New social networking site Ello appears to be the talk of the town lately—at least, among the tech circles, the land grab for one's unique user name is already on. And while the five-week-old social networking site might not have all that much going for it, feature-wise, it does have the most important ingredient in a social network's recipe in the early stages: attention.
Soon after that, though, the site will invariably have to make a shift toward monetization. Fun as a free, advertising-free experience might be, it's doesn't make the most sense business-wise. How Ello gets to that point, given its founders' dislike of advertising, becomes a bit of an exercise in creativity.
"Your social network is owned by advertisers. Every post you share, every friend you make, and every link you follow is tracked, recorded, and converted into data. Advertisers buy your data so they can show you more ads. You are the product that's bought and sold," reads Ello's Manifesto.
"We believe there is a better way. We believe in audacity. We believe in beauty, simplicity, and transparency. We believe that the people who make things and the people who use them should be in partnership," it continues, noting in the very end that the site's users are "not a product".
Ello founder Paul Budnitz seems happy to discuss his general dislike of Web-based advertising—which, we note, doesn't translate over into the world of venture capital. Ello has already gone through a seed funding round with Vermont-based FreshTracks Capital, which invested $435,000 in the social networking startup. Obviously, investors will likely be looking for a return on their contribution at some point.
"I want to change the world. I want to prove that advertising isn't the only way to make money on the Internet," Budnitz said, in an interview with Fortune.
"What's screwing up the Internet and creating all the data collection problems and privacy issues has to do with advertising as a model on the Internet," he added.
The solution? Scarcity. Or, rather, the site plans to take advantage of its rather plain setup by charging extra for features that it will later introduce into the mix. The fees won't be much—a dollar here, two dollars there, et cetera—but that's the social network's business plan. Managing two different Ello accounts, for example, will ultimately set a user back $2.
What's unclear is just how many users Ello might need—users willing to pay for the site's latest features—in order to stay afloat. And, of course, whether users will flock to the idea. For some, Ello's Twitter-like simplicity is its key advantage over a more feature-filled social network like Facebook; paying extra to unlock more might defeat the entire point of jumping ship to begin with.