Back in the day, you know in 1997, a company like Lycos or Yahoo (YHOO) would announce an e-commerce relationship with say Barnes and Noble or some travel site every other week. With advertising revenues scant, e-commerce deals were then seen as a quick way for portals to boost revenues (if not profits) back then. This Bubble 1.0 flashback happened while reading this report in The Financial Times about Apple’s plans to work with Bebo and selling music through the fast growing social network in UK and Ireland.
Buried at the end of the report was this nugget:
Mobile telephone operators Vodafone and Orange have also signed deals with MySpace and Bebo, respectively, hoping to increase the use of the internet through mobile phones by encouraging social network users to access pages via their handsets. Last month Facebook, another popular networking site, unveiled plans to allow outside companies such as Amazon, the online shopping site, to embed customised features in Facebook pages.
Wow… E-Commerce is showing up on Social Nets.
Walking down the memory lane, it is easy to see some similarities between portals of 1990s and social networks of today. Social Nets face some of the same business dynamics that challenged Yahoo and Lycos. Despite high number of page views, good traction with their users, today’s social networks haven’t exactly won over the advertising establishment that controls the purse strings.
The old portals did well by selling access to the audiences (politically correct phrase we use these days: community) to folks who had something to sell. Social Networks, it seems are taking a cue from that old game plan. If used judiciously, this is actually a healthy development as it gives the social networks a decent revenue stream and makes them less reliant on the mercurial online advertising market.
The Apple-Bebo deal around iTunes and music sales, for instance passes the commonsense test. While the FT report doesn’t outline what the exact financial agreement between Bebo-and-Apple is, one can guess that there will be a tiny fraction of total sales that might flow into Bebo’s coffers.
Can we expect more such deals that match the communities with commerce in coming months? I think yes – but what do you guys think?