images (Flickr, for example) and where to get stories (a blog, for example) Newspapers and magazines can subsequently search for stories and purchase user generated material for their use The ChaCha76 service pays for users to act as the “artificial artificial intelligence” of the service An expert in a specific field searches for information in accordance with user requests and gets paid for his/her help The service offers work in small pieces The Amazon Mechanical Turk77 service harnesses users to carry out tasks that are very difficult to assign to a computer but very easy to complete by humans (such as pattern recognition) The users are paid for their effort The Threadless service has outsourced T-shirt design to users If a user-designed shirt is printed, the user will be paid for his/her effort Threadless has actually been successful in attracting top designers to design models for the service The enterprise itself does not have any risk because only the best designs are rewarded and the popularity of the products is quite certain Particularly for designers in the early stages of their careers the service provides a good opportunity to gain reputation and subsequently build a career In the Revver78 service, the producer/distributor of a video and the maintainer of the site share among themselves revenue based on the number of downloads and advertising JPG Magazine79 is a printed magazine whose contents comprise images produced by users and submitted to the magazine In addition to the editorial staff, users can influence the choice of images for publication by voting, and qualifying photographers receive a reward of one hundred dollars 75 Scoopt: http://www.scoopt.com ChaCha: http://www.chacha.com/ 77 Amazon Mechanical Turk: http://www.mturk.com/mturk/welcome 78 Revver: http://www.revver.com 79 JPGMag: http://jpgmag.com 76 50 At the beginning of 2007 YouTube announced that it would start to pay compensation for video screening to the authors of the most popular videos YouTube says that it will reward creativity Advertisements will probably be added to the most popular videos, funding part of the rewards80 In addition, revenue sharing can be done between different services: Mash-up services as a form of social media have attracted a lot of publicity Mash-up refers to a service whose content is formed by combining the contents of two or more services An example is Chicago Crime81, which combines the committed crimes and the Google Maps service82 into a new way of viewing the distribution of crime within the city Mash-ups also provide business opportunities Services can often be established with a very small investment: Most of the needed information technology and software already exists in the services utilised by the mash-up Large servers or high data transmission capacity are not needed as the information is collected from the original servers Mashups are therefore light to build and maintain Mash-ups could serve as a new way of marketing various services For example, HousingMaps combines classified ads on craigslist83 with the Google Maps service Users can view the housing advertisements of private sellers in a way similar to that used by large real estate agents The mash-up may expedite the sales of housing Igglo84 represents a similar model in Finland Revenue sharing between different service providers will emerge as a new business opportunity Because mash-ups increase the efficiency of product sales, it would seem reasonable that the creator of a mash-up received its share of the revenue A similar model is in place in the Last.fm service Last.fm player shows the CD in which the currently played song was included in In addition, it provides the listener with a link to Amazon’s e-commerce site Last.fm receives part of the revenue from Amazon Revenue sharing between different operators becomes more difficult should the number information sources increase What happens if a mash-up combines information from three different sources is an interesting question What is the appropriate proportion of sharing the revenue? What are the mechanisms for transferring money in such a network? These issues have not yet been unambiguously solved The expansion of 80 BBC: http://news.bbc.co.uk/1/hi/business/6305957.stm Chicago Crime: http://www.chicagocrime.org/ 82 Google Maps: http://maps.google.com 83 craigslist: http://www.craigslist.org/ 84 Igglo: http://www.igglo.fi 81 51 mash-ups creating business depends on whether different parties will be able to agree upon these issues In addition to the above-mentioned business challenges, the development of mash-ups involves technological issues Various applications are implemented using different technologies (mainly different programming and markup languages) In addition, the mash-up’s implementor must have the command of all the partial applications and carry out various kinds of conversions and conflict resolutions between contents provided by the services For example, there are many practices for representing location information, and the conversions between these are not necessarily straightforward The technological challenges are linked with issues of responsibility and therefore also with business issues One of the proposed solutions to facilitate the creation of mashups is using some Semantic Web technologies that in order to define content unambiguously and respond to many challenges of compatibility It can be considered quite probable that a major player such as Google or Yahoo will create a method, tools, and interfaces for revenue sharing in mash-up services (similar to the PayPal service), and the system will thus become a de facto standard for business based on mash-ups Yahoo has already a simple service, Yahoo Pipes85, for building mash-ups It is likely that in the future the revenue sharing mechanisms will be added to these kinds of tools 5.3 Underlying technology There is technology underlying social media services This technology is related both to usability and the user interface, making the use of the service easier, and to server and database applications running in the background The usability of a service is a factor by which social media services differentiate In many cases, the service that is easiest to use and most comfortable will become the most popular among a group of similar services Services are seldom unique – copycats will emerge immediately The first service entering the market is not too often the winner For example, YouTube offered an easy way to embed videos into any Web page and in this way won over users On the other hand, the information technology in the background of the services provides opportunities for “traditional” IT