Microsoft goes social

    The software giant thinks it can make money in social networking the old-fashioned way - charging subscription fees.

    By Jessi Hempel

    Facebook might have a larger audience than the population of Brazil (200 million users vs. 191 million citizens), but the site doesn't yet have a viable business model. Twitter is wildly popular but it loses money. Could the codgers at software giant Microsoft (a Facebook investor) be the guys who end up figuring out how to make money on social networks?

    The company on Wednesday will begin testing a new social-networking platform called Microsoft Vine, and chief strategist Craig Mundie tells Fortune the company is planning on pursuing a subscription-based model instead of trying to support the platform only with advertising. Vine's other twist: It plans to target public safety officials and concerned citizens seeking emergency information.

    "All governments have this issue. Many of them struggle with safety as a problem," Mundie says. And he says he is optimistic that Microsoft (MSFT, Fortune 500) can crack the code for making money off social networks. (More on that in a moment.)

    Think of the platform as the updated version of a 9-1-1 call or the local public radio station. Consumer users of the service can create profiles and make groups "my family" or "my softball team," to whom they can send messages. Activity will be limited to two actions: alerts and reports.

    A tree down in your neighborhood? You could post a report about that. Practice canceled because of the rain? Send an alert to your teammates. And in more serious situations, a flood, say, the site will provide information on how to handle the emergency. Vine will also offer updates from sources such as the U.S. National Oceanic and Atmospheric Administration.

    So far public officials have been reluctant to use social media as a formal way to interact with citizens. Barbara Graff, director of the office of emergency management for the city of Seattle, is willing to test the service with Microsoft, in part because she's eager to get more data and insights into how the city can use these new communications tools.

    Microsoft says it would make basic service available free, but would charge for premium services, such as access to the platform via smart phone. The world soon will know if consumers are willing to pay for social networking, or if the subscription model is destined to die on the vine.