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Small business owners may have been wise to rack up followers via social media sites last year. But Seth Godin argues that a good idea trumps a large number of followers. A lot of followers are what he calls "faux followers"--they sign up to follow but aren't really there when you need them. Instead, it is better to have fewer followers and an idea that is good enough for those followers to spread it around. Here's Godin's graph: Godin: The curves represent different ideas and different starting points. If you start with 10,000 fans and have an idea that on average nets .8 new people per generation, that means that 10,000 people will pass it on to 8000 people, and then 6400 people, etc. That's yellow on the graph. Pretty soon, it dies out. On the other hand, if you start with 100 people (99% less!) and the idea is twice as good (1.5 net passalong) it doesn't take long before you overtake the other plan. (the green). That's not even including the compounding of new people getting you people. But wait! If your idea is just a little more viral, a 1.7 passalong, wow, huge results. Infinity, here we come. That's the purple (of course.) Read Viral growth trumps lots of faux followers here .

Small business owners got on board the social media train in big numbers a year ago--nearly 3/4 of all Twitter users signed up in the first half of 2009. But Martin Warner , entrepreneur and co-founder of Talkbiznow , a business social networking site, is banking on 2010 being the year that small and medium-sized enterprise (SME) owners start to see the benefits of social media to their bottom line. He points out that social media levels the playing field for SMEs, in areas like the cost of infrastructure and "obtaining access to the most talented workers." Warner, from a piece in Reuters , notes: Linkedin , reported that it had 50 million registered users in a blog on the website in October 2009. Half of Linkedin’s users are in the US while it has signed up 11 million professionals in Europe and 3 million in India, now the network’s fastest growing market. Linkedin’s biggest rival in Europe, Hamburg-based Xing , has more than 8 million professionals and its careers and jobs section is one of the main services that it offers to its users. Everyone from university alumni to employees with specialist skills such as high frequency, computer-based traders in the City of London can join a host of groups on Linkedin which advertise jobs as well as displaying links to news stories, discussion forums and occasionally blogs by industry professionals. Social networks can also be used by small businesses as refined advertising tools. Advertising executives are increasingly recognising the great value of the information on members housed in these websites, which usually has much more detail and focus than the data on display in consumer networks such as Facebook. However, while social networks present great opportunities for professionals and SMEs, small businesses looking at opportunities latent within social networking websites should proceed with caution. Read Small business--the next frontier for social networks here .

Count Om Malik among those who were surprised that Twitter had a profitable year in 2009. Not that he isn't optimistic about the social media wunderkind's current and future value--in fact, he thinks Twitter isn't charging Google and Microsoft (the companies that accounted for Twitter's revenue this year). It's just that he didn't expect the company to be in the black by now. But he does expect Twitter to start spending in three key areas next year: *New management team including several new “C”-suite executives. *Infrastructure to scale their network to accommodate future growth. *Hiring more engineers and other key people as it tries to build out the service. Which means the so-called profits are going to evaporate and the company will have to dip into its $155 million (VC) cash hoard. Even the soon-to-come commercial accounts might not be enough to make up for all that spending. Read Twitter May Be Profitable — No, Seriously! here .

The Economist held a Media Convergence Forum in October to explore the changing relationship between consumers and commerce in the digital age. Here's how the organizers described the purpose of the forum on their website: The surge of new technologies and social media innovations in today's environment is significantly altering the future media landscape for marketers. Consumer behaviour is changing and the way marketers reach their audience must also change. Marketers are searching for new ways to not only reach their customers, but to understand them, to peer inside their minds. As the level of consumer understanding increases, so can the knowledge of how best to reach them. However the plethora of tools at a marketers disposal is not easy to navigate and real learning comes from a real understanding of the future of media convergence. Interesting and compelling, to be sure. But they also had Karl Fisch, Scott McLeod, and Jeff Brenman put together a video/data visualization of the changing landscape, and it really captures your attention. Titled Did You Know 4.0: The Media Landscape , it presents, in less than 5 minutes, the current shifts in how consumers and businesses are interacting through digital media. And while much of the focus is on news media and advertising, the core issues connect to just about all facets of commerce in the digital age: (Hat tip to Chelsey Hoffman, University of Michigan)

