I've been wondering how LinkedIn makes money. This BusinessWeek article explains it:
LinkedIn has grown to 9 million members—3.6 million of whom log in at least once a quarter—and attracted blue-chip advertisers like BMW, American Express (AXP), and Virgin Atlantic Airways by catering to an affluent demographic. The average LinkedIn user is 39 and makes $139,000 a year. Of the total, 89,000 are chief executive officers, and nearly half a million others occupy another job in the C-suite, LinkedIn says. In addition, companies including Microsoft (MSFT), eBay (EBAY), Target (TGT), and L'Oréal pay $2,000 to $10,000 a month for the ability to search LinkedIn's profiles for job candidates.
They are also eager to expand and add features, mindfull of the missteps of others, such as MySpace and Facebook.
LinkedIn CEO Reid Hoffman tries to keep those influential members around as much with restraint as with the services the site offers. He has shied away from annoying messages meant to increase traffic, says Bessemer Managing Partner David Cowan. "He doesn't send you an e-mail every time something happens," Cowan said. "He's not just trying to aggregate clicks."
[...]
Next month, the company plans to start marketing LinkedIn Experts, a separate site it began quietly testing in December that helps investors and consultants find knowledgeable people in a given field, then arrange hour-long phone consultations for $500. LinkedIn's staff identifies the experts—including some in arcane fields like construction materials in China—and the company splits the revenue with the user whose knowledge is tapped. Each additional hour costs $250.
That's most interesting – I guess a user's recommendations from contacts in the same (or similar) field makes one an "expert", just as one would in traditional fields of academic study, domains of knowledge, or specific industries.
Tags: American Express, Bessemer, China, David Cowan, eBay, L'Or, LinkedIn, Microsoft, Reid Hoffman, separate site, Target, USD, Virgin Atlantic Airways, Web_2.0
