Mariamz

Community Success Factors 2: Financial Viability

Posted on: June 27, 2009

This is Item 2 of my 8 Critical Success Factors for Virtual Communities post.

Financial viability could make or break a virtual community. Even the simplest web presence will require resources, which may begin from a few hours a week for a blog all the way up to racks of servers and legions of employees.

04_28_5---Pile-of-Money_web

Monetisation remains a huge challenge for social sites. Furthermore, funding sources influence the kind of community that develops – therefore revenue models must be considered carefully. A mixed model where funding comes from many sources may prevent one powerful investor from influencing the direction of a community to its detriment.

Advertising can seem like an obvious choice, but even the big players are struggling to glean enough revenue using this, and as Robin Mansell & Steinmueller has argued: virtual communities share the issue faced by other advertiser-supported media, for “a conflict between the purposes of the advertisers and the interests of the community as a whole.”

Don’t forget the potential for corporate, government or third sector sponsorship. Who can buy into your dream? You may not have many visitors or members yet but in whose interest is it for your community to succeed?

It is worth virtual communities exploring all of the Internet Business Models out there, bearing in mind the delicate balance between keeping the community going and driving members away by undesirable associations, adverts and pleas for money. Michael Rappa has created a comprehensive list (link below):

  • Brokerage
  • Advertising
  • Infomediary
  • Merchant
  • Manufacturer (Direct)
  • Affiliate
  • Community
  • Subscription
  • Utility

Business Models on the web

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