A couple of thoughts on the nightmare of monetization in Big Consumer Tech

Communication is hard to monetize

Though it's one of the most essential functions of technology - from the telegraph to the telephone to email and the web - the content it produces has the least value, outside the person and moment a particular message was meant for. We know how to monetize information and entertainment via direct payment (ebooks, music), sponsorships or added value (AdWords), but the very act of interrupting a communication stream or creating a distraction in order to derive value is ultimately destructive or futile. Match.com derives value by extortion. Other communication services have tiered levels of functionality. Others try to distract you with obnoxious display ads Hotmail, Gmail, Yahoo mail, Facebook). At one point we paid by the minute to communicate - I ran up hundreds of dollars of phone bills during college by simply talking. And later, AOL charged me by the hour to connect to the internet. I've only just recently stopped paying per text message I receive. Really, how much is a single IM, text, email, comment, tweet or 'like' really worth? And then how do you translate that worth into actual money? Meebo had a chat client, eventually was some sort of ad thing before it got bought. Lingr, tiny-chat and a million other chatrooms and chat sites have faded as their inability to derive actual value from communications continue.

Also, correlation (new rule?): The closer web content gets to communication, the less value it has. However, if the communication facilitates some other purpose - like eBay - then the lock-in is high and the value is huge. 'Markets' online are simply sevices that facilitate communication between buyers and sellers. In order for Facebook to actually make money from their service, they need to figure out how to convert their communication service into facilitating some other goal.


Russell had lots of good thoughts in that long post. I particularly liked "Web Revenues" and "Why I can't get excited about 'apps.'"


Matt Asay on disposable companies and the "don't even bother" school of monetization success that makes things suck sooner or later:

The Downside To Making Money

It turns out that it's very difficult to remain popular while charging for one's service. LinkedIn has done it by charging recruiters. Google has done it by aligning relevant ads next to search results. But monetizing people's inane pictures of their meals? Instagram didn't even bother.

Pinterest is starting to roll out paid services. Foursquare, too, has been straining to make more money lately. Ironically, these noble efforts to actually sustain the companies on real revenue may make them far less valuable.