I’m working on a column for Fast Company Magazine about how microblogging companies like FriendFeed, Twitter, and Tumblr might make money. Here’s a little sneak peek based on a conversation I had today with Tumblr founder/CEO David Karp.
First, we didn’t focus on just advertising. Tumblr is joining media sharing sites Flickr and SmugMug into charging its users for stuff. People in the industry call that the “freemium” model. Give away one version, but charge for more features. Like what Flickr does. SmugMug goes further and just plain charges, but it’s worth it for what you get, which is why they have tons of happy users who pay.
“Hopefully this stuff will be slick enough that people will appreciate it,” Karp told me, saying he thinks people will pay to use Tumblr’s cooler features.
But that stuff is already known, along with the standard old advertising model. Let’s talk some bleeding edge stuff and can it be applied to Twitter? (I might drop in on Twitter tomorrow unannounced to see what I can learn about their monetization features).
He’s motivated by what he saw happen on Facebook. “Ben and Jerry distributed free little items,” Karp said. “It was the social gesture.”
The social gesture? Yeah, by passing you something cool, people appreciated that and either passed back something else that was cool, or passed it onto all their friends.
“This ad is really an endorsement,” he told me. It was a way for people to tell their friends that Ben and Jerry’s is a cool brand and this is a cool thing to play with.
Then we talked about Tumblr. Already in my little brush with Tumblr’s lead developer I saw a real-world demonstration of how this works. He claimed he didn’t read me, because he doesn’t find my content useful. But within 20 minutes of me posting that he had updated his post saying he saw it. How did THAT happen? Someone sent it to him on Facebook.
And, over on Tumblr, I was able to reblog his post to my own Tumblr, which caused a little note to show up on his original post.
The whole thing is viral and takes advantage of our egos.
Now take the kind of advertising that Tumblr could do in the future. Ones where by interacting with the ad you cause things to happen. Click a “I drink Coke” ad, for instance, and your avatar could change to include a Coke icon.
These kinds of interactive advertisements that share your social guestures are a lot cooler than banner ads, Karp told me. He said that these features, which include reblogging, are a “more refined version of trackback and pingback.”
The standard blogger deals where someone blogs for a year, builds up an audience, and gets a book deal, caught his eye. So did the College Humor site, which became popular on Tumblr. They got noticed, Karp told me, got the attention of the Web and turned that into a TV show.
How about donations?
Tumblr has been a partner of Tipjoy’s for a while. “You can give a blogger a buck when they make a neat post,” Karp told me.
Search and destination?
When you search on Twitter Search, for instance, you are presented with a bunch of users who have left Tweets. What if users who paid $5 a month could have color icons while everyone else has black and white? Or, a purple star next to their name? Think that’s not important? Right now Flickr is reminding me that I haven’t paid up because my name doesn’t have “pro” next to it, like Thomas Hawk’s does. Makes me look lame.
But, if you are searching for something, like what people are saying about ski resorts in Tahoe, because you want to see the snow conditions or something like that, doesn’t that open yourself up to a new kind of advertising? Sure it does. Google taught us that. But social networks can go a lot further because they can show you information from your friends. My ex-boss was asking just that on Twitter tonight to see if he should take his family to Tahoe this weekend. Imagine if Northstar sent him a note saying “hey, your friend Mike was just up here, check out his photos.” What else could be done in search to bring more visibility to certain posts, or companies? Lots, Karp told me.
How about a public directory where you can only see people who paid $5 a month? He thinks such a thing would be very popular because bloggers want to be found and other people want new kinds of filtering to find the serious users of a system and what’s better than knowing someone paid a little money for a listing?
Now, what about the users?
So far we covered how Tumblr or Twitter or FriendFeed might make money. But what about the users? Do they want to just blog for free, or do they want to try to make a living. And make a living without selling their editorial down the river?
How do users share in all this and can the best users make enough to quit their day jobs? Karp told me that most of their traffic comes from the top 40% of their users, so how can he reward them? He has some ideas on that too, but that’ll have to wait for future interviews and the article.
What innovative ways do you think Twitter, Facebook, FriendFeed, and Tumblr will be able to make money?
Oh, and if you work at a microblogging company, I’d love to talk to you about this stuff.