How networking sites handle policing, revenue models and feedback (last of two parts).

Yesterday, I examined how networking sites fare in authenticating and controlling user data. Today, we'll look at policing, revenue models, and blogger and customer feedback.

Policing -- How do networking sites deal with inappropriate users?

Affinity Engines and The Square have adopted a similar philosophy. Once these companies have authenticated who you are, there's sort of a gentleman's agreement that their members will ultimately do the right thing when they interact with each other on the site. They've also kept their networks relatively small, have had very few instances of rogue users, and thus feel that policing just isn't a big issue. But some of the other sites, which have -- or aspire to be -- much larger networks, and which don't authenticate identity as vigorously, have found it necessary to establish procedures dealing with rouge users.

For example, Evite has had to deal with spammers who try to use the Evite application to send out thousands of emails in order to promote a rave or some other large event. As a result, Evite has imposed a limit of 500 invitees per event. Moreover, Evite's president monitors Evites that go out to more than 200 people. I wondered if that was an effective use of his time, but he assured me that the average number of invitees was around 35, and that there were very few Evites going out to 200 or more people.

Evite also has added a "report abuse" button to its event invitation process. Even sites that consider abuse to be a non-issue should seriously consider adopting similar functionality as it can provide the company with extremely valuable information on customer perceptions. Also, the user-generated trust metrics that are being established by many of the sites help each community to police itself to a certain extent.

Tribe.net has a feature that allows someone setting up an affinity group to moderate that group, and the group moderator can approve membership. And although Tribe allows users to send a message to just about anyone else, they also provide users with a filtering technology so that messages from strangers go directly into the junk folder. And messages from irritants can be easily blocked.

LinkedIn, being a professional network, probably has the most to lose if members become too aggressive. A CEO from a large company will probably not remain on the network for long if she is peppered by too many requests for contact.

According to Konstantin Guericke, LinkedIn's VP of marketing, "The point of social networking is not to establish virtual fiefdoms, but rather to conservatively build upon an already trusted network of colleagues."

Along those lines LinkedIn limits the number of messages members can send to other members who aren't in their immediate network. The company boasts that 83 percent of its referral messages receive a response, so it would appear that the conservative approach is working.

Revenue Models -- How do they monetize site traffic?

There are definitely privacy implications surrounding revenue models. Any community site that is vague about how it'll monetize its site traffic falls under immediate suspicion, as users seem to fear the worst. Sites without a strong revenue model are perceived to be more likely to sell user data or otherwise act outside of their privacy policies if times get tough. Therefore, while it's important to be clear about customer data policies, it's equally important for companies in this space to be clear about what they are getting in return for providing the service.

The Square seeks to monetize its 80,000 member list via a combination of online ads, email sponsorships, and list rentals. Similarly, Affinity Engines offers ad-supported emails to its members. Evite has reached profitability using the media model, but is looking at other revenue streams surrounding its newly enhanced local event listings. Whether the media model is sustainable over the long term is still subject to debate, and many networking sites are looking to subscriptions either as a sole source or to enhance their revenue streams.

For example, LinkedIn revenues are predicated upon getting their members to pay for their premium service. While about 5 percent of the company's 750,000 current users pay the premium, its goal is to double that percentage. Classmates enjoys a nice revenue mix, drawing revenue from a combination of online ads and email sponsorships as well as premium subscriptions.

Tribe.net is developing a local online classified model. The premise is to provide a free listings service for consumers, but charge businesses in one or more categories, or for certain placements. The company receives financial backing from the Washington Post and Knight Ridder, two companies with plenty of expertise with the classified model. Equally important perhaps, is that the classified model is generally understood and accepted by consumers.

Plaxo has drawn almost as much fire for its revenue model as it has over privacy issues (LINK). When the company began operations in late 2002, it did so without a demonstrable revenue model. While that approach may have been OK for Google and other companies that emerged in the late '90s, it brought Plaxo under intense scrutiny from privacy advocates. Partly in response to that criticism, the company announced a premium subscription model earlier this year. And while it's hard to imagine that its current premium offering, which includes tech support, will generate much revenue, future premium offerings that sync the service to cell phones and PDAs are more promising.

Blogger/Community Input -- How do you address community (and blogger) criticism?

I included bloggers here -- even though many of them are not registered members of these services -- because they are often the most vocal critics. My sense is that the bloggers are often the proverbial canary in a coal mine, articulating the unspoken concerns of actual users. The impact bloggers have had on many of these sites cannot be overestimated. Admittedly, some of what I've read on blogs has been the handiwork of people with political axes to grind -- kooks and others who clearly have too much time on their hands. However, much of the commentary I've read has been right on the money. And many of the networking sites have used that commentary to develop a more robust, safe and privacy-friendly user experience.

Plaxo, for example, has done a great job understanding the bloggers. The company has been the target of intense scrutiny and criticism from bloggers. In response, Plaxo's proprietors have established feedback loops to take that criticism into account as they redesign their product. They've also taken a proactive role in educating the community -- providing commentary on other's blogs, and even setting up their own company blog to set the record straight.

Tribe.net actively solicits both positive and negative feedback from its users -- inviting them to share how they've benefited from using the service, as well as encouraging them to report abuse or other user concerns. Similarly, Classmates actively requests feedback from members who subscribe to its newsletters.

Bottom line: My unsolicited advice

Networking is here to stay. The question in my mind is which networking tools will continue to thrive, and which will fade away like some aging '80's pop singer. The companies that execute in the following areas will have a great shot at being around in five years:

1. Develop and refine authentication procedures and trust metrics.
2. Enhance user control over what PII others can see and when they can see it.
3. Diversify the revenue model so that they aren't so reliant upon advertising.
4. Build and enhance feedback loops in order to better understand what their users want.

Alan Chapell is a consultant focusing on privacy marketing -- helping companies understand privacy and incorporate consumer perception into product development. He has been in the interactive space for more than seven years with firms such as Jupiter Research, DoubleClick and Cheetahmail. Mr. Chapell is the New York chapter chairman of the International Association of Privacy Professionals, and he publishes a daily blog on issues of consumer privacy.