Does Your Social Networking Site “Catch-And-Keep” Users?

Social networking has been the most debated business model on this forum. Frankly, I am not a sucker to the SN stuff yet. I have a LinkedIn account, but is yet to use it for my own professional networking fully. I visit the site on and off purely to add a friend or (someone who send me an invitation) to my list. I may be an odd one. But the question is what does it take to catch a user and make him come back again and again to the site? End of the day, that is the key to the success of a SN website.
Josh Kopelman, Managing Director of venture capital firm First Round Capital, has an excellent post on the social networking business models. He differentiates between MySpace and Facebook (which have a catch-and-keep strategy) on the one hand and Classmates.com (which inadvertently has a catch-and-release model) on the other hand.
The difference is very clear. MySpace and Facebook grew in leaps and bounds in their user base, while Classmates.com suffered a big churn with its user base staying remaining almost the same as it was in 2004. By the way, it also affects the valuation. Classmates got sold for $100 million despite having revenues of $74 million (1.4 times revenue or $2.4 a subscriber). On the other hand, Facebook had reportedly got a $1-billion buyout offer from Yahoo last year, which was at a valuation of 20 times revenues or $71.43 per user.
Which model you want to pursue? Don’t miss Kopelman’s post if you are in the business of SN or if you are looking to invest in one.

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