LinkedIn Looks to Grow, Promises More for Free

Tuesday Mar 7th 2006 by Dan Muse
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The social networking site said its premium services have brought it to profitability. Now it will add more free features in an effort to double its membership by year's end.

For social networking pioneer LinkedIn, "Last year was the year of premium services and profitability," said Konstantin Guericke, vice president of marketing at the Palo Alto, Calif.-based company.

LinkedIn Corp. today reported that thanks to recently announced premium services that range in price from $60 to $2,000 per year, its expects to reach profitability this month. Guericke said that recruiting firms and investment firms tend to subscribe to the higher-end services, while other small businesses tend to use the services in the $60 range for background information and business development.

But if 2005 was the year to monetize its user base by offering for-pay services, 2006 is the year members will get more in the way of free services. By offering more for all members, LinkedIn hopes to grow its network to the 10 million user mark in the next six-to-nine months, Guericke said. That's good news for the small businesses that make up a large percent of LinkedIn's members. Currently, LinkedIn has about five million members, according to the company.

Businesses that typically rely on LinkedIn are those that frequently need to contact professionals, Guericke said. Those include recruiters, analysts, researchers, investment professionals and management consultants. Small business owners and managers who need to recruit hard-to-find employees are also likely customers, according to Guericke.

In the coming months, Guericke said, LinkedIn will provide its members with updates about their colleagues on their home pages, including who has a new e-mail address, who got promoted and who is hiring. The best opportunities tend to come through one's network of relationships, he said.

LinkedIn now gives its members the option of having their LinkedIn profile listed by Internet search engines such as Google and Yahoo. "Search is becoming more vertical," Guericke said, adding that "people search" may be the next big vertical search category. Also, starting later this month, visitors to the site will be able to search for people on LinkedIn to find member profiles. To get details on what former bosses, co-workers or business partners say about someone, visitors will need to sign up for a free LinkedIn membership, he said.

Once members find someone who matches their criteria, they will be able to find professionals with similar characteristics with a single click. Also, members will be able to create search agents that notify them of new members who match their criteria.

By attracting more members to the free services, LinkedIn naturally creates a large base to which it can sell premium services. However, on a social networking site, Guericke said, the value of all members — free and paid — is heightened. "We still have to provide value for all users. For Wall Street Journal Online, free users don't help. For us, free users are valuable," he said.

Dan Muse is executive editor of internet.com's Small Business Channel, EarthWeb's Networking Channel and ServerWatch.

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