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The Social Network Business Plan: 18 Strategies That Will Create Great Wealth (Hardcover)
October 8, 2009 by admin
Filed under Twitter Products
All of us know that users of the Web do not read advertisements on the websites we visit, yet the online communities are emerging as the next great media rely solely on this method to produce revenue. In The Social Network Business Plan, social network expert, David Silver presents and explains 18 cutting-edge methods to create revenue for social network websites–none of which are advertising. He also predicts the demise of seemingly successful online communities such as MySpace a (more…)
I got this book because I have been struggling to grow an online community for the last year. I’ve found that the technology is pretty straight forward. However, few books speak to three essentials: 1) delivering benefits and wealth to community members, 2) sources of revenue for the community developer besides advertising, and 3) how to actually grow the community. David Silver’s book deals very well with the first two only. That’s why it is only rated 4 stars.
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.
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.
David Silver takes the whole social networking phenomenon apart and has fun with it all along the way.
Right now the whole game is rather new and there is a lot of guesswork about where it’s going to; yet David talks with such confidence and with such clear reasoning that he appears to have been sent from the future and is here to tell us how it all will actually unfold.
You’ll notice that the subtitle of the book is “18 Strategies That Will Create Great Wealth”. You should know that these strategies are to bring about 18 distinctly different sustainable (and ongoing) revenue channels.
You’ll be familiar with some of these channels, but not all of them, and it will surprise you to see how few of them are currently in effect. He’s talking about a future that is not too far away. (You’ll also become aware of some of these channels that ARE being implemented — and how they are making money behind the scenes.)
Mr. Silver is an angel investor; a partner in Santa Fe Capital who has long been fond of Internet enterprises (he drops some very famous names in this and Smart Start-Ups).
Here he reveals various formulae that he has used over the years to determine whether he should represent a project to investors. Principal among them is an 8 step process that he sometimes calls “Silver’s Law” and sometimes the “Demonstrable Economic Justification Factors”. It’s easy to use and is a MUST in any social site business plan to follow these steps to determine the viability of a proposed community.
Through reading this book, I got a very good grasp on the real value of social networking sites to the world, assisting all of us in leading better lives. That is on the long term view. I also got lots of ideas about how early adapters will create more communities and create great wealth for their founders.
Mr. Silver identifies these communities as “recommender communities” and illustrates clearly their value. (You get a good glimpse of this as early as the book’s introduction.)
In this book, the “multibillion dollar question” is articulated: “… will the… ‘brands’ continue to control their customers through advertising, shelf-space management, couponing, catalogues, and web site retailing, or will recommender communities utilizing the wisdom of the crowds to vote on the best products and services actually instruct the vast number of consumers on which product or service to purchase?”
His response: “If the entrepreneurs who build the recommender communities execute their business models with elegance and efficiency — and I will provide the best instructions for doing so — then the recommender communities will creatively disrupt the (brands).”
Both Smart Start-Ups and The Social Network Business Plan are easy to read. It is obvious that the author loves his subject and that he loves the English language. I am glad that I read this book as I now have a much more clear and confident perception of this wonderfully disruptive force (see chapter “The Sumptuous Impertinence”) in the world.
DW Locke
1.0 out of 5 stars
Not a good use of Time or Money!
I took the time to read this book thinking it would expand my knowledge on building on the several social networks that we have launched.
Having spent almost 20 years working with trade and professional associations, I have gained a deep understanding of how communities of interest are built and sustained in the not-for-profit community. David Silver’s new book illustrates how to take a more proactive and entrepreneurial approach to a traditional setting and to create a new type of organization based on the use of social media tools.
Mr. Silver defines not only how to make these communities profitable but he lays out examples of industries and sectors that are ripe for attention. One of the strengths of the book is that it demonstrates the need for a viable business case and that there are multiple income streams available. It is not sufficient to simply accumulate a large audience based on a “free to use” basis and to count on click through ad revenue, as many current social network models have done. It works in the short term but is questionable at best in the long term.
The book does a good job of a.) defining what is in effect a new business model, b.) explaining how to construct this new business, c.) identify and define the revenue streams and give examples of business cases and d.) gives examples of specific vertical markets for entrepreneurs to explore.
Coming from the not-for-profit sector, I think the book has identified and defined what the future of communities, traditionally occupied by trade and professional associations, may look like if the plans are diligently executed. Its an exciting new model for creative entrepreneurs to create “social businesses’ that deliver the best from the association and the for-profit worlds.
5.0 out of 5 stars
This book will expand the walls of your mind…
I am a small business owner and a web designer. I am currently working on a web project that will include a social network and so in doing research, I came across this book.
4.0 out of 5 stars
Business Validation
Whether new to the concept of a social networking business or a seasoned pro, this book makes you think about the “other” ways to generate cash aside from Advertising revenue…
5.0 out of 5 stars
Fresh Insights
The first five chapters of this book are excellent. It is rare that I gain so much insight about web marketing from one book (I’ve read dozens).
5.0 out of 5 stars
Incredible read and very informative for entrepreneurs
This book is very incredible. I have read Smart Start-ups from David Silver, and I loved it, but this book is far beyond Smart Start-ups…
5.0 out of 5 stars
This book can be the difference between homerun and strike out
Social networks are certainly all the rage and show up daily in coffee shop conversations, fund raising pitches, on the news and in every corner of Internet.
5.0 out of 5 stars
Social Network Business
David Silver is an opinioned and intelligent angel investor who loves to share his knowledge and wisdom.
5.0 out of 5 stars
The Social Network Business Plan
The Social Network Business Plan: 18 Strategies That Will Create Great Wealth
If you’re reading this review it’s because you’re contemplating buying this book and I…
5.0 out of 5 stars
Great research
Great book. Well organized, great research, and what I love about Silver’s books are the cliff-notes-like introductory sections.
5.0 out of 5 stars
Excellent foundation for writing a business plan
David Silver is an excellent author and one of the leaders in social networking business plans. He has captured some great ideas in this book that will help any entrepreneur hone…