Technology

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Wall Street Crisis Pushes Business Networking Sites Ahead of Facebook

September 29, 2008 11:43 AM
by findingDulcinea Staff
Two business-focused social networking sites, LinkedIn and Xing, are booming thanks to an increase in traffic from users fearing—or already experiencing—job losses.

Online Business Networking Moving Forward in Economic Downturn

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Business-focused sites LinkedIn and Xing have carved themselves a social networking niche in the face of job cuts across the job market. According to The Economist, the two sites have been attracting new members at “breakneck speed” and have figured out how to turn a profit, “in contrast to mass-market social networks such as Facebook and MySpace.”

Silicon Valley-based LinkedIn, founded in 2002 by entrepreneur Reid Hoffman, has recently gotten $53 million in venture capital funding. The company does not release the details of its balance sheet. However, The Economist’s sources have noted that this year the networking site may have garnered a sizeable portion of its $100 million in yearly revenues from hiring companies and headhunters.

As for Xing, which is headquartered in Hamburg, Germany, 80 percent of its revenue is from subscription fees. Users are charged 6 euros, or about $9 a month, to use the site. The site, which The Economist says has a “distinctly Germanic feel,” pulled in 16 million euros, or about $24 million in profit this year.

LinkedIn founder Hoffman told The Economist, “Most users of social networks have a lot of disposable time, but not much disposable income. With professionals it is the other way around.”

This being said, no price beats free, which Facebook remains. And the site does cast a wider net. Once primarily used to find pictures of long-lost friends from elementary school, Facebook can foster professional connections and a tool to search for employment.

The faltering economy has caused enterprising people of all ages to turn to Facebook as a way to spread information. Christine Pon Chin, a real estate buyer, said that Facebook helped her find “additional buyers and sellers for the future.”

Only two years ago, students were concerned that potential employers would judge them based on their Facebook pages, a practice they felt would be “unethical.”

Those who still use the social networking site for primarily personal rather than professional reasons worry about protocol when they are “friended” by their bosses.

Background: The evolution of Facebook

Related Topics: Facebook at the office

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