As social networking sites look for ways to generate revenue, an alternate business model is building strength. Earlier this month, Lookabooka.com launched as a online hybrid site. Users visiting this site can:

  • Access their social media network
  • Read news
  • Shop for books, movies and music

What’s different about this approach is that Lookabooka will immediately generate revenues from e-commerce related to its sales of books and music. Company founder Jeff Merle also believes consumers will be attracted to the hybrid Web site because they can save time and money.

It’s too soon to tell whether hybrid Web sites will pose a serious business challenge to existing e-commerce sites which enjoy strong profits as consumers continue to embrace online shopping. However, Lookabooka might have social networking entrepreneurs looking over their shoulders, especially when it’s time to pitch the venture capital community for another round of funding. The existing social networking business model relies on building traffic by offering free services and then trying to sell premium content and services to its members. This approach requires a long lead time to positive cash flows. Of course, the venture capital community seems particularly interested in this sector given the recent $35 million investment made in February to Twitter but not every social networking site attracts as much consumer attention.

In any case, as these new social networking and hybrid sites continue to launch, they will need strong online and offline marketing campaigns to generate consumer interest in an increasingly crowded marketplace.

[Sources: Company Release, Lookabooka Web site, March 2009]