Great time of year - when you can make absurd statements that no one remembers. So, I guess I'll join in on the fun.
1. Facebook continues to loose money at a rate that makes the government (really any government) look good. They quickly burn through their cash and raise more cash and then raise some more. Their growth is phenomenal, but it becomes apparent that they aren't quite able to monetize.
2. Facebook tries a bold new strategy of invasive advertising. Lots of analysis of all sorts of things that piss off users.
3. Alternative services create an interoperable system that doesn't suck. Users are able to create friend relationships across domains. All of a sudden, social-network lock-in crumbles.
I think that last one is the coolest thought. There are things stopping an open network from working:
1. Logins. OpenID is poorly implemented - it should work like email. Put in your email address, get the format of the OpenID url by checking the domain part and then put the username together in the format specified by the site for login. Profit! Most banks already have a two screen authentication (first just username, then just password) so it's not so outrageous to think users won't accept that.
2. Friends. There needs to be a cross-service friend system. This isn't so hard to implement. We already have a unique ID (the OpenID/Email). So, now we can say, bill@microsoft.com is friends with steve@apple.com even if only steve has signed up for the service because we import the bill email address as an ID to the service when we sign-up/sync. Now, that's a SPAM haven. So, why not hash the first part. So, bill becomes xc78901@microsoft.com as the ID and when bill@microsoft.com signs up, we hash it to see the ID and realise that he's already friends with others using the service. Cool! That way, we can take our friend network with us to whatever service and have it sync up easily.
Prediction 4: In the end of 2010, Facebook loses too much money and no VC wants to back them anymore. They have more than 20,000 workers. Finally, they need bailout from the government.
This prediction is made on the previous 3 predictions made by mdasen.
If I can share what I do on other sites with my friends on Facebook (presumably people I know and/or care about), that's a value gain for both me and anyone adopting this, because I'm likely to use these other sites more often.
If, on the other hand, Facebook Connect isn't well adopted or it's a miserable experience, the Facebook really is just one locked in social network, and someone will come along and connect my profile across all websites. Someone other than OpenID which is the most annoying login system devised.
How is Facebook not already able to sell marketing information? Nobody wants to know which bands are suddenly becoming more popular (and where)? Or which movies are being looked forward to by which people?
Monetization will make or break Facebook. If they can pay investors back along with a healthy margin and continue to bring in revenue then they will stay.
Personally I don't think there is enough advertising money available regardless of economic conditions to keep this behemoth afloat. I'd love to know what alternatives those clever FB MBAs are cooking up.
An acquisition could pay back investors as well, unless you think nobody would dare buy a nonprofitable company. But I do think there's some credence to this; they are huge and the economy has sunk quite a bit since their famed $15b valuation.
Still, you don't think they could sell for $2b right now?
My point about Facebook Connect is that it's the one thing that can "lock them in" as the social network of the internet... the place where everyone has their real profile and shares what they really do on other websites. If leaving facebook means screwing my account on 10 other sites on I use, then I'm not going to leave, even if you do slam ads down my throat.
How to monetize. Well, if I was a website using facebook connect, which we have to assume they'll be thousands, I'd surely pay facebook to serve up meaningful ads that use information I've sent them: eg: "4 of your friends recently visited Hackernews"
Another thing which I haven't seen a good implementation of is showing off what people buy. If I bought something online I wouldn't be against sharing it with my friends if, for example, it was a cool product or on sale. Facebook could make money from that. With FBconnect, services might start doing this, and facebook can get a piece of the action for showing news feed items that boost sales.
By the way, are Facebook's numbers even public? How do you know they're losing money?
I really think it comes down to "The last sucker" to invest in facebook loses, I think facebook can't sell to anyone but microsoft because of their investment... and perhaps microsoft is waiting for the big crunch; then will get them at a really good price.
Monetization should make or break every company that ever existed. It's silly that there are companies that can't monetize but are considered "successful".
I don't think it's too silly of a concept. You can imagine a company having several departments: some which lose money, and some which make money. The departments that don't "generate revenue" per se can still be beneficial to the company as a whole, perhaps they provide publicity, they're good PR, they good morale, etc...
