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Obviously determining Market Size is a vital step in starting a business. With ecommerce or the sale of a product it seems to be a much more concrete process. On that note, does anyone have any advice as to how one would compute market size for a social networking site? Does anyone know how sites like facebook, linkedIn, Ning, etc. compare?

What about (non-sicial network) sites like StartUpToDo.com or 37Signals.com?

Thanks

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Well 37signals is not a social network. They are however probably the only company that is profitable.

The market size of social networks are potentially limitless but even though it's fairly easy to make revenue it's very hard to be profitable.

First and foremost because most social networks are ecosystems and start out as free.

Second of all because it's very hard to get people to pay to work which is potentially what they do when they join a social network.

But you can work with the following parameters to determine potential market.

  1. Advertising Google ads, Premium Ads (ala those on Smashing Magazine)

  2. Subscription Well.com as I have been a member of for 10 years now is a subscription based discussion forum. They haven't changed for years yet it's the place I know with some of the smartest people on the planet. You can course also calculate based on the "freemium" model

  3. Free to play, pay for sway. This is very popular with habbohotel.com and with a lot of casual games.

If you want to calculate the market size I would suggest you simply multiply number of users with the unit prizes for the above mentioned possible models.

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I am going to guess startuptodo is profitable as well... though not near the level of the others – TimJ♦ Jan 26 '10 at 14:59
@@ThomPete thanks for the comprehensive answer. I will be checking out all of these ideas. If you have any recommendations where i can get some quality reading done on the freemium model I'd be much obliged. Otherwise, no sweat and thanks for the great response :) – Eric Amzalag Jan 26 '10 at 16:20
Freemium model is used among others by 37 Signals and DropBox The basic principle is that you allow the customer your system but you limit them in certain ways. For instance DropBox allow you to store 2GB for free. Soon you will want more and that is where you start paying. Habbo hotel and casual games allow you to play the game for free but if you want to show off or stand out you pay for some virtual goods. Read more here freemium.org – ThomPete Jan 26 '10 at 18:21
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One way is to compare their traffic. You can use one of the following tools:

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I just listened to a podcast of a Stanford seminar with DHH. He said 37signals had 3 million users - but that data is over a year old.

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Thank you sir for the response :). Ill be checking it out too so if i find data and anyones interested ill be sure to post it here :) – Eric Amzalag Jan 26 '10 at 6:21
37 Signals is not a social network – ThomPete Jan 26 '10 at 8:25
@ThomPete I didnt say 37signals was a social network. and @Tim thank you for the response again- i did indeed ask for that specific info. – Eric Amzalag Jan 26 '10 at 16:17
Tim I just said that 37 isn't a social network as seemed to be Eric's statement. I can see it's corrected now. – ThomPete Jan 26 '10 at 22:57

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