Can someone explain to me how Facebook plans to make money? It must be an open secret in Silicon Valley that everyone’s favorite social network is planning an IPO in 2012 based on those rumors that are all over the tech blogs. It’s the current darling of Palo Alto and listed by more than one analyst alongside Apple, Google and Amazon. I’ve even seen that they are attempting to raise $100 billion from said IPO, which would place their market capitalization equal to that of Pepsi.
I get it; Mark Zuckerburg and company know alot about you. They know what you “like”, they know who you know and they know where you check-in. How does that revenue stream go anywhere beyond targeted advertisements?
Does Facebook expect that its users (or even new users) would be willing to pay for their service? With a myriad of alternatives out there from Google+ to LinkedIn to even Yelp, I don’t see that happening. Why would anyone pay for the right to upload your own content to Facebook when free alternatives exist?
Does Facebook expect companies to pay for the ability to have “company pages” which users can visit? Some companies will certainly pay for that privilege, but why wouldn’t they just have a website? A website which offered them greater control over their content and wasn’t exclusive to only those users with Facebook accounts seems far more desirable.
Marketing research is clearly valuable and is certainly something that Facebook would be able to sell. Plus it is compiled of data which users are more than willing to give to the company for free. I’m just skeptical that for all the overhead Facebook requires in terms of data centers and developers this would be profitable. Most marketing research firms operate with only a hand-full of analysts working on specific accounts. And there are absolutely zero $100 billion marketing research firms in existence. Neilsen Holdings has a market cap of 1/10 of that. Gartner’s market cap is less than one-third of Neilsen’s at $3 billion.
Let’s also not forget that users generally get the concept of “fair” and once they realize they are handing a public company free resources with each status update, they might not be so inclined to do so.
If Facebook’s only revenue stream is selling advertisements to its own users, who access the platform for free, they are locked in a zero-sum game. The snake is eating its own tail.
I get it; Mark Zuckerburg and company know alot about you. They know what you “like”, they know who you know and they know where you check-in. How does that revenue stream go anywhere beyond targeted advertisements?
Does Facebook expect that its users (or even new users) would be willing to pay for their service? With a myriad of alternatives out there from Google+ to LinkedIn to even Yelp, I don’t see that happening. Why would anyone pay for the right to upload your own content to Facebook when free alternatives exist?
Does Facebook expect companies to pay for the ability to have “company pages” which users can visit? Some companies will certainly pay for that privilege, but why wouldn’t they just have a website? A website which offered them greater control over their content and wasn’t exclusive to only those users with Facebook accounts seems far more desirable.
Marketing research is clearly valuable and is certainly something that Facebook would be able to sell. Plus it is compiled of data which users are more than willing to give to the company for free. I’m just skeptical that for all the overhead Facebook requires in terms of data centers and developers this would be profitable. Most marketing research firms operate with only a hand-full of analysts working on specific accounts. And there are absolutely zero $100 billion marketing research firms in existence. Neilsen Holdings has a market cap of 1/10 of that. Gartner’s market cap is less than one-third of Neilsen’s at $3 billion.
Let’s also not forget that users generally get the concept of “fair” and once they realize they are handing a public company free resources with each status update, they might not be so inclined to do so.
If Facebook’s only revenue stream is selling advertisements to its own users, who access the platform for free, they are locked in a zero-sum game. The snake is eating its own tail.
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