Wednesday, March 08, 2006
Monetizing Web 2.0?
Two things jumped out at me immediately from their disclosures: a) they appear to generate a ton of traffic to and through their site; and b) they generate very little revenue. Gross revenue over the 17 months reported where $74,194,50 USD with an monthly average of $4364.38. Their best revenue month was in December, 2004 with $5872.50 USD.
I'm not a financial analyst, and I'm not going to second-guess what the founders should and should not have done with respect to the site and its services or content, but a gross revenue stream like this doesn't sustain a business very long, not to mention that their gross revenues have been trending downward since June, 2005. All of this from a site that claims 50,000 members, signs up 100-150 members per day, 1 million listings on Google, and an Alexa ranking of 4174?
What's sticking in my craw right now is this: despite the impressive site and traffic/hit numbers, the revenue issue more than suggests that there isn't a sustainable business here, and if there is, what am I missing? What could the founders (or a buyer) do differently to drive up revenues?
And that's a question that needs answers in lots of cases like this, because it won't be the last...