Ad Play vs Services Play

from a recent email conversation following a lunch…

Kind of building on what i had said about social networks being message boards…mind you, my background is in the telecom/infrastructure/engineering side of the internet as a platform — what it is, what it is designed to do. i know all the platforms very well (phone, TV, web) from a general design standpoint but the web is where i spent most of my time. so this is all coming from what i believe by the design of the web makes sense.

Web usage can be divided into two categories: utility or entertainment. either people will use it to DO something or they’ll use it to ENGAGE in something.

• Do (utility) - communicate with other people, check movie times, book an appointment, buy grandma a sweater, etc.

• Engage (entertainment) — watch a web video, read an article, play a video game, communicate with other people.

**Communication falls under both because people use the web to communicate as a utility (email, voip) and entertainment (message boards, social networks).

When you look at it this way, it’s easier in my opinion to see how to monetize. there are a lot of working examples in the world as we know it:

• Entertainment — ad supported, subscription/paid content, brand integration

• Utility — added services. phone companies don’t make the real money on the service they provide — it’s on the things like voice mail, texting abilities, etc.

So, if you want to know how to make money on the internet platform, you either have to be one or both of these:

• Utility — provide a service to the user — retail site, communications platform (message board, email provider, etc.), applications, aggregators, etc., voice over IP, skype

• Entertainment - content site — hulu, video game site, content sites of any kind like media, news, blogs, etc.

And then monetize following the basic model that has worked for telecom, print media, and broadcast TV for years.

Historically, it has always been very hard to make ad money on a utility/service over a platform. That is why the telecom carriers add services and charge us for it if we want them. I also believe that is why message boards (aka social networks) don’t make any money — and never will. It is not an ad play — it’s a services play. So the question becomes: what are the added services that could be interesting to users and how will you get them to pay for it?

The other way to go around it is to have both, ie - stylediary was a content AND community site. Utility and entertainment.