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5 Business Models for Social Media Startups

By Jun Loayza 2009-07-14 14:58:43 UTC

Jun Loayza is the President of a company focused on building social media campaigns for companies. He is also the co-founder of which measures and ranks your social influence online. He loves to meet other young, motivated entrepreneurs, and can be reached though his personal blog .

During the first Internet boom, the most common business model was probably, "get a ton of traffic, then figure out how to make money" — which savvy readers will note isn't a very good business model. Often, the way those businesses attempted to make money on that traffic was to use display or text advertising. Making money from advertising is still possible, but it's no longer as easy as building a site and putting some ads on it. Fortunately, there are a number of business models to choose from.

Today's social media startups

are finding unique ways of generating revenue from the very beginning. Here are a few of the revenue models that they're using and how you can apply them to your company.

1. Freemium Model

Description: This business model works by offering a basic service for free, while charging for a premium service with advanced features to paying members.

The biggest challenge for businesses using the freemium model is figuring how much to give away for free so that users will still need and want to upgrade to a paying plan. If most users can get by with the basic free plan, they won't have a need to upgrade. For example, I'll probably never upgrade my LinkedIn account and because I don't shoot high definition videos, I'll never need a Premium Vimeo account either.

I spoke with Marcus Nelson from UserVoice about their use of the freemium model and how it works:

Category: Personal Finance

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