Mashable's Ning Perspective Misses Social Networking Business Fundamentals
April 19, 2010
I believe Jolie O'Dell is missing something in her story on the Ning lessons and failures, I believe the article fails to recognize Ning is a social network more like Facebook and MySpace.
She suggests that we all have to be realistic about making money, and charging for the Ning service.
"we do know is that the dotcom-era free-for-all of apps, services and content for end users is not-so-gradually coming to a halt. In the light of economic reality, nothing is free."
and,
"it’s about time we suck it up as consumers and start paying for the bandwidth we use, from web hosting to online storage to site creation and maintenance. As we all know, there’s no such thing as a free lunch."
I can certainly accept economic reality, if a business cannot cover its costs and needs to increase prices and offer new pricing, then the business should do so. But in the case of Ning there's a difference between increasing revenue and chopping off the hand that helped Ning grow through word of mouth by stopping free services.
Ning grew its business by offering network subscribers free access and community managers free hosting for their unique social networks. We have to remember Ning competes with MySpace and Facebook and numerous other social networks. Yet despite that competition Ning has succeeded in growing a large number of social networks. If those free social networks had a big hand in building brand presence and recognition, removing the free option will remove the support of the people who helped Ning to become successful, and unfortunately I don't think those people are going to be entirely happy with Ning's decision. So while it may be a business decision to stop free networks on the Ning platform, to me that decision will adversely affect the company's reputation, goodwill and business.
Jolie went on to suggest, "If you and your community can’t find a way to pay a modest monthly fee for the goods and services you use in your network, you might have one of two problems: You’re not passionate enough to moderate a community on your topic, or your topic isn’t inspiring your network to keep it afloat."
I don't think Mashable would critique Facebook or MySpace in the same way, after all both companies offer access to free communities within their social networks. Now I agree, Ning is different from Facebook and MySpace, Ning gives you the option to create a unique social network. But Ning, like Facebook and MySpace was built on giving access to free hosting of communities. In return for tools and hosting, Facebook and MySpace wanted numbers, lots and lots of people to join their communities so that Facebook and MySpace could in turn monetize their social networks. Both Facebook and MySpace have been savvy about building their networks and developing a business model to turn a profit. Ning however has not. I'd suggest to naysayers of the original Ning concept, that the problem was not with the freemium model, but rather that there wasn't enough attention to growing their premium business. Ironic, I'm agreeing with the CEO's analysis of their business, but I reach different conclusions about what the company needs to do next to turn a profit. Yes, support the premium customers, but don't stop support of their existing free hosted customers as I believe Ning will lose too much goodwill and one of the main pillars of a successful social network, the ability for its members to build community.
I think Mashable has Ning all wrong; Ning is not a social network management system first, but a social network. Consumers join once, and can join many communities within the social network easily with the same registration information, those communities can have unique branding, but all who join each community understand they are joining each unique community as part of the Ning network. The larger social network reduces the barriers to joining each unique social network within Ning. Members join, see the value of Ning, understand they can build their own community, do so for free, and then turn from a free community to a premium community. By cutting free communities I believe Ning maybe reducing its principal source of premium leads, the free social network managers, and instead will have to develop alternative methods to attract customers, which may cost more money to promote.
She suggests that we all have to be realistic about making money, and charging for the Ning service.
"we do know is that the dotcom-era free-for-all of apps, services and content for end users is not-so-gradually coming to a halt. In the light of economic reality, nothing is free."
and,
"it’s about time we suck it up as consumers and start paying for the bandwidth we use, from web hosting to online storage to site creation and maintenance. As we all know, there’s no such thing as a free lunch."
I can certainly accept economic reality, if a business cannot cover its costs and needs to increase prices and offer new pricing, then the business should do so. But in the case of Ning there's a difference between increasing revenue and chopping off the hand that helped Ning grow through word of mouth by stopping free services.
Ning grew its business by offering network subscribers free access and community managers free hosting for their unique social networks. We have to remember Ning competes with MySpace and Facebook and numerous other social networks. Yet despite that competition Ning has succeeded in growing a large number of social networks. If those free social networks had a big hand in building brand presence and recognition, removing the free option will remove the support of the people who helped Ning to become successful, and unfortunately I don't think those people are going to be entirely happy with Ning's decision. So while it may be a business decision to stop free networks on the Ning platform, to me that decision will adversely affect the company's reputation, goodwill and business.
Jolie went on to suggest, "If you and your community can’t find a way to pay a modest monthly fee for the goods and services you use in your network, you might have one of two problems: You’re not passionate enough to moderate a community on your topic, or your topic isn’t inspiring your network to keep it afloat."
I don't think Mashable would critique Facebook or MySpace in the same way, after all both companies offer access to free communities within their social networks. Now I agree, Ning is different from Facebook and MySpace, Ning gives you the option to create a unique social network. But Ning, like Facebook and MySpace was built on giving access to free hosting of communities. In return for tools and hosting, Facebook and MySpace wanted numbers, lots and lots of people to join their communities so that Facebook and MySpace could in turn monetize their social networks. Both Facebook and MySpace have been savvy about building their networks and developing a business model to turn a profit. Ning however has not. I'd suggest to naysayers of the original Ning concept, that the problem was not with the freemium model, but rather that there wasn't enough attention to growing their premium business. Ironic, I'm agreeing with the CEO's analysis of their business, but I reach different conclusions about what the company needs to do next to turn a profit. Yes, support the premium customers, but don't stop support of their existing free hosted customers as I believe Ning will lose too much goodwill and one of the main pillars of a successful social network, the ability for its members to build community.
I think Mashable has Ning all wrong; Ning is not a social network management system first, but a social network. Consumers join once, and can join many communities within the social network easily with the same registration information, those communities can have unique branding, but all who join each community understand they are joining each unique community as part of the Ning network. The larger social network reduces the barriers to joining each unique social network within Ning. Members join, see the value of Ning, understand they can build their own community, do so for free, and then turn from a free community to a premium community. By cutting free communities I believe Ning maybe reducing its principal source of premium leads, the free social network managers, and instead will have to develop alternative methods to attract customers, which may cost more money to promote.
If we criticize Ning for offering free access to a social network, and free hosting for a community we might as well criticize Facebook and MySpace for providing the same services. Free has worked for Facebook and MySpace, and I believe Freemium can work for Ning, if the company can speed the process of network managers turning to the premium service, but abandoning the free hosting model removes one of Ning's competitive advantages for Premium lead generation. Instead of pushing free customer out of the network, grandfather them into their accounts, and reduce services for new accounts. Give lots of incentives to free network managers to charge for services. And ask each free community for donations to support their access to a community.
4/20/10: 9:41pm Seems as if I spoke too soon, my apologies to the folks at Ning, it looks as if they have been more active in getting the word out about their news on dropping free on Ning. Dan York points to the Ning Creators network, where a Ning employee posted an updated on April 15th.