Active Rain and Pay-to-Play - the Larger Context
Categories: New Business Models, social networking, Social Media
On Media Transparent today, I lightly analyzed 9 ways to monetize a social network using enigmatic Twitter as the model - a wildly popular network that eventually will have to declare a revenue model. Real estate has its own beloved Twitter construct in Active Rain, and yesterday, Active Rain announced its new $29/month fee for new members who want to post consumer-facing articles.
The real estate industry is unique in its widespread adoption of
the social media for business networking purposes, and Active Rain’s
ability to connect its real estate agent members with consumers looking
for a Realtor makes pay-to-play an ROI proposition. $29/month may
leverage one lead that can contribute $1,000s in fee income. There are
active discussions on this policy at Active Rain (570 comments+) and Bloodhound Realty Blog.
I believe this is the first pay-to-play move by a large social network of 130,000+ members. (Surprisingly I didn't see any of the tech blogs pick up the story). It’s a courageous and laudable move that can be only assessed in hindsight based on future adoption rate.
In the larger context, Active Rain's decision is not about whether social networks should always be free, it's about business model credibility. It's important not to sit on the "tried and true" when in the long (or even short) run, the model cannot sustain profitability and thus the business. Every new iteration of the social network business model will yield another business model because the business ecosystem adapts to it, so it's important to take bold steps.
As a site owner of a real estate social network I will be watching to see what effect this has on the ultimate future growth of AR.
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Free has never been profitable unless the site is sold to someone else who gets stuck on dealing with how to make a buck and usually just strips it for its technology and moves on. I cannot think of anyone online or off for that matter who has started from free then figured a way to make it not free. You are starting completely from the wrong USP.
On your other ways for Twitter or any of these to make a buck. Ads are usually the only answer, but do little to pay off the enormous debt caused by the growth. AR has tried many other walls and this one was the only one they should have chosen from jump street imho. But again ZERO to a premium is a tough sell.
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Pat thanks for the thoughts about our bold move. We’ve never been ones to just sit around waiting for something good to happen.
It's been 3 days since our announcement and with 830 new free memberships since Monday, our new member signups are pacing actually higher than our last 30 days average, and we are beating our internal projections for paid memberships.
Look forward to a series of new announcement in the coming weeks.
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Great news that supports your new business model Jon!
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Hey Pat,
So I just posted a property filed under a consumer category on ActiveRain, since I am a free non-paying member will it not be visible to consumers? Right now it appears as if it is.
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