Those departments, even though they lose money, have value to that company.
With start-ups you can make something profitable, and surely that's preferred because you get your money back sooner, or you can build something that has value to someone else. In the end, you need just need to build something with value.
Facebook will have a big 2009 because there is no time to have a business model based on not-charging poor college students like during the middle of the worst recession since the Great Depression.
OpenID died last year. Anyone still hoping that OpenID will gain any traction is hopelessly shortsighted.
Facebook will make money, that is the least problem. Facebook connect is going to evolve to merge with MySpace, WindowsLive, StudiVZ, Xiaonei identities. People no longer identify themselves by their email addresses, they do so by their social networking account, and he's right there.
And people don't like changing their social network, they are too entrenched. Americans like to think that Facebook is so dominant, but lots of people like Hi5 and cannot imagine using anything else, because their friends are all there.
There will come a system where people can sign-in anywhere using their personal page. But such systems come slowly because of all the competing interests each pulling another way.
"People no longer identify themselves by their email addresses, they do so by their social networking account, and he's right there."
I don't find that to be true at all. Social networking sites have a long way to go before get anywhere near the ubiquity of email with the general adult population.
I could take a trip around my office and everyone has email, maybe 5 of the 30 use myspace or facebook. Grown ups still prefer email and see facebook/myspace as nothing more than a silly website kids like.
You really don't see what's happening then? You know how people get to a certain age and then they stop wanting to change the technology they use? That's what the adults in your office are doing. Email is like having a fixed-line phone - it's going slowly out of use.
The young ones are the ones that change technology, not the ones who have already adopted a technology. It's difficult to shake off the inertia of an existing method, but when you see someone young compare two technologies (email vs social-networking mail), and in almost all cases choose one option, then that option has won.
People who have to choose for the first time are overwhelmingly choosing one side. So it does not matter what the grown ups in your office are using because those grown ups are being replaced.
Email is not going anywhere soon, it has its place, but for sending messages to friends, social networking has already won.
One can certainly make that argument, but it assumes people don't outgrow those sites, and they are just web sites by the way, not some new protocol or revolutionary thing. Social network has been around for ages, myspace and facebook are just recent reincarnations of the fad.
Perhaps the kids just haven't been around long enough to see that walled gardens are always fads and never last while true open systems like email, IRC, and the web as a whole cannot be displaced by any such private system.
Sure, kids like facebook, but then they grow up, get jobs, and discover the rest of the internet and actually start using it. The older folks aren't stuck on using old technology, they're wisely using the better technology rather than following teenage fads which won't last.
Usenet was open, why did forums take over? Why do people prefer MSN and co to IRC? Sometimes the technology you think is right does not win. Keep your mind open.
Usenet was harder to use, forums work from any web browser. IRC, also hard to use for non computer people while IM's were easy, obvious reasons why those became popular.
The same is not true of twitter/facebook/myspace, email is just as simple to use and works in browsers as well. I'm not oblivious to the social aspects and the hooking up factor going on but that stuff only appeals to very young single folks.
Social networking has not won anything yet, it's too young to even be over the fad phase, it has it's place but it won't be replacing email anytime soon. I'm also a programmer in my early 30's so I'm hardly an old foggie that just doesn't get it. My mind's open but my eyes aren't shut.
Facebook can't keep burning VC money forever and it's not yet figured out a profitable way to monetize its eyeballs. In this economy, which still hasn't hit bottom, it's not looking very good for them.
Email is not going anywhere soon, it has its place, but for sending messages to friends, social networking has already won.
i think you meant to say text messaging, not social networking. go to any middle school or high school, it's all about the phone platform. the parents of these kids would rather pay $15 for unlimited text plan than $30 for an unlimited data plan.
"People no longer identify themselves by their email addresses, they do so by their social networking account, and he's right there."