September 2009 should go down as an historic turning point for social media, as Facebook is now bringing more money in than it is paying out. That doesn't necessarily mean that is is profitable yet, as Douglas MacMillan writes in BusinessWeek : Rather, the cash it generates from advertising and other forms of revenue now exceed the cost of servers and other capital expenditures required to keep Facebook running. One-time costs, like the reported $50 million acquisition of Friendfeed last month, and operational expenses like personnel, are not included in this equation. Outside investments in the company, like the $200 million it raised from Digital Sky Technologies in May, are not accounted for either. Facebook has never disclosed its revenues, but board member Marc Andreessen recently told Rueters that the site is on track to generate over $500 million in revenues this year. The same day it announced its cash flow milestone, Facebook said it has added 50 million users in the past two months — bringing its total user base to 300 million and its signup rate to roughly 806,000 users per day. That’s a huge amount of traffic to support, and the site’s accumulating stockpile of photos, videos, and other content requires an ever greater number of expensive servers. This was a serious problem for Facebook as recently as March, when my colleague Spencer Ante reported that it was seeking $100 million in debt financing directly related to server costs. Now, it appears that economies of scale are working in the company’s favor: the more members it attracts, the less it has to pay to support each one. Read the full article here . And listen to, or download, Marketplace radio's coverage of the news here .

The growth of the social media tool Twitter has been one of the leading tech and media stories of the last year. But skeptics abound as the business model for Twtter seems elusive, secret, or nonexistent. As Twitter's founders play their cards close to the vest, some businesses have found a great deal of utility in the tool. Small Business Trends writers have frequently highlighted the potential value of Twitter to small business owners--most recently giving it a key mention in their list of 16 Things You Can Do Yourself to Create Word-of-Mouth for Your Business . Zane Safrit writes: Join the millions of people who’ve looked like fools at least once in their life. It’s a party. And join them as they connect with millions of customers, prospects, partners, vendors, ideas, innovators solutions. And the New York Times is getting in the act. In today's paper, Claire Cain Miller profiles some small business owners who drank the Twitter Kool-Aid and are seeing big results after relatively little effort: “We think of these social media tools as being in the realm of the sophisticated, multiplatform marketers like Coca-Cola and McDonald’s , but a lot of these supersmall businesses are gravitating toward them because they are accessible, free and very simple,” said Greg Sterling , an analyst who studies the Internet’s influence on shopping and local businesses. Small businesses typically get more than half of their customers through word of mouth, he said, and Twitter is the digital manifestation of that. Twitter users broadcast messages of up to 140 characters in length, and the culture of the service encourages people to spread news to friends in their own network. Read Mom-and-Pop Operators Turn to Social Media here .

Many a keyboard was pounded yesterday as bloggers, reporters, analysts, and countless others wrote about General Motors as it filed for bankruptcy. But in this day and age, a company doesn't need to just sit idly by while others write its narrative. GM is going straight to the hungry news consumer itself--with a new blog. GM's Fastlane Blog is allowing (pushing?) executives to communicate its restructuring plans with the general public--or at least the part of the general public that seeks it out. For example, CEO Fritz Henderson wrote a post yesterday in which he announced more interactivity: We’re committed to open communications and I am personally putting a high priority on transparency. One way we’ll do this is by launching a series of live web chats on this website. I’ll kick things off later this week for one hour on Thursday, June 4 at 3 p.m. EDT. Following me, a steady stream of GM leaders from throughout the company will host additional chats, about two a week, on whatever topics are of most concern to you. The blog is set up to compliment a site called re:invention , which is full of videos that tout the new GM approach.