companies The services often require large numbers of servers, as well as heavy and scalable database structures This makes it 85 http://pipes.yahoo.com/pipes/ 52 possible for enterprises selling servers and software to build their business underlying social media services as service providers, for example By way of example, in October 2006, all significant Web 2.0 enterprises except MySpace utilised MySQL databases in their day-to-day operations Mobile phones, terminal devices and in the future, also a persistent wireless network connection, provide social media with a mobile dimension In this case, the transfer of content back and forth increases the traffic and business of traditional telecom enterprises The expansion of fixed broadband connections has also filled the revenue gaps of telephone operators However, enterprises providing data communications capacity should draw up reasonable pricing models: a threat is represented by solutions such as FON and Skype which, once they have reached a critical mass, may wreak havoc on the old business model Information security providers surely have a field of work also in social media Even though social media is partially based on openness, the modification of content and borrowing from others, major services always have substantial information security risks If money comes into the picture more intensively in the future, this will increase the risks further Mash-up services provide a new perspective: these services are built on top of other services The provider of a mash-up may well with very lightweight IT solutions as the service utilises the capacity of other services This allows the creation of an attractive service with modest resources An example is HousingMaps, which combines classified ads from one source and map services from another One very essential technological phenomenon that is already taken for granted in its triviality is the digitalisation of content in general This is particularly evident in the case of photographs and films Attitudes and behaviours concerning photography have substantially changed with the transition from paper prints requiring development to digital photographs The reason is not so much the speed and ease of the image production process – way back in the print era, Polaroid cameras allowed for immediate completion of the products of one’s mind This is rather an issue of the inexpensive price of taking pictures Taking an individual digital picture does not cost anything, which clearly lowers the threshold for photography The possibility to share pictures with large crowds at negligible cost also creates new dimensions 53 5.4 Social media in professional use The progress of social media, like most technological innovations today, is fuelled by consumers The first applications and services cater for private individuals, while any potential professional applications lag behind There are several explanations for this phenomenon in connection with social media Enterprises typically have a greatly higher threshold to introduce new applications and services; time and money is spent on investigating the correctness and quality of services Furthermore, the use of external servers and their software in strategically important operations may be a decisive issue for many enterprises However, a variety of methods can be seen through which enterprises could benefit from social media applications and methods in their operations One approach is the use of social media innovations in an enterprise’s internal functions For example, the use of wiki technologies as a platform for project reporting and other distribution of information is becoming more common Even this report was edited largely on a wiki The introduction of wikis and other methods based on open sharing of information will probably be most successful in enterprises in which the atmosphere is already open and which aim at efficient communication between different organisational units In some cases, new technology can also serve as a “trigger” for a new open way of operation After a successful internal launch, the enterprise can consider extending the scope of social media tools and practices towards partner enterprises and customers Tools and technologies implemented using Web 2.0 technologies are typically very lightweight, they not require installation on the user’s terminal and work with standard browsers This means that integration between the information systems of different enterprises takes little effort when utilising social media applications For example, the development of shared documents, time management and customer relationship management in general are processes in which social media solutions might be applicable to enterprise use This is well in line with the general turning point in work methods that is currently visible: jointly operating partner enterprises can vary their roles as the producers and consumers of information Social media applications have a clear advantage compared to many traditional applications: they are often free of charge or at least very inexpensive Furthermore, the applications are based on open source, providing enterprises with modifiability and transparency Enterprises must naturally invest in IT support but it costs very little to obtain and test a certain piece of software This makes it possible to test different applications with a rapid cycle, and turning down a certain application will not result in a loss of investment All of the funds used for the introduction project can be spent on service content – not on buying or developing software The payback period is short 54 The utilisation of social media in mobile use opens up new ways for enterprises to monitor and manage their employees “in the field” Mobile employees can produce and share content concerning a variety of tasks in real time with easy-to-use applications The produced content can be accounted for in enterprise resource planning systems either automatically or manually depending on the case Also in this approach, social media contributes to enterprise networks For example, the different functions of a building, such as ventilation, electrical supply and cleaning, are probably the responsibilities of different enterprises All of these enterprises could share information by using lightweight applications operating with standard browsers For example, if a cleaner noticed a deficiency in ventilation, he/she could share this with the appropriate enterprise with no effort Enterprises can harness the huge potential of social media also at the brand level By monitoring online writings about themselves, enterprises gain valuable and unfiltered information on how