how does social networking sites earn money?

[Tom]

1st of all - the social sites earn money by the advertisement. There are a lot of money invested by others to create an ad on the social sites like facebook, linkedin, ning etc. You can go through: http://www.makeuseof.com/tag/how-do-soci...wondering/

Think about it. On a social network, they have all your information. And the rights to sell it (check your terms). They take down your information, and display ads customized for you. They know you race, age, location, likes, dislikes, likes of your friends and family. Facebook just started to make money within the last year. But its worth billions and billions because the information it holds it worth billions.

That's why twitter is so huge. Its data mining. A personalized ad is 1000 times more valuable than a generic ad. That's why you see websites that tailor to specific markets, make more per ad than a broader website. This is because they have more information in regards to who sees the ads.

So all social networks make money from mining information, stats, and customizing ads based off that information. And sometimes, they just sell the information with the stats.

This is why Google is so rich. because they harvest the data collected from you searching, and they maximize ad click through rates.

Hope that helps