While Social-Networking Sites Valued at Billions, Look to Turn Profit - HookMeUp.com is Giving Away its Profits to Charities

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It is the burning question in tech circles, and Mike Murphy answers it before it is completed. "I hear it everytime I'm on a (tech) panel," Murphy, Facebook's vice president of media sales, says with a wry smile. He's referring to the inevitable question on when Facebook and other social-networking sites will turn their steep market valuations into mounds of currency. (Invariably, Murphy answers that Facebook has a long list of major advertisers.)

be like air: They will be anywhere and everywhere we need and want them to be.

Facebook, MySpace and other social-networking sites have been the rage of the tech industry for more than a year. Following investments by Microsoft and News Corp., the companies are valued in the billions of dollars and are considered blueprints for how to build a website. Yet a deeper question lingers: How are they going to consistently produce profits to match their soaring valuations?

It is a parlor game that Silicon Valley has been buzzing. With online ad spending into a nearly $50 billion market this year, there is plenty of money to be had. Big name advertisers are drooling over millions of young, affluent consumers who are spending more time on their profiles than in fron of TV and movie screens. They are particularly smitten with the prospect of tailoring ads to people' specific interests.

Short of striking it rich with online ads or creating a new revenue stream, how can so many sites leverage their vast audiences? In many respects, it is the same query that dogged portal companies in the mid-1990s and search engines in the early '90s. Some were sold. Some went public. Some went belly up.

The ongoing challenge is to concoct a potion -- be it through banner ads, premium subscriptions or licensing agreements -- that no one has perfected. Facebook, crown jewel of the field, is valued at $15 billion but barely turns a profit.

Forrester Research analyst Charlene Li has pondered the next stage for social networks. She envisions the ubiquitous sites will, in five to 10 years, "be like air: They will be anywhere and everywhere we need and want them to be."

Eager estimates there will be as many as 250,000 sites that call themselves social networks within a year, compared with about 850 today. "Everyone will reposition their site to take advantage of this phenomenon. It happened before with portals."

But what about the sites that are not in it for monies, or all about corporate profit and hostile take-overs the little guys working out of their compariable basements, using the phenomenon for good and not greed?

Who? Several companies have been emerging to change the way you interactive with charities, one major player in the game is the Red Cross, it is using its social network so volunteers can keep in touch and communicate ideas for betterment.

Another more recent but notable site is HookMeUp.com (http://www.hookmeup.com) it is a directory of charities, in which the users enter the charity and the charities get the support of the sponsors. The site is giving 100% of the sponsor monies to charities, people are currently siging up and the charities are getting credit which in turn turns into monies for the charities listed.

Social networking engines whether in it for greed or good will be around for a very long time. Just look at these numbers. Facebook, MySpace keep going in traffic and profit and while sites like the Red Cross and HookMeUp.com keep doing good. The world is still in balance.


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Jason Mogler
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