Does Ning CEO Rosenthal Announcement Mark the Beginning of the End of Our Social Networking Free Ride?

so I’ve come here to give you a hand
and lead you into the promised land
so…
come on and take a free ride [free ride!]

Lyrics from the song Free Ride by Edgar Winter Group

Denise, a member of my Facebook community shared a link earlier today regarding a major announcement from Ning’s new CEO Jason Rosenthal which may very well signal the beginning of the end of the social networking free ride.

Don’t get me wrong, this has been a long time coming.  In fact in an excerpt from the opening of the 2nd chapter in my new book “The Unsociable Business of Social Networks And Why The So Act Social Network Will Change The World” I wrote the following:

“The social network community is on the verge of a monumental shift in which many of the networks that are in existence today will not be around tomorrow.

By evolving beyond their technological origins, the core survivors will avoid the fate of the early lights, who like SixDegrees.com are destined to fade into historic insignificance in much the same manner that CP/M ceded to the DOS platform in the early days of the personal computer.”

Of course for me, this debate has extended well beyond the pages of the book itself to encompass several articles and even a radio show or two on the PI Window on Business.

One such article that immediately comes to mind is the August 28th, 2009 post “The American Football League, American Basketball Association and Blog Talk Radio?

The subsequent interview (Can Twitter Make Money and Other Questions Regarding Social Media Revenue Models) with Shel Israel, author of the book “Twitterville: How Businesses Can Thrive in the New Global Neighborhoods,” added an interesting dimension from someone who many consider to be the “Godfather of social media.”

In short, Rosenthal’s announcement that there is a “need to double down on our premium services business,” and therefore “our Premium Ning Networks like Friends or Enemies, Linkin Park, Shred or Die, Pickens Plan, and tens of thousands of others which drive 75% of our monthly US traffic, need and will pay for many more services and features from us,” is not a question of why this is happening, but instead why did it take so long?

Rosenthal in a matter-of-fact silver or lead fashion then went on to say that it is now Ning’s “strategy to devote 100% of our resources to building the winning product to capture this big opportunity.”  This means that Ning “will phase out” their “free service” offering, providing existing free networks with “the opportunity to either convert to paying for premium services, or transition off of Ning.”

As a point of exclamation as to the resolve of the CEO, he then stated that he had “made the very tough decision to reduce the size of our team from 167 people to 98 people.”  An effective immediately proclamation based on his closing comment that “We’ll use today to say goodbye to our friends and teammates who will be leaving the company.”

all over the country I’ve seen it the same
nobody’s winning at this kind of game
we’ve got to do better it’s time to begin
you know all the answers must come from within
so…

While I personally never really utilized Ning beyond joining a handful of the communities that will be directly affected by the April 15th announcement, I know that the overall industry will be paying close attention to how this latest social media story unfolds.

Especially networks such as LinkedIn, which has been at increasing odds with its membership over issues such as limiting the number of contacts to unannounced platform modifications – some resulting in a gradual erosion of free services, to Twitter where statistics show a downward trend in usage against increasing investor pressure to turn on its revenue engines.

come on and take a free ride [free ride]
come on and sit here by my side
come on and take a free ride

In the meantime, check out my new book as it would appear that many of the observations it provides are materializing at a much faster rate than originally anticipated.  Once again, not why but why did it take so long.

NOTE: 10% of all proceeds are donated to the Haiti Relief cause.  To Date The PI Social Media Network has donated a total of $500 to this cause.

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