It’s been about a year and a half now since I originally conceived the idea of HiPPstr; a new social network, a unique social network. During that time, I’ve learnt a lot; more than you could imagine. Today I’m going to talk about social networking as a viable business model. People keep pressing the question to me, how will you make money?

My answer is usually, I Don’t Know. The obvious path is targeted advertising, the current model that supports all the big social networks, Facebook, MySpace and Bebo. Although is it a viable business model? There are two problems at the moment, with social networking as a business.

1. The founders are developers not business men.
2. Ads at best, break even.

Most of you will argue the first point is good, which it is but not if you want to make money. Developers are interested in having a successful product; if you offered them 100m dollars, they would sure take it, but it’s not usually their goal. On the other hand we saw the disaster that was caused by the so called Web 1.0 start-ups, founded by business men. I’ve said since the start that my goal with HiPPstr is not to become a billionaire but to advance technology.

So, if none of “us” want to make money, where does the problem lie? Social networking start-ups can only live of VC funding for so long. Bills need to be paid but more importantly so do employees.

How is this fixed, the current problem is that the internet is still expensive. It’s expensive to get 1 million visitors at once and it’s expensive to handle that traffic. So the answer to this problem is not more advertising but better infrastructure, infrastructure that is paid for by the ISP not the content provider, infrastructure that allows for cheap bandwidth.

In this particular article I’ve used Social Networking as the example but this applies to the new internet: IPTV, Social Networks, File Sharing, Video Conferencing, VOIP, etc.

Is social networking a viable business model, not yet.