The collapse of Ning’s free social network offering and the noises being made by Twitter at Chirp (Twitters first developer conference) underline the need to have a sound business model (yes even online!). Ning was the brainchild of Marc Andreessen (of Netscape fame) a network of social networks. It took in over $120M of investment, had 20 Million visitors a month and over 2 Million networks used the platform… Now staff numbers are being slashed by the new CEO Jason Rosenthal and they are going to drop all free users.

“When I became CEO 30 days ago, I told you I would take a hard look at our business. This process has brought real clarity to what’s working, what’s not, and what we need to do now to make Ning a big success.

My main conclusion is that we need to double down on our premium services business. Our Premium Ning Networks[...] drive 75% of our monthly U.S. traffic, and those Network Creators need and will pay for many more services and features from us.

So, we are going to change our strategy to devote 100% of our resources to building the winning product to capture this big opportunity. We will phase out our free service. Existing free networks will have the opportunity to either convert to paying for premium services, or transition off of Ning[...] All of our product development capability will be devoted to making paying Network Creators extremely happy.”

Jason Rosenthal

This news is sending shockwaves throughout the internet community (and more specifically the Ning networks who have built businesses on the platform). Unfortunately just having huge numbers of users and masses of traffic is not necessarily a viable business strategy in and of itself. This is also slowly dawning on Twitter and rumblings of needs for revenue streams reared their head at Chirp…

This entry was posted on Sunday, April 18th, 2010 at 8:21 pm and is filed under General Chatter, Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.