Consumers don’t like paying for anything online. This is especially true when it comes to younger consumers. Common knowledge, right?

Wrong. Just ask myYearbook, a second-tier social network that caters primarily to teens. It has managed to do something many other social networks haven’t: turn a profit. And it’s done it by charging its supposedly frugal Gen Y users.

According to paidContent, myYearbook is profitable on the back of subscription and virtual goods businesses that have increased revenues by 120% year-over-year.

myYearbook, which was started by two teens in 2005 with the help of their internet entrepreneur brother, sells a virtual currency called Lunch Money which myYearbookers can use to purchase a variety of virtual goods. Lunch Money can also be acquired by completing CPA offers, a model that is surprisingly not employed as frequently as it could/should be.

More recently, myYearbook launched a VIP Club subscription service. Monthly fees range from $6.99 to $19.99 and give subscribers a monthly allowance of Lunch Money and access to exclusive virtual goods.

According to myYearbook CEO Geoff Cook, only 2-3% of myYearbook users have signed up for a VIP Club subscription. This, however, is in line with the company’s expectations and Cook is very satisfied with the company’s path, statingThe freemium strategy has been an extremely successful part of myYearbook’s
monetization strategy, and we remain bullish on the additional revenue
possibilities that this model will bring

Although myYearbook is no social networking slouch (it has over 10m members), it is a second-tier social network that doesn’t have the same brand recognition as Facebook or MySpace. In fact, a recent survey showed that 91% of myYearbook users are on MySpace and approximately two-thirds are on Facebook. Which makes the fact that it is turning a profit charging users all the more impressive.

Whether through virtual goods or subscriptions, it’s clear that social network users aren’t exactly tightwads and there is money to be made.

The greatest beneficiary of this might be Facebook. myYearbook’s success in charging users highlights just how important the full launch of a payment platform will likely to be for the world’s largest social network. The challenge for Facebook, however, is in reversing the potential damage caused by its hands-off approach to app monetization, which has driven app developers to third party services that provide monetization tools. If myYearbook’s experience is any indication, a more aggressive monetization strategy that provides an easy and seamlessly integrated payments/virtual currency solution for app developers could turn Facebook into a real cash cow.

Photo credit: House of Sims via Flickr.