Here I focus on LinkedIn and how they can monetize their groups via charging a fee for email blasts, but the same applies to Google+, Twitter, Facebook etc. In short, LinkedIn alone could generate an extra $50 million per year, thought the best implementation would probably involve LinkedIn outsourcing email blasts to a vendor such as MailChimp or VerticalResponse: it would probably mean that LinkedIn would earn only $25 million a year, the vendor would earn $25 million a year, but for LinkedIn, it would mean no more spam issues (and no more technical support, complaints), and email blasts totally outsourced and automated.

So how would this work?

LinkedIn has 1.9 million groups today. Most are very small, some are large (> 100,000 members), some are very large. On average, based on our estimates (we checked 20 randomly selected LinkedIn members to see how many groups they belong to - the average was 24), each LinkedIn member belongs to more than 20 groups. Right now, there are about 300 million members. Let's say, conservatively, that about 100 million members are active and accept to receive email blasts, about once a week from each group. In short, it means that LinkedIn could potentially monetize 100 million members x 20 groups per year. Assuming only one out of 10 groups would accept to pay a fee to LinkedIn (or its vendor) for email blasts, we are at 100 million users x 2 groups/user, in terms of monetizing capability.

We pay $15,000 a year to our vendor (VerticalResponse) to send 20 million messages to 100,000 subscribers each year. Since we are a rather large client, let's assume that the aggregated fee for 100 small clients reaching out to 100,000 users (when combined together), would be like $25,000 a year.

Interesting numbers

From this analysis, LinkedIn could generate $25,000 x 100,000,000 (users) x 2 (two groups out of twenty per user, that accept to pay a fee) divided by 100,000 (our VerticalResponse subscriber base). That's $50 million a year. My guess is that LinkedIn would have to share 50% with their vendor (VerticalResponse or MailChimp) unless they want to manage this whole thing themselves. The same applies to Google+, Facebook, Twitter and other social networks, thus my $200 million figure in the subject line.

Interestingly, LinkedIn is about 1,000 times bigger than we are (in terms of members). Their revenue is about $2 billion per year (2,000 times our revenue). Our community is a leading niche network that should command much higher ad revenue per pageview than LinkedIn (not sure what LinkedIn's margin is, ours is 80%). My guess is that LinkedIn is significantly overpriced (or we are underpriced, or a combination of both).

Note

Another potential source of revenue would be for LinkedIn to share the email addresses of members (of the groups that you own on LinkedIn) with group owners only, for a fee - except those from members who explicitly refuse to have their emaill address shared with third parties. Actually, they did that in the past, but it was free. It is clear that LinkedIn attaches a lot of value to email address of its members, their legal team is very active on this to prevent thieves from stealing these email addresses and reselling them..

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