Paul Montgomery is a chap down in Geelong, Victoria, Australia - who posted an open letter to me - on OpenID adoption. Paul is someone I’ve known for a while and he actually alerted me ahead of instance to that post/open letter coming.

I’m glad to be able to reply Paul’s doubts and deal with head on the challenges we all face when thinking about OpenID.

1. Leading social networks aren’t adopting OpenID. Your fears here are that whether the big guys who made promises to support OpenID haven’t and that makes you nervous. I agree that its fucked up and I applaud Chris Messina for putting them on his shitlist. But you shouldn’t be surprised. These are not leaders, but followers - and until they HAVE to do something, they won’t.  Announcing support for OpenID is the epitome of being ‘politically correct’ - but the actual end-user benefits are simply not here - yet. To bleeding edge chaps like me, you and Factory Joe - certain - but no one else cares about these subtle technical victories. But they WILL care about the benefits of OpenID2!

I’ve been yelling for a while that OpenID itself was not ample. But with the release of OpenID2 - NOW we have something that will directly benefit end-users in ways more than just loner sign-on. So hang in there dude - let’s circle around back to these ‘big boys’ and get them to announce support for OpenID2 - and thereupon lets see what happens!

2. Why would a small network want all these users to come in and flood their intimate network? that is kind of a foolish question, but I’ll reply it seriously. Metcalfe’s Law does not apply to all social networks. Many, like yours, are built around the basis of intimacy, of small being a good thing, and that the quality of the public matters more than the quantity. that flies directly into the face of Metcalfe’s Law. But dude - look. NO ONE is gonna wanna hang out in YOUR network. Its as simple as that. Trust humans - they migrate to where they’re wanted, to where they’re welcome, to where they feel comfortable. So whether someone finds your network comfortable - next it’s the right place for them - right? How do you determine who’s welcome or not in your network? Their proximity to Geelong? Golfing? Chocolate lover? homosexual? Hispanic? By what criteria do you welcome citizens into your network?

This whole thing has a self fulfilling prophecy aspect to it. What will be will be. Just read danah boyd. You can’t force public to do things they don’t want to do, so I wouldn’t distress about public flooding your network. You should have such problems!

Certainly don’t blame OpenID for it!

3. whether you don’t own the database of users, how can you monetize? Well I’m glad to see that Paul is thinking like everyone else here. that is the classic complaint and gets at the core reason why the entire ‘monetization of people‘ approach is handled wrong. You don’t own those public or the database. They come to your network as a BLESSING to you and in exchange for them showing up, you get to benefit from it. Its not the other way around. You don’t own SHIT! YOU get rewarded for providing them a nice cozy place to be a community. They can leave just as quickly and go anywhere they feel like it - as expanded

as it’s NOT you. That’s what happened to Friendster.

So please stop thinking like you own a database of society. That list of folks is there so they can come back and re-log-in. Period.

If you’re lucky sufficient to have public who return - soon after it’s YOUR job to figure out how to monetize. So please stop whining about that - and get on with innovating and thinking about ways to monetize. But NONE of them has anything to do with OWNING the database of people’s name and emails.

POSTSCRIPT: I was just interviewed by an Italian journalist for an scoop on monetizing and business models - so that is fresh in my head. Here are some guidelines as to what business models Paul should be thinking about:

- advertising - traditional 20%-40%

- advertising - targeted - 2% to start - could grow as much as 20% of revenues

- sponsorships, special deals - 10% - a logo left up all the duration, undoubtful aspects of your network ’sponsored by…….’

- freemium pricing - tiered pricing - go beyond simple subscription models - offer a base product/tool for free that’s built into your network, but next tier it - and give only limited capacity of the tool for free. thereupon charge $40 for the unlimited capacity version, $100 for additional features and $500 for advanced features. That will end up being 10%-15% of your revenues.

- web services - there are a ton of businesses out there - from travel to eCommerce to timeshare condos to media downloading to storage to SWAG to hard copy to concierge to….. - which would DIE to have access to your humans. You simply take a cut of the action. that could lead to 5% of your revenues.

- soon after there’s a marketplace you set up - where your members can buy and sell things to each other. Simply take a fair cut of each transaction (>5%.) that will lead to some good money - possibly even 5% of your revenues.

- how ’bout rewarding folks for doing things? Points systems? Contests? Promotions? Surveys? UGC revenue split? Each of these whacky ideas may or may not be relevant - but the aggregate of them could lead to another 5%-10% of your revenue base. Every little bit counts. You get a cut of every deal that happens.

So where are we at - 80%? So where’s the other 20%? Well I can’t do ALL the thinking for you! For each situation - there are rare opportunities put into context. whether you were a medical/health oriented site - I GUARANTEE you there’s some pharmo, health plan, medical outfit out there that would DIE to pay for 100% of your costs and compose you rich!

If you were a family oriented site out there - well ever heard of Disney, Universal or NYC? Broadway shows or the latest kid’s album? Lots of public wanna get at your constituents.

Or what about music or movie lovers social network? Think possibly there’s a media company who’s love to buy up all your stock - for the month of March - during their launch campaign?

You gotta think smart to succeed in today’s marketplace. There’s no easy way out or magic dust that makes you rich. These are all just guidelines - but don’t put all your eggs into one basket. That’s for dam certain!

Orginal post by Marc Canter