you can make money from community

The return on investment (ROI) of online communities has often been difficult to quantify. I once worked for a consumer website where a statistician explained to me that whilst their typical unique user spent upwards of £15 per visit, those visiting the community areas of the site (message boards and Q&A style chats) visited the site much more frequently but weren’t necessarily buying. To him, online community members were parasites – increasing the load on servers and forcing the site to pay for community management services such as moderation. I went to great lengths to inform him that, in addition to increasing user loyalty and site visits, online communities are a great source of customer and product research. As the open source software movement has demonstrated time and time again, ideas from consumers can be utilised in refining and improving a product, whether it’s software or the output of a radio station, the customer service provision of a broadband provider or a shrink wrapped product on the shelves of a retail outlet.

Now it would seem that pure communities, that is sites that see online communities as the center of their proposition rather than simply a bolt-on, can make money too – and it’s not just dating sites.

Craigslist is a community bulletin board where users can post job ads, look for flat shares, find a date, and buy, sell or trade just about anything. BBC News Online reports that the site carries "more than five million new classified adverts per month" which generates "2.5 billion page views". It’s free to place most advertisements but commercial advertising placing job ads in several cities are charged a small fee – which amounts to an annual turnover of around $10 million (£5.62 million). e-bay recently acquired a 25% stake in Craigslist.

Likewise, flickr, the much talked about photo-sharing website that allows users to tag photos, making it easier to organise, find, and share photos was recently purchased by Yahoo. A basic flickr account is free but users can opt for a "pro" account which increases their monthly upload limit. Yahoo itself was recently the focus of a feature article in Wired which explains how the site has built it’s brand and makes money by offering a wide range of services, and that community is a key part of their key to success.

Next up, Fox has purchased social networking site MySpace for around $580 million (much to the displeasure of some users of the service who fear that the new owners will censor them).

Things seem to be moving quickly as big players get into, or increase their footprint within, the online community sector.