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by Rosemari Patterson
While I cannot speak for other social networks or the entire history of LinkedIn, LinkedIn in its current incarnation has three very important things going for it:
1. Freemium
LinkedIn works off of a "freemium" business model that has boomed on the Internet. This means that the producer is giving the consumer a product for free while offering an optional premium service. Many extremely successful business that use online distribution use this model such as Skype, a free VOIP service that charges for calls made to numbers outside of its network. The freemium business model is most often seen in the digital entertainment industry with MMORPGs such as Dungeons&Dragons Online. After moving to a freemium model, D&D Online saw a 500% revenue increase with an additional 1 million subscribers. Think about those numbers.
2. Demographic Bulls-eye
LinkedIn draws in many people looking for jobs, but it also draws in those who are already working and therefore have income.
It also has a big draw for companies looking for new talent.
The freemium model allows those looking for jobs to use the free functions of the site to acquire a job and those who already have jobs or companies to purchase premium functions that allow for more powerful networking. Basically, those who can pay will probably pay. Those who can't pay don't have to.
3. Web 2.0 Communication
This aspect requires a bit of introduction. Many people have many different definitions of what makes something “Web 2.0,” but effectively, it boils down to two things:
- User-generated content
- User-power distribution
Online social networking really is the new word of mouth that not only works faster than any marketing/advertising venture, but also can work miracles.
Recently, a group of online writers and artists collaborated on a self-published book (a real book made with paper and everything) and were selling it on Amazon.com.
They decided to try something daring. Instead of paying for advertisements like banners and such, instead of giving up after publishers refused to carry the book, they did a very simple thing.
They asked their online audiences on their respective websites to collectively buy it on a single day, specifically October 26th, to make it the #1 bestselling book on Amazon.com on that day. Using common (and free!) social media resources like their Twitter accounts, personal weblogs, and Facebook walls, the authors and their audiences promoted their mass purchase plan. They succeeded, unintentionally outselling Glenn Beck’s new hardback that shared the release date. Right now (27/10/2010) it is still in the top 100 in the #3 spot. What’s really remarkable is that the authors didn't slave for months for this. They did this in little under a week, not including the hype of making the book itself.
To get started, social networks need to draw in users of varying dedication, but also establish a strong user base. Its targeted demographics of professional contacts does that. To survive, it needs money. Its freemium business model provides for that. To grow, it needs to effectively facilitate communication and integrate applications that their users want and need. There's a reason why it works so nicely with Twitter. To thrive, it needs to be irreplaceable. In effect, it has a loyal user base because of its user base. It connects people and rewards users for those connection. Not to mention, it does exactly what it says on the box. LinkedIn is such a success because it just works.
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