'Corporate FaceBook' Turns Profit

A recent post on Marketing Shift Jason Dowdell noted that Linked In, a social networking site for professionals recorded profitability for the month of February. Dowdell has established a rapport with the owner of the site, Konstantin Guericke. The main difference between LinkedIn and other social networking sites such as FaceBook and MySpace is that they charge a membership fee.

Linked In is a global operation with over five million members worldwide and growing, according to an article in the Sydney Morning Herald. The memberships start at the entry level for free and range from $5 to $200 a month. According to CNN Money, a job listing costs $95. Guericke contends that "The question is, do people pay for subscription-based services on the Internet? Especially in the business arena, if you provide enough value, the answer is yes." Xeni Jardin on an article for MSNBC.com says “There is growing evidence to support claims that some social networking services (SNS for short) can be a powerful professional ally to businesses — in particular, independent entrepreneurs and smaller companies, for whom each new personal connection is a significant business building block.”

On the site, people can maintain a list of professional contacts, search for a job, post a job, find services, or find people by several different search criteria. According to an article in Information Week, employers are able to find people who are not actively seeking a job, but were still open to hearing about opportunities. It also helps people connect with members of their college graduating class or colleagues that they have lost touch with in the past.

Unlike so many services, including AOL Instant Messenger, MySpace, FaceBook, and countless others relying on advertising for revenue, Linked In represents a different side of the internet. The freeloadeing spirit of the internet that has been so prevalent since its inception might be somewhat waning. The advent of iTunes may have been the watershed moment, paving the way for other companies that provide valuable enough services on the internet that people will pay for them. Linked In still has advertisements for its unpaid members, but the main portion of their revenues comes from their membership fees.

Another main difference between Linked In and many other SNS sites is that people who are on the site have something in common. Dowdell says, “People need a reason to connect to other people and I believe this is one of the main reasons Linked In is beginning to hit its stride in the social networking world. They've found reasons for people to join and find other like-minded individuals.” In a sense it is similar to E-Harmony and other online dating sites in that people join the site for a specific reason. This begins to explain why people pay a membership fee.

Expanding on my post from last week, if Google wanted to make a good investment, they should probably steer clear of FaceBook and look towards Linked In. The latter has a predictable revenue stream relying on the value of its services and not the trendy nature of website hits. In addition I have a feeling that in exchange for some control the CEO of Linked In would settle for less than $2 Billion.