Business models

So The New York Times got rid of its social media editor this week. The Poynter article explains that the NYT no longer felt like it needed a social media editor because social media should be the job of all reporters. Fair point, but then what exactly did the social media editor do?

Gawker took that up when NYT first created the position 1.5 years ago. “New York Times Hiring ‘Social Media Editor’ To …Do Something,” Gawker wrote. Jennifer Preston, who is the only person who held the job, was essentially meant to get the rest of the company using social media in the most brand-building way possible.

When The NYT created the position the company’s internal memo stated:

…the point is that an awful lot of people are finding our work not by coming to our homepage or looking at our newspaper but through alerts and recommendations from their friends and colleagues. So we ought to learn how to reach those people effectively and serve them well. At the same time, more of us are using social networks to find sources, contacts and information.

It was a good and smart move for the time, I think. It’s even more telling that the position is no longer needed. According to Twitaholic, The NYT is the 29th most popular Twitter account. (Can we really expect it to compete with Lady Gaga, Britney Spears or Justin Beiber?)

I don’t know if other newsrooms have or had a Social Media Editor position, but I understand what The NYT did. It does take some work to get reporters on board with realizing that their work can no longer just stop at filing copy. Modern media entities need to be where their readers are, and their readers are on Twitter and Facebook. As silly as her job sounded, Preston’s role in getting the rest of the newsroom on board with how to properly make the most of social media was a great call by The NYT.

The learning curve with social media is pretty fast. I doubt The NYT ever thought this was a permanent position they were creating, but there was a time when it was needed and they addressed it at the time.

So after a quick Google search, I felt like a bit of an idiot because I found lots of stories documenting several million dollars in Facebook ad revenue. According to Business Insider, Facebook brought in about $500 million in revenue through ads on the right side of the screen, engagement ads and Facebook gifts.

But I’m not completely crazy.

From a January 2010 Forbes article:

Of course trying to value Facebook is as difficult as hiding from your former high school sweetheart online. The company’s revenue is secret–estimates for 2009 range from $300 million to $500 million–and there are no big publicly traded social networking sites for comparison. But for fun we took the high-end revenue estimate of this “next Google” and multiplied it by the ratio of Google’s value at the time of its 2004 public offering to its sales the previous year. That ratio was 15.7. Extrapolated value of Facebook: $7.9 billion, well below the price implied by the latest private bids.

And then I found this, from September 2009 TechCrunch posting: Facebook Crosses 300 Million Users. Oh Yeah, And They Just Went Cash Flow Positive.

So Facebook has been making money for about a year, but wasn’t expected to be totally in the black until 2010. So there. TechCrunch also says part of the reason for the delay in profits is due to server expenses and securing storage for all that data.

So there. I’m not an idiot.

But the real value is their enormous user base and the type of information they have about those users. PC World explains the enormous potential revenue stream — and privacy battles — in a June 2010 piece.

Great question! Please continue this conversation on the blog. This is exactly what this blog is for. Thanks!