So far, the only business model for Social Media (Social Networks, Wiki’s, blogs etc.) has been the advertising model. Get as many eyeballs as you can and serve up ads in the hopes people click-through and subsequently purchase a product. This works reasonably well for Bibo, MySpace, Facebook and a small handful of others. But Social Media is really about Social Production. Wikipedia is about getting others to build a knowledge base. That has intrinsic value; it used by students, business analysts, researchers etc., that result in indirect economic benefits. Even to the Enterprise. But we have no economic measurement or model for what could be termed “Knowledge Transactions.”

Time is money. How then, do you measure value inherent in sharing and producing knowledge in Social Media when very few are directly being compensated for their time. A person writing a blog entry, unless they are paid by a media firm or PR agency, is not being paid. It’s just Consumer Generated Media (CGM.) Many blogs are simply individuals writing about life. Others for business purposes. Through good writing they are hoping to attract an audience, and someone in that audience may then pay them for the work they are writing about. This is, then a form of advertising. As hundreds or thousands may view an ad before a few make a purchase, so it may be with a blog written for commercial purposes. Much as intevix employs blogging as a key element of it’s marketing and business model. And yes, we attract and retain clients this way. It is a business model where we conduct a Knowledge Transaction and gain Monetary Transaction.

That is one business model for Social Media, along with advertising models. Social Media may be valued by an Enterprise or government more viably through measuring the impact and influence of Social Media on the organization. A single blogger can cause immense damage, conversely, that blogger can positively impact sales or stock prices. In either case, a Knowledge Transaction has taken place inside Social Media networks as and when “people” react and either buy or don’t buy, a service or product. The more popular the individual and the larger the audience they attract, the more valuable their Knowledge Transactions.

This is certainly not a thesis on a new economic model, simply a proposition for consideration in how business will eventually look for a way to value Knowledge Transactions. It is part of organizations learning to have a two-way conversation with their audiences through Social Media. Mass Media is simply an “observed” media with no interaction. Social Media is all about interaction, it is a two-way medium. Organizations will have to value their time and Social Media participants in order to manage their conversations in the social space - the Web. If they don’t, the damage can be irreparable.