"(Recall that despite being the fifth most popular Web site in the world, Facebook is barely profitable.)"
That's a crucial point about Facebook's business model. It can't generate enough revenue yet to provide satisfactory server response consistently (as I have again discovered today).
"(Mr. Schnitt suggests that users are free to lie about their hometown or take down their profile picture to protect their privacy"
Where is the link to that statement? Doesn't it degrade Facebook's value (as against MySpace) if Facebook becomes the place to be fake? Well, indeed, that becomes the conclusion of the author of the submitted article, that Facebook becomes no longer a place to behave like one is among friends now that Facebook is desperate to monetize.
Having lived through the dotcom bubble, I know very well the terrible danger of runaway popularity. For a while Facebook was positively awash in Kool-Aid -- remember when they were going to be the next Microsoft and every application in the world was going to run primarily on their platform?
That's dangerous. The problem with bubbles is that they distort your view of reality. You do crazy things, like build out a big company with big infrastructure that is out of proportion to your primary use case. Or chase other people's business models instead of your own because you become addicted to the glare of the relentlessly-moving spotlight.
If, indeed, Facebook can't provide privacy while staying in business, that's a very exciting piece of business news. It means that somebody else -- one site, two sites, hundreds of sites, perhaps something that doesn't look like a site at all -- is going to inherit Facebook's use case, the one that built their business: socializing with a select group of friends without excessive privacy concerns. [1]
To work, fellow nerds!
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[1] Yeah, I know, little or nothing that you type can ever be guaranteed to be truly private. Digital data is too hard to hide and too easy to spread. I strive not to type anything that would kill me if it were cited all over the place. But there's value in the difference between "something that a private detective or a spy can learn without too much work" and "something that the Googlebot will index seconds after you write it". And that value is going to be worth money to someone, even if Facebook is tempted or compelled to turn away from it.
But there's value in the difference between "something that a private detective or a spy can learn without too much work" and "something that the Googlebot will index seconds after you write it". And that value is going to be worth money to someone, even if Facebook is tempted or compelled to turn away from it.
This is a well made point. The difference between what can be learned and what can be learned easily/through happenstance is very significant.
It is hard to hide something form some truly determined to find it out, but that is very different from broadcasting it to the world.
Facebook management is going in the complete wrong direction. They are trying to generate more revenue per user rather than trying to make the user happy. They are treating the advertisers like the customers. The users are the important customers. It is very short sighted.
The important customers are always the ones who pay the bills, in this case that'd be the advertisers, not the users. This should be obvious, without being able to pay the bills there is no service at all.
The important customers are always the ones who pay the bills, in this case that'd be the advertisers, not the users.
I think that is the fundamental point about Facebook's business model. The Facebook view is that the customers of Facebook are
a) advertisers,
b) third-party application developers,
and
c) whoever else has corporate-size bankrolls to fund Facebook.
Regular users are mere eyeballs to count to draw in the actual customers to Facebook. It has been an interesting free ride to be on Facebook, and I DO spend a lot of time there recently since I figured out how to use posted links to stimulate interesting conversations among my varied circles of friends who have never met one another. But I don't see how Facebook can be profitable in the genuine, investor-satisfying meaning of "profitable" without becoming very annoying to most users. Good luck to anyone who can succeed in providing Facebook-level service and making an honest day's wage, but so far the model is still not making sense.
What if they charged each user $1 per month? I would pay that if it means I don't have to worry about my communication, photos, etc. being resold to others.
That is not at all how management views it. They are not at all emphasizing revenue; they are engineering-driven, not business-driven, and their engineers are driving the company, not just the management.
I think you're conflating "can't" and "won't". They have not been focused on driving revenue up; if this were a company goal they could have done a lot more sales. They acquire sales of advertisements in different ways, and if they really wanted more money, they could have pumped cash into expanding their sales force to do a lot of heavy lifting. However, their eye is on making that sort of sales unnecessary through producing an ads platform that people can go to directly instead.
are you sure that's not just engineering? twitter went through a period like that, and iirc facebook rolled their own scalability solution, maybe they're working a few kinks.
That's a crucial point about Facebook's business model. It can't generate enough revenue yet to provide satisfactory server response consistently (as I have again discovered today).
"(Mr. Schnitt suggests that users are free to lie about their hometown or take down their profile picture to protect their privacy"
Where is the link to that statement? Doesn't it degrade Facebook's value (as against MySpace) if Facebook becomes the place to be fake? Well, indeed, that becomes the conclusion of the author of the submitted article, that Facebook becomes no longer a place to behave like one is among friends now that Facebook is desperate to monetize.