How do social networks make money?

[Stone Richard]

- Venture Capital: how do social networks make moneyFirst things first, most (if not all) social networks start with funding from venture capitalists. Investors are willing to take a risk on a company if they think it can be profitable in the future, so they invest early and hope for a huge payoff down the road.

- Advertising & E-Commerce: Advertising is what most people would consider the number one way that social networks make money. After all, they have millions of users. That’s millions of eyeballs wandering around their website. Why wouldn’t advertisers want to get in on those views?

- Offering Premium Options: While some social networks are completely free, others might offer a premium option to its users in an attempt to earn some money. LinkedIn, for example, has a premium package for job seekers. All of your networking options are free with LinkedIn, but if you want special privileges you have to sign up for one of their premium options.

- Creative Products & Promotions: Because of the difficulty of monetizing a social network, websites are forced to come up with creative ways to earn revenue. The best example of this is Facebook Gifts.