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Future of Social Networks is in Niche Groups

Social networking has become an integral part of the Internet experience, however, after 13 years of applications in the U.S. market, revenue generation is not what it was once predicted to be, according to a recent market study by In-Stat.

The solution is to find different models -- innovative business methods -- to capitalize on the wealth of data social networking sites collect, the high-tech market research firm says.

Affiliate advertising, the selling of virtual goods, micro-payments, social network site merchandising, and data mining are all viable alternatives to traditional revenue generation models.

"Development of niche social networking sites is an essential piece of the monetization puzzle," says Jill Meyers, In-Stat analyst.

"The more specific a social networking site is to a select group of users, the more targeted the advertising can become; the more loyal the membership will be because it caters to specific interests; and the more opportunities the site will have to be profitable."

Their research provides a brief history of social networking, the groups that participate, different models of monetization -- both current and potentially future -- and contains the results of an In-Stat U.S. consumer survey about online social networking.

I believe that niche group interaction, now enabled by social network platforms, is merely the current generation of online group communication that started with email lists, grew to incorporate threaded-message discussions, and various other types of online forum applications.

In-Stat's market study found the following:

- In-Stat forecasts 92.2 million social networking users in the U.S. by 2012.

- 66.6 percent of respondents to the In-Stat U.S. consumer survey do not pay for premium services or features.

- 16.7 percent of survey respondents use a mobile phone to participate in online social networking or video content sites.

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