Chris Dixon wrote a piece today asking if online business model innovation is slowing down.  In relation to social media, my take on the matter is quite simple: it cannot slow down.  This is true for multiple reasons.  Mainly, I think that “where people spend time, money will follow.”  If enough people are using the same resource to solve their problems, consume information, or entertain themselves, there is a way to monetize.  However, this doesn’t mean that it’s going to be Google-type monetization of $22B a year.

Social media business models will probably have great difficulty capitalizing on purchasing intent (where Google sees it’s highest margins).  What social media provides (Tumblr, Facebook, Twitter) is an outlet for interaction, information, and expression - or consumption intent.  Opposed to other online mediums, end users consume information from their peers and sources they selectively follow, not a source generated by an algorithm.

The benefit of the social media model is that we receive information from people we trust.  We read the articles referred to us by people we admire.  We buy the things that received glowing reviews from our peers.  We interact with people with the same interests.  And we constantly share with the desire to inform, impress, educate, and engage.  So while social media may never be able to create an AdSense equivalent, it has the advantage of user engagement - people want an answer, but the ride is just as valuable as the destination.

Social media can employ countless monetizable features - some more efficient and with higher margins than others.  The fact of the matter remains that there is no single best practice for monetizing social media right now, and that’s a very good thing.  It leaves the door open to new business models and innovation around revenue streams.  It’s an exciting time to be in this space, and even if there is no AdSense for social media, there will be a new paradigm for business on the internet - and that is equally exciting.