The Social Network Business Plan
Anyone who is attempting to improve their social network or to start a new online community will benefit from David Silver‘s book The Social Network Business Plan: 18 Strategies That Will Create Great Wealth.
Don’t be turned off by the title. This is not a book about technology. Instead it deals with the issues and challenges that need to be addressed to build and maintain successful online social networks from the perspective of an investor. “Wealth” is broadly defined not only in monetary terms, but also in user benefits from helping companies and government to provide better products and services.
My Review From The Trenches
My review is through the lens of someone who is trying mightily to build an online home remodeling community, Millennial Living, using the content management software platform Drupal. Besides maintaining the site, I spend time thinking about ways to grow the community and produce content. Since time is precious, I am always trying to learn more about social networks at the least cost. David Silver’s book helped a lot.
How To Read This Book
First read the book from cover to cover. It’s especially important not to skip the Introduction. I did and I was totally lost in Chapter 1. The introduction spells out the author’s philosophy and defines important concepts like “recommender websites” and communities.
Silver defines “wealth” in two ways. The first is from the perspective of an investor. This might trouble those who run or are contemplating building a non-profit online community. Don’t let it bother you. The reality is that we all have to make a living, and the expertise and effort to create value and benefits for the members of a community takes money.
There is a second aspect of wealth creation, according to Silver. This wealth is the benefit members receive from achieving the fundamental goals of the network, besides fellowship and social interaction. For example, companies that rely on the community for business and don’t have to advertise can pass part of their savings to members. In addition, vendors would be able to design and offer better services and products by understanding the needs of the community. I found this compelling and especially relevant to why many of us are so interested in social networks. In my case, it is to reduce and ultimately eliminate the pain from remodeling and decorating.
What’s Good About The Book
The book’s approach to launching and sustaining social networks is to get away from the advertising model that so many social networks use today. Think Facebook and MySpace and perhaps your own community if you use Google Adsense. When I came across this passage, alarm bells sounded since I use Adsense on my site. Of course the 18 ways of generating revenue recommended in the book offered some alternatives and food for thought, but they take a lot more work than using Adsense. Social network sites, my own included, need to diversity their revenue streams to grow.
The most important aspect of the book deals with user-generated content. Silver advocates “slicing and dicing” anonymous user content that discusses products and services and creating reports for industry, companies and government. His reasoning appears sound, since most companies would prefer dealing with a specialized community over advertising to the masses. Personally I don’t see any harm in this as long as users are told up front that this will be done and how they would share in the benefits.
Chapter 4 is an important chapter. It provides three great examples of online communities that are relatively successful and are using many of the strategies Silver advocates. These companies include:
Sermo.com a community for physicians to discuss real live cases and other issues of concern with their colleagues.
Patientslikeme.com- a community that helps people deal with serious illnesses.
Hystersisters.com- a women only community for those who have had a hysterectomy or are contemplating one.
References to these websites are invaluable. They allow you to visualize how the strategies could be employed in your community.
The book also provides examples of social networking sites that could be started. This might be good to jump-start your brainstorming sessions if you are looking for ideas. In addition, the book provides proforma incomes statements that go with the communities. The financial statements give you a feel for what it takes in terms of effort and money to grow a community. Although the numbers should not be taken literally, you can get an idea of where your effort should be directed and what an investor’s expectations might be.
What The Book Lacks
The book assumes that there’s a need for the community to begin with and that you can get people to sign up as members. It is short on specifics on how to go about this, so you have to look elsewhere for this material. However, it assumes a great deal of effort in these areas specifically for SEO, membership recruitment, etc. The proforma incomes statements will give you an idea of how you might budget for this.
The book does not dwell on social networking software. It references commercial software offerings like Ning and Onesite. That’s a result of Silver’s inexperience with web stuff and the open source community, which he readily admits to. I am working on educating him about Drupal’s capabilities so I expect that in his next book, he will acknowledge Drupal.
There are times when the book departs from its central message of abandoning all advertising and relying on user-created content. It also assumes that people will pay a nominal fee to become members. This is definitely not my experience so far.
Conclusion
My bottom line: This book will help you get your arms around what you should be doing on the non-technical side to start or improve your social networking site.
– Guest post by Tom Russo, Millennial Living
Related Links
Social Network Business Plans: What Makes Them Different?
How To Start A Social Networking Website Part 2: Business Models and Revenue Streams
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Great review. But if I may, I would like to add few more comments. I think this is a very good book, as suggested above. However, there are few things that I don’t really like about it.
First, Silver suggested that the online community will thrive, and the traditional marketing will wither. He even suggested that this event will occur within the next 5 years. This is a pretty strong statement, but I don’t really believe in it. Traditional marketing carries strong momentum, and it is hard to stop. I do believe that online recommender community will thrive but the claim that the product vendor and marketing companies will subdue to the online community, in my opinion, is too strong.
Secondly, there are too much details in the book. Although details are good for references, it does not engage me when I am reading the book. In fact, most of the time, I would skip the details to the next part. Don’t get me wrong, the details are good, but perhaps not for me, at least not for now.
Finally, I don’t believe that all 18 revenue channels will work for ALL communities. If you are starting a company, you may have to ponder which of the 18 channels fits your community and the culture in your country.
Teerawat,
Thanks for your thoughtful comments. I’m sure others appreciate your analysis.
Peg