E-Commerce Model: Social Networking Sites

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Social Networking Sites|

This report will deal with the phenomenon of social networking sites and their position(s) in the current and future economic model.

Table of Contents|
Section 1: Revenue Models, SWOT Analysis and Future Prospects| Pg. 2| Section 1.1: Revenue Models| Pg. 2|
Section 1.2: SWOT Analysis| Pg. 4|
Section 1.3: Prospects in the future for Facebook| Pg. 5| Section 2: Possible New Uses of an Existing Social Network| Pg. 6| Section 2.1: eGovernment| Pg. 6|

Section 2.2: eEducation| Pg. 7|
Section 3: : Customer Centric Designs of eCommerce Websites| Pg. 8| References| Pg. 10|

Section 1: Revenue Models, SWOT Analysis and Prospects of Popular Social Networking Sites This section will examine 4 social networking sites (Facebook, MySpace, Twitter and Google+) from an economic perspective. This section will be divided into three sub-sections: 1) The first sub-section will inspect the revenue models employed by each of these sites. 2) The second sub-section will look at the SWOT analysis of two of these sites and attempt to identify the various strengths and weaknesses of these sites. 3) The final sub-section will focus on one of these sites and look at its future prospects. Section 1.1: Revenue Models

With 750 million active users (USA Today 2011), Facebook is undoubtedly the current market leader in the field of social networking sites. Established by former Harvard student Mark Zuckerberg in February 2004 as The Facebook, the site changed its name to Facebook in August 2005 and soon established itself as a major player in a field that was being led by Orkut and MySpace (Mashable, n.d), attracting users with its exclusivity and clean-interface. Facebook’s most important method of earning revenue is through advertising. A major chunk of its revenue is generated by the self-serve advertisement system which allows companies to decide who they want to market to, based on various preferences such as age, gender, marital status and the likes (Guardian 2009). The same report talks about Facebook selling virtual advertising estate on their websites to anyone who can dole out the cash, directing them to pages or profiles as they see fit. Finally, Facebook’s base of 3rd party apps has been the basis for many credit-card based transactions (in games for example) of which Facebook receives a certain percentage. All of these methods have helped Facebook’s revenue rise enough to be able to breakeven with its day to day costs (Guardian 2009) which is a major breakthrough for any social networking site. MySpace

The leading social networking site before Facebook was established, MySpace had made its name in the field for being a site that was preferred by upcoming musicians for its ability to allow easy sharing of music. It was considered the youth’s most preferred network, since it was the first site that allowed them to ‘relate to brands and bands’ (Web Strategist 2008). However, the site currently owned by Specific Media, failed to innovate and lost a lot of its market share after the advent of Facebook, and has a current active user-base of 110 million users (The Next Web 2010). MySpace’s revenue model also revolves mostly around advertising. The site uses the basic two types of advertisements that are used by a lot of popular websites, namely pay-per-view and pay-per-click. In the former, the marketer pays a certain amount of money to have his Advertisement Banner up on MySpace’s pages while in the latter; he pays a certain amount (usually a few pennies) for every click that his advertisement gets. Although that may not sound like much, but with MySpace’s users still numbering in the million, the numbers certainly add up with the company making more than $550 million in revenue in 2007. However, since MySpace has fallen behind its...
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