Social media: you’re doing it wrong:

NEW YORK – As the bid deadline for ailing BusinessWeek magazine approaches the McGraw-Hill title is revealed to have spent $16m on creating its social networking site, which is generating little cash.

BusinessWeek launched its social networking venture Business Exchange in 2007. By 2008 it had spent $16m on the site, which is estimated by the New York Time to have generated just $600,000 in revenues.

Joanne asked how you can spend that much money on a social network. Here’s how: think like a big company. They’re a big brand, from a big company. They clearly need a big, expensive infrastructure, or so the thinking goes. Unfortunately, that rather ignores the fact that the products they’re trying to complete with run lean and fast, with low overheads and the ability to adapt quickly to changes in their competitive environment.

I’ve been faced with people arguing for “big infrastructure” here, but so far we’ve been successful in keeping our blogging and community infrastructure (fairly) lean and focused – and thus in line with the potential revenue.