In a recent evaluation of some social networking sites, we find that many sites are valued in the $20-$25 per user range for a one off purchase.
On that basis, and the traffic from this site based on unique users, that's me back to being a dot com (dollar) millionaire again then. However, finding a buyer is another matter.
Seriously though, I am rather surprised at the economic model at work here.
1. Clever programmers write some website software. If you're in the UK you're unlikely to get stock options for this.
2. Said website goes onto become hugely successful, clever programmers don't usually get to become millionaires based on this (bebo being one of the few UK exceptions).
3. Said website is then based on active users, who contribute content. This content then drives further user activity fostering a community some of which has commercial value in the form of advertising. Millions of users contributing content = crowdsourcing. Users build up the site "for free" rather than the pre Web 2.0 days of a company having to pay a 3rd party to do it.
We've moved from the Web1.0 days when you needed to pay content editors to have good content on your site (about.com) to Web2.0 when with a decent site site owners get this content for free. So what's next? I would suggest the next economic revolution on the net is that rather than taking the users for a free ride, they should be paid back in shares based on a proportion of the advertising revenue that their content generates. Then when the company is sold, they get cash for those shares and a reward for having built the site up rather than nothing in the way of a financial thank-you for making the site a success.
There's no such thing as a free lunch and personally I am rather surprised at the hundreds of hours people spend on social networking sites, building up value in those sites for a tiny number of shareholders who walk away with 9 figure payouts and the users who created that wealth getting nothing in return.
Crowdsourcing isn't that new, Adam Smith wrote in 1776 in the founding work of economics the wealth of nations that "the division of labour is the source of economic growth". So what about a fair day's wage for a fair day's work in 2008 then? Profit sharing plans for employees are nothing new in the US although still something of a novelty in the UK, is it such a stretch to extend this concept of profit sharing out to crowdsourced content creators?
People aren't slaves. They shouldn't expect to work for nothing. If the contributors to these sites simply downed tools and said "no more contributions until I get paid for them", the Internet would perhaps turn into a different place with more money being distributed out to the original content creators and less of it being sucked into the middle and the search engines that serve up advertising.
Who do you think is more worthy of being paid?
Is this the new economy?
Craig (posting to his own site).
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