As most of you would agree, the Web 2.0 era is long over. Web 2.0 was categorized by ad-based business models. Everything has to be free, and advertisers would somehow pay the bills. We entrepreneurs chased after user counts, and the ad dollars were assumed to flow in.
We started Spokeo with the standard "Google AdSense" ad model. We thought that if we’ve built something cool that people like, we would earn enough to cover our operations and someone would buy us out. This sounds naive, but that’s what we were dreaming, and I bet that’s what every TechCrunch reader was thinking back in 2006.
The pursuit of user counts works fine if the ad CPM (cost per thousand impressions) stays at the 2005 level. Back then, advertisers hadn’t figured out that user-generated content converts poorly into sales, so these advertisers paid more for the benefits of the doubt. Take Google as an example. Google paid MySpace $900 million dollars in 2006 to take care of MySpace’s ad inventory, and all Google got in return is the lesson that user-generated content doesn’t monetize. Advertisers aren’t dumb, and they won’t pay for ads that don’t work forever. CPM for user-generated content took a nose dive around 2007, and all Web 2.0 sites with ad-driven business models were affected.
Spokeo cannot escape this fallout. We ran ads for 3 months in the beginning of 2008, and we quickly realized that even if we grow the traffic by 100 times, we still couldn’t cover our basic costs. Facing the hard reality, we made one of the biggest business decisions by turning Spokeo into a premium service. It’s a last-ditched effort to save our business, and we didn’t know what to expect. Fortunately, there were many people who like Spokeo to pay a little to support us, and now we should be able to weather through this economic downturn.
Here we would like to thank all of our users for supporting us, and we would continue to introduce new and innovative products in the near future. We got something huge scheduled for January 2009 (big projects always take time), so stay tuned!
I dont mind paying the 29.00 but you really need to add something that will make being on the premium plan worth the money. Reveal private sites,
or give codes to get into them. your advertisement reads get information on friends, old boyfriends ect…. yet there is nothing. If I have a friend on my email list then I know what social groups they are in. I want to see the people that I dont know the email address…. They dont want me to see what social groups they are in…. and if they are private I want to see it. That would be worth 29.00.
I could have paid a little more for net detective and gotten criminal backgrounds, ss #, addresses, phone #, and so on.
I hope you do something exciting before January…..
Thanks and Good Luck
Our goal is to find out your friends’ public activities across different social networks. It’s not to break into people’s private accounts. It’s a fine line between tracking people’s online activities vs. breaking into people private journals, and we don’t want to cross that line. Hope you can understand our decision and consideration.
>> It’s a fine line between tracking people’s online activities vs. breaking
>> into people private journals
No it isn’t.
Good luck charging, for something in a fledgling economy. See perhaps you should cut staff and realize that no amount of VC will amount to much with a weak business model. Your statement that the ‘web 2.0 era is long over..’ You are an aggregator for web 2.0 sites. Good luck in the failing economy. It’s good web 2.0 is over because you’re running your site like web 1.
…
I learned a lesson starting out in business. “Good things are seldom cheap, and cheap things are seldom good.”
I certainly can understand Rhonda’s request to “get more content” however sites which require password entry or invitation only viewing hold a legal expectation to privacy. If you defeat it, you are going to find yourselves in court. And don’t we all know that technically it’s possible, but how would you automate that? I mean XML isn’t exactly unbreakable, but I can see the quality control tests now (eeek!).
That said, I am a premium subscriber and am a supporter of your service. I’m writing up your product for my Intelligence newsletter, data2know.com (January 09). Even with limited access to ‘allowable only’ sites, your engine is amazing! I’m also writing on Tom Whitley’s Lococitato.com (you should join forces!) and What’s Yo Name (yoname.com).
For those who would gladly destroy their PC’s with virus infected Net Detective you are misled. Save your money and learn about public records @ brbpub.com. The rest of us will enjoy the Web 2.0 to 4.0 developments, and encourage the Developers to stop giving their products and processor time away. Even MIT had grant money supporting all those hippie developers.
PI Grrl.
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The problem I have with this has nothing to do with if its wrong or right to look at some one else private profiles. That is a personal choice, which some people may have good reason to need, with no intent to do harm. My issue with this site is if a company advertises they can or will get you into hidden profiles and then don’t they are nothing better than “con men” that take advantage of desperate people. Type in Basic search commands for finding hidden profiles and this site turns up as a provider of such services. The bad guy isn’t people desperate to know more about someone, its the company that takes em for a ride.
That was an interesting read. Didn’t realize that user generated content was actually a con in terms of PPC advertising. Google definitely has the market for this but it’s surprising that Spokeo decided to switch up as a premium service. There just wasn’t enough volume of clicks to justify the costs based on impressions? Strange. Well, business models can be adaptive and sounds like switching to a premium service is the way to go in this case. ~Paul
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we started also with google adsense to earn money on our projekts.
now we make mones only with our webshop
the old economy is the best
Best wishes from germany
namensschilder
Spokeo Blog | Find People through People Search » Blog Archive » Ad Model vs. Premium Model great article thank you.
Hey, if you give out great content, I agree, people are willing to pay but it has to be super awesome content that you can’t get other places.
thank you very nice article very best information
yes i can say every one will pay if it is Unique and that the brand if you make then it sells big
Spokeo Blog | Find People through People Search » Blog Archive » Ad Model vs. Premium Model great article thank you.
I doubt that the reason that spokeo failed was because of the fact, that ads don’t work on user generated content. Honesty it is just a matter of knowing how to place your ads, and having good content to back it. Otherwise facebook would have fallen under a long time ago. Nobody is going to pay money for the rite to use a website.
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Hi Jamar,
Thanks for the suggestion about adding additional videos! I will keep that in mind for the future blogs.
-Katie
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