customers feel about them, their products and activities A step forward is to establish a blog or an online community focusing on the enterprise’s activities or its sector of operation However, when doing this, an enterprise must be careful in order to retain its own credibility For example, it should be considered whether to maintain a blog or online community on the enterprise’s own server and under its address, or whether the operations should be outsourced Furthermore, it must be ensured that users not categorise the activity as a flog (see the section on Sideeffects) Today, substantially more attention must be paid to maintaining credibility 55 Conclusions Most social media services not have a clear business model The services have been built around a great idea without a conception of who would pay for the idea The most popular ideas grow so large that they start to live a life of their own YouTube, for example, with its enormous contents attracts millions of visitors every day and is an interesting investment target for large players The services also need people who produce content free of charge in order to make the service interesting as such Some social media pioneers have made money with services having no clear business model: YouTube was sold to Google for 1.3 billion dollars There are only a few such success stories and there will not be many more – at least not in the same scale The most common and at least partially functioning business model in social media applications is advertising When a new service gains popularity, advertisements are the first thing to step in Both Google and Yahoo have made it very easy to add advertisements as part of one’s own service Ads by Google are the most popular model among new services With good luck, advertising revenue can indeed be used to cover the costs of the service Some services, such as MySpace, become attractive objects for advertising, and advertising rights can create substantial revenue, in the case of MySpace about one billion euros However, the greatest winners in social media funded by advertising are Google and Yahoo It is also true that not all social media can be based on advertising Good social media business models already in use are subscriptions and the sales of products A service can be designed as fee-based from the very beginning The most widely known example is the World of Warcraft game tangential to social media, which is based on monthly fees The service collects approximately one billion euros of annual revenue from monthly fees On the other hand, a free service can offer its users better features against payment: Flickr, for example, offers additional features against a small annual fee iStockPhoto is an exemplary social media service The service operates as an online photo agency, mediating inexpensive photographs from photographers to the media The service is based on payment for the rights to use images This is known to the photographers and the buyers of photos The service utilises the power of the masses of social media but is based on a clear way to sell content – this service has a business model 56 6.1 Specific issues Social media should be viewed as a phenomenon rather than a set of technologies In this publication, Web 2.0 is seen as the technological manifestation of social media A set of special characteristics describing social media as a phenomenon can be listed The first one is activeness The very existence of social media is based on user activeness, whether artistic content production, commenting on existing enterprises or phenomena (either positive or negative), or social networking The proportions of Web usage are evident from the fact that even though it is estimated that 90% of users merely consume content, there is still enough material to guarantee the success of a large number of social media enterprises Identity, privacy and privacy protection are crucial issues related to social media The Net allows a user to impersonate someone else – on the other hand, his/her identity can be stolen and purchases can be made or even crimes committed in his/her name Identity-related problems are a subset of the side-effects of social media Various types of copyright problems and, on the other hand, the production of digital “junk” by social media methods are side-effects that must be addressed in one way or another Social media applications must gain the trust of users Trust must also be achieved between users, particularly in applications that involve the transfer of money or that can have a negative impact on the reputation or brand of the parties Advertising has been an absolutely necessary factor for the existence and spreading of social media up to the present day It can be fairly assumed that advertising will continue to play a central role It will probably take on new forms such as the embodiment of advertisements in other content through various kinds of product placement The utilisation of mobility will increase its significance in social media Mobile devices have so far been utilised mainly in the production of social media, e.g as a storage medium for photos and videos Services and earnings models offering social media to mobile users are still to come In such activities, it is useful to utilise operating situations when distributing information For example, the physical location or social environment of a user can be utilised for filtering essential information from all of the information available 6.2 New models Crowd-sourcing can be seen major possibilities for companies For example the traditional media has noticed the possibilities of social media: the best social media content corresponds to content created by professionals Content produced by voluntary 57 forces has indeed started to become part of traditional media An example of this is You Witness News by Reuters and Yahoo, bringing user generated images and videos to Reuters’ news desks and actual news In addition, the masses can be used for product development as Lego has done, or doing virtual tasks as in the ChaCha search engine The next natural step that can be seen is that revenues of new better services are shared between users and services: The best content will be valuable enough for the revenue share to be justified The first examples of this exist already: the Scoopt service mediates stories and images for the media against payment The revenue is shared between the service and the content creator Money will certainly become part of social media: At the beginning of 2007 YouTube announced that it would start to pay compensation for creativity to the uploaders of the most popular videos When users are being paid for