Chinese Social Network Leads the Way to the Land of Profit

As popular as they are, social networks often have difficulty figuring out how to turn a profit. Many rely on advertising for most if not all of their income, and it can be difficult to achieve advertising dollars that are greater than operating costs.

This is not so much of a problem for QQ, a popular social network in China. The company recently posted $523 in revenues with only 13 percent coming from advertising. When you compare this to the $150 million made by Facebook, it really goes to demonstrate how far non-advertising dollars can take a social network.

Much of QQ's profits come from selling digital goods, games and mobile services.

MySpace has a deal with four major record labels to create MySpace Music, which would potentially compete with iTunes. Meanwhile, Facebook is getting into the music scene with deals to sell tracks and tickets, and Facebook has been working with Amazon to increase its potential for ecommerce revenue.

And, no doubt, this is only the beginning. With so much untapped revenue out there beyond just advertising, there should be more blending of social networks and ecommerce in the future.