Important caveat: only users with paid accounts are eligible for the program.

Here’s the deal: users who cough up between $5 for 2 months or $25 for 12 months of using LiveJournal, can add Google AdSense banners to their blog and keep 100% of the earnings (after Google takes their cut). They will be required to sign up for a Google AdSense account or associate an existing account to start earning revenue from displaying Google ads. Users who enter the program can control where ads appear and whether they’re text, images, or both.

What I fail to see how this deal benefits LiveJournal in any way, since they won’t be seeing a penny based on the current agreement. Perhaps it’s just a way for them to maintain its user base, considering the fact most popular blogging platforms already offer multiple ways for users to monetize their traffic.

LiveJournal has a rich history when it comes to weblog publishing. First started more than 10 years ago (on April 15, 1999) by Brad Fitzpatrick as a way of keeping his high school friends updated on his activities, its parent company Danga Interactive was acquired by Six Apart in January 2005. Less than two years later, Six Apart announced it was selling LiveJournal to SUP, a Russian media company that had been licensing the LiveJournal brand and software for use in Russia. Fitzpatrick moved on to join … Google, which may be part of the reason behind the LiveJournal/Google advertising deal.

LiveJournal says it signed up over 22 million new users since its U.S. launch and has a worldwide monthly reach of 25 million users with approximately 7 million in Russia and 8 million in the U.S.

Kind of funny to notice Fitzpatrick hasn’t yet entered the program to start monetizing his own LiveJournal blog. Or maybe he just doesn’t have a paid account?

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Twitter, Facebook and LiveJournal spent yesterday battling a DDOS attack that started around 6 am California time. Twitter and LiveJournal went down hard, Facebook stayed mostly online but was clearly under strain. CNET reports that a single individual’s accounts on the services may have been the primary target.

Now, nearly 24 hours later, Facebook and LiveJournal appear to be performing normally. But Twitter is down completely and has been for the last few hours.

As of 4 pm Twitter was saying things were looking better: “Site latency has continued to improve.” But for most users, all third party services have been completely unusable for the last 20 hours or so (Tweetdeck, Seesmic, Power Twitter, etc..), bringing down the entire Twitter ecosystem. The Twitter.com site itself hasn’t been reliable either.

The Twitter status blog has been silent since that 4:14 update.

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“This allows Six Apart to focus on their remaining three brands (Vox, TypePad and MoveableType)” CEO Chris Alden told me this evening. LiveJournal, created by Brad Fitzpatrick in 1999, was the lone service not built in house. “We have very ambitious plans for our remaining brands going forward” he added.

Since the 2005 acquisition, Live Journal has grown from 5 million to over 14 million accounts. But overall unique visitor and page view growth has been static for the last year. In October 2007 Comscore says LiveJournal had 13.8 million worldwide unique visitors generating 475 million page views. That’s up only slightly from the 11.1 million visitors and and 408 million page view per month a year ago.

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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.

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