content, services based entirely on free content may fall into trouble For example, this may happen to Wikipedia with its strict principles Various types of mash-up services provide completely new opportunities for revenue sharing between different services The services combine different sources of information and create new methods of viewing the information For example, HousingMaps brings private classified ads on top of a Google map A new service and view to the information has the potential to increase revenue flows to the services In such a case the revenue should be shared between different players No clear rules have yet evolved nor regulated for revenue sharing, particularly if a mash-up is based on combining three or more services However, mash-ups provide a lightweight and agile method of building new applications on top of existing ones, and there are interesting business opportunities in such services Social media services are often backed by large servers and extensive databases The services are used over broadband and wireless networks Enterprises offering traditional information, communication and software technology have good opportunities to succeed with the support of social media An example of this is MySQL, which underlies most of the significant social media applications More traditional players will be able to receive their share of the flows of revenue by offering services and solutions to social media enterprises Social media tools and methods developed by users can be transferred to the corporate world The tools are often free of charge and refined by a large number of users Enterprises can adopt these tools to their own operations with very small investment Social media tools can also be used to change the working methods of an enterprise by, for example, encouraging openness and networking The tools also operate in complex 58 enterprise networks Enterprises offering these new tools as part of the operations of the corporate world will have business opportunities Social media provides many new business opportunities When designing services, it is also important to develop a business model You cannot succeed without a model, and advertising is not sufficient to create reasonable revenue, at least not for all players This is particularly true with small countries and language groups, such as in Finland The designer of a service can utilise the business models presented in this report In addition to an innovative idea, someone should be ready to pay for the service, at least through some route 59 Series title, number and report code of publication VTT Research Notes 2384 VTT–TIED–2384 Author(s) Kangas, Petteri, Toivonen, Santtu & Bäck, Asta (eds.) Title “Ads by Google” and other social media business models Abstract Social media is becoming more and more attractive to Web users However, the majority of social media services not have a clear business model Typically an innovative idea gives birth to a service, which people can use free of charge The most common way to create revenue is via advertisements: Google ads appear in many services In the long run, however, social media has to adopt alternative means for making money At the moment there are a few alternative business models, of which four larger themes are reported: Crowd-sourcing, revenue sharing between services and users, developing and selling underlying technologies, and adopting social media tools and approaches for professional use Some examples of these approaches already exist The report also identifies and defines some core concepts of social media, as well as investigates various phenomena co-occurring with social media, namely user activeness, identity, copyrights, mobility, trust, and side-effects These phenomena should be kept in mind when designing and launching social media products and services ISBN 978-951-38-6917-5 (soft back ed.) 978-951-38-6918-2 (URL: http://www.vtt.fi/publications/index.jsp) Series title and ISSN Project number 11183 VTT Tiedotteita – Research Notes 1235-0605 (soft back edition) 1455-0865 (URL: http://www.vtt.fi/publications/index.jsp) Date April 2007 Language English, Finnish abstr Name of project Keywords social media, Web 2.0, Internet, business model Pages 59 p Commissioned by VTT Technical Research Centre of Finland Publisher VTT Technical Research Centre of Finland P.O.Box 1000, FI-02044 VTT, Finland Phone internat +358 20 722 4404 Fax +358 20 722 4374 ESPOO 2007 Publikationen distribueras av This publication is available from VTT PL 1000 02044 VTT Puh 020 722 4404 Faksi 020 722 4374 VTT PB 1000 02044 VTT Tel 020 722 4404 Fax 020 722 4374 VTT P.O Box 1000 FI-02044 VTT, Finland Phone internat + 358 20 722 4404 Fax + 358 20 722 4374 ISBN 978-951-38-6917-5 (nid.) ISSN 1235-0605 (nid.) ISBN 978-951-38-6918-2 (URL: http://www.vtt.fi/publications/index.jsp) ISSN 1455-0865 (URL: http://www.vtt.fi/publications/index.jsp) "Ads by Google" and other social media business models Julkaisu on saatavana VTT RESEARCH NOTES 2384 Social media is becoming more and more attractive to Web users However, the majority of social media services not have a clear business model Typically an innovative idea gives birth to a service, which people can use free of charge The most common way to create revenue is via advertisements: Google ads appear in many services In the long run, however, social media has to adopt alternative means for making money At the moment there are a few alternative business models, of which four larger themes are reported: Crowd-sourcing, revenue sharing between services and users, developing and selling underlying technologies, and adopting social media tools and approaches for professional use Some examples of these approaches already exist The report also identifies and defines some core concepts of social media, as well as investigates various phenomena co-occurring with social media, namely user activeness, identity, copyrights, mobility, trust, and side-effects These phenomena should be kept in mind when designing and launching social media products and services "Ads by Google" and other social media business models VTT RESEARCH NOTES 2384 ... “Ads by Google” and other social media business models Espoo 2007 VTT Tiedotteita – Research Notes 2384 59 p Avainsanat: social media, Web 2.0, Internet, business model Abstract Social media. .. VTT TIEDOTTEITA – RESEARCH NOTES 2384 “Ads by Google” and other social media business models Petteri Kangas, Santtu Toivonen & Asta Bäck (eds.)... designing and launching social media products and services Foreword In early winter 2006, a decision was made at VTT that social media business opportunities should be studied and identified YouTube and