LinkedIn Proving Social Networks Can Profit - The UpStream

LinkedIn Proving Social Networks Can Profit

posted Saturday Feb 11, 2012 by Scott Ertz

LinkedIn Proving Social Networks Can Profit

It is fairly early in LinkedIn's public life and it seems to have been nothing but good for the company so far. Since going public in May of last year, their earnings, as well as their subscriber-base, has continued to rise. Their earnings, announced this week, show that their earnings this quarter have risen 105%. Yes, LinkedIn made more than double this quarter than this quarter last year. That is impressive growth for any company, even more so for a social network.

While it may not seem like it, this might actually be good for Facebook. While it may show that LinkedIn is growing, possibly at the cost of Facebook, it also shows that a social network can be profitable, which could help Facebook in their inevitable IPO.

How is LinkedIn making money, while Facebook seems to be losing? Hit the break to find out.

LinkedIn has a very different model than Facebook. One third of their revenue comes from their Premium Subscriptions - paid user accounts for heavy users as well as job-seekers. This is a revenue stream that Facebook does not have at all, having no paid-accounts. Facebook has the advantage of revenue from Facebook Credits, but that is a different type of revenue from regular income from subscriptions.

As we approach the IPO for Facebook, we will see how much the growth of LinkedIn will affect the starting price of the Facebook stock.

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