By: Dana Blankenhorn

July 25th, 2001

Reader Rating: 6

Content sites are publications, which gives them a business model. Commerce sites are stores, which gives them a business model. But what are community sites?

They can be virtual town halls, they can be debating societies, they can be salons, or they can be water coolers, but none of those analogies yields a clue as to their business model.

Community sites emerged in the 1980s on systems like CompuServe, taking a portion of the revenue from the online time they generated. AOL’s decision to move to all-you-can-eat pricing in 1993 killed that business model.

The Internet boom made advertising a valid business model for a time. When banner spaces could be sold at $20 per thousand, any content on them was superfluous. But that game is over. Today many communities – whether based on Websites or email – beg their users for money (which never works) or simply toss in the towel.

The reason is that many people who built Web communities did so without understanding their own role. They were building clubs in which they wanted to be members, not businesses they were going to run for profit. These communities were labors of love, but the owners are now suffering donor fatigue.

However, there are models for Web communities that combine elements of content and commerce.

Like content sites, community sites should be organized around a market or lifestyle; they should register their users to provide advertisers with audited circulation figures; and they should create "membership" benefits (access to archives, special events, email access to other members) that encourage payments.

Classmates.com [1] is a classic success story. They buy cheap ads, measure the success of these ads based on free registrations, then up-sell users to $30-per-year memberships based on the lists of high school classmates that registered guests can see in their emails.

As with ecommerce sites, users of community sites can share certain needs for products or services. Site owners can make money as affiliates of other sites; they can organize buying pools (and take a little off the top); and they can build "resource pages" - thinly-disguised online malls that offer discounts to members.

But in all cases, success begins by knowing your audience. You need to know your target just like a publication owner knows theirs. You need to know the products and services your target needs just like a store manager knows them. And you need to identify your members by name, address, email and interest. You need this information if you’re to place yourself at the intersection of the marketplace you’ve created, and earn yourself a piece of the action.

Knowing who your target is will tell you who you need to be. If your community is based on a lifestyle you may be like the AARP [2], and seek discounts that can generate membership fees. If your community is based on a market you might be more like the folks at Supercomm [3], a virtual trade fair.

You may have started with a virtual clubhouse, but now you've wound up running an association. Your members represent a powerful economic force, but it takes professional help to harness that force. If you don’t want to be in that business, find someone who is - and pay them what they’re worth. Or, if you do want to be in that business, then: welcome, but you’ve got a steep learning curve. It’s time to get serious.

[1] http://www.classmates.com
[2] http://www.aarp.com
[3] http://www.supercomm2001.com