That's an argument FOR OpenID, not against it! If every social network has to invent their own sign in protocol, they have two choices: roll their own, or use OpenID. The smart ones will use OpenID. They're welcome to disguise it under a "log in with MySpace" button, but under the hood it makes sense to use the existing protocol with the pre-written libraries rather than invent something new from scratch.
OpenID is not that complex that the technology is important. And seriously, OpenID has already gone the linux way - if a technology is pushed so heavily and utterly fails to make a mark, then LET IT DIE.
OpenID was not intended as a method for sites to perform communicating between themselves, and even if you can use it for that, why not create a protocol that faces the reality of auth methods right now.
Do you have evidence for that assertion? I use OpenID every day. If OpenID doesn't succeed, I'm sure something like it will.
> Americans like to think that Facebook is so dominant, but lots of people like Hi5 and cannot imagine using anything else, because their friends are all there.
If the least problem Facebook has is to make money, then why haven't they done it now? Don't you think it might be smart to get that little item checked off their list sooner rather than later?
If you wanted any indication to show how desperate FB are to monetize, consider their aggressive introduction of invasive (and I suspect redundant) ads over the last two months. There's no master plan there - the redundancy of "users first, monetize later philosophy" has seriously screwed up any plan they may once have had.
My advice to them: subscriptions, by the end of the year, before they start falting on their datacentre bills. People can't flock to a new free version of fb because nobody would fund it now.
Because to make money, people need to pay, and when people need to pay, growth slows. Their focus is on growth for the moment, and for that they need to spend.
It's like playing monopoly - at the beginning of the game you concentrate on buying as many properties as you can, because you know later they will bring you profits. If you immediately start building when you have just 3 cards, then you will earn money right at the start, but you will suffer later.
Facebook can sell itself at any time it wants to. Money is not the issue.
How will they make money? They need to make a LOT just to repay investors. The path to profitability is far from clear from my pov.
A business does not choose to run at a loss. They are currently running at a loss because they have failed to monetize. Investors keep giving them money because they assume (have faith) there will be some way of turning a profit in the future.
So Facebook is the new Gmail?
Gmail has a lot of power and they don't seem to have done anything bad, so far. It's the users who decide to give all this information to a site, and there is nothing we can do besides trusting them. Well, it's what the Internet is about: a lot of benefits, a lot of vulnerabilities. The cool site everybody signs up on can be Facebook, Google or whichever, but things are not going to change for some time.
One day facebook will have to work out the monetization issue. They have accepted loads of investor money, and all those investors will one day expect a very healthy return.
I think their success in getting more investment money comes from the mindset that something this big can't fail.
I'm really curious to see if they come up with a working solution.
Great time of year - when you can make absurd statements that no one remembers. So, I guess I'll join in on the fun.
1. Facebook continues to loose money at a rate that makes the government (really any government) look good. They quickly burn through their cash and raise more cash and then raise some more. Their growth is phenomenal, but it becomes apparent that they aren't quite able to monetize.
2. Facebook tries a bold new strategy of invasive advertising. Lots of analysis of all sorts of things that piss off users.
3. Alternative services create an interoperable system that doesn't suck. Users are able to create friend relationships across domains. All of a sudden, social-network lock-in crumbles.
I think that last one is the coolest thought. There are things stopping an open network from working:
1. Logins. OpenID is poorly implemented - it should work like email. Put in your email address, get the format of the OpenID url by checking the domain part and then put the username together in the format specified by the site for login. Profit! Most banks already have a two screen authentication (first just username, then just password) so it's not so outrageous to think users won't accept that.
2. Friends. There needs to be a cross-service friend system. This isn't so hard to implement. We already have a unique ID (the OpenID/Email). So, now we can say, bill@microsoft.com is friends with steve@apple.com even if only steve has signed up for the service because we import the bill email address as an ID to the service when we sign-up/sync. Now, that's a SPAM haven. So, why not hash the first part. So, bill becomes xc78901@microsoft.com as the ID and when bill@microsoft.com signs up, we hash it to see the ID and realise that he's already friends with others using the service. Cool! That way, we can take our friend network with us to whatever service and have it sync up easily.