Derek Powazek questions whether social networks are actually profitable with some enlightening facts to support his arguments.

He takes into consideration Digg’s recent sale value of (alleged) $500k compared to it’s initial investment of $45m, Facebook’s IPO woes plus the troubles Twitter and Tumblr are having shoe-horning a business model into their hugely popular services without upsetting users.

These trends suggest monetisation of social networks are a red herring; it goes against the grain of what make people interact on a social level. Humans are extremely perceptible to free stuff, less so towards paid products without a tangible result.

Derek also makes reference to Maciej Ceglowski who setup Pinboard on the backlash of Yahoo’s rumoured plans to close Delicious and how he found moderate success with his paid service. This shows transparency and honesty with your customers from the start can go a long way.

The debate has raised some interesting thoughts that are going around the community at present. I’m definitely intrigued where it is all going.