The online business models of successful social networks are of great interest to owners of smaller ones. Here’s a quick update on the LinkedIns business model. Job ads are Linkedin’s biggest source of net revenues, says this morning’s New York Times article on it’s upcoming IPO.
Revenue Sources Show Linkedin Freemium Business Model
LinkedIn’s basic memberships are free. It charges users on the freemium model for upgraded services.
- Hiring Solutions (job ads) – 41% for the first 9 months of 2010, down from 29% in 2009
- Display and Text Ads – 32%, the same as the prior year
- Paid Memberships – 27% , down from 41%
Implications for Social Networking Websites
As I see it, the great promise of a growing annuity stream from memberships is fading for social networking websites, even for big companies. Advertising is here to stay, but it is only one leg of the stool. And most social networks cannot sell job ads. The Linkedin business model gives one recipe for success: multiple revenue streams.