LiveJournal just announced that they will soon begin offering sponsored communities with benefits to participating users and sponsored features provided by companies other than LiveJournal. The SixApart owned social networking site has slowly rolled these plans out over recent months but just made the official announcement tonight. Early feedback from users is decidedly negative. Update: Here’s the newest from the company on this, it appears that they backed down on much of the original plans.
Sponsored communities will be groups sponsored by advertisers who are offering group members things like exclusive movie trailers, behind-the-scenes footage, travel advice, tips and tricks, special deals. It’s funny, I thought most of that was already freely available all over the internet. There is some potential here, and this is an increasingly common direction for social networks to move in, but it will be a difficult strategy to pull off in a compelling way.
The second part of the plan seems much more viable. Sponsored features will be technical add-ons that LiveJournal hasn’t offered its users so far. The first will be an SMS integration service sponsored by Amp’dMobile. This make some sense and it will be good to see what kind of creative features are provided by partners.
Two concerns that arise: the baby could get thrown out with the bath water in that users could be so upset at seeing their alternative to MySpace growing increasingly ad driven that they don’t care about the ad sponsored special features. LiveJournal offers paid accounts already and some users will undoubtedly feel that if they’ve paid for an account, they don’t want to see ads. The new sponsored SMS service, though, will be available only to paid members. That makes sense to cut down on abuse, but we’ll see how those users respond to both paying and seeing ads.
With social networking sites becoming either a dime a dozen or worth a billion dollars, depending on how you look at it, there’s an interesting balance being sought between the need to profit and the need to keep allegedly fickle users happy.
A second concern is that the sponsored features strategy seems to conflict with the spirit of open APIs. LiveJournal uses not the MetaWeblog API or the Blogger API, but one of its own. It’s been praised as good to work with, but not a lot of people apparently do. Is there some kind of artificial scarcity of access to LiveJournal that will be required in order monetize integration with the platform? Or is it just a matter of anyone being able to program against the LiveJournal API but only sponsors having their applications integrated directly into the service and offered by SixApart to the customers. It will be interesting to see if this is an issue.
Online social networking obviously drives a lot of page views, but it’s been questioned by many people whether those users click on ads very often. Hitwise says MySpace drives more retail traffic than MSN Search, but the conversion rate is another question. Sponsored communities are something that many if not all social networks seem to be moving towards, but the sponsored features sound very interesting. If this works, it could well be a model we see employed more often. Perhaps someone will sponsor a MySpace IM that funcitons.
It’s notoriously hard for bloggers with a limited audience to monetize the traffic generated by the content they self-publish, and LiveJournal users are no exception. Now LiveJournal has added a program dubbed ‘Your Journal – Your Money’ which should help users monetize their blogs or journals using Google AdSense. 
