Social Media: July 2010 Archives

Salacious headline?  Yes.  True?  Also yes. 

This is not a slam against the EXTREME popularity and unprecedented GROWTH story that is Facebook.  This is a reality check of an unsustainable business model. 

Much like a homeowner who can no longer afford an overinflated house purchased during the height of the bubble and decides to walk away, Facebook (with claims that it will hit ONE BILLION users in the not too distant future) has given it all away for free for far to long to change. 

But change it must or Facebook Is Worthless.

Imagine the cable networks at their inception (especially premium channels like HBO) giving the channel to anyone for free at the beginning and then trying to convince customers to pay down the line.  It's a daunting task.  One that Hulu is going through now - but they made the hard decision, and even though traffic and video streams will certainly fall, it will soon be profitable because it wasn't too late to right the ship.

Imagine Disney/Pixar putting out Toy Story 3 for free in theaters and trying to make up their costs by throwing up billboards along the walls.  What kind of idiot would do that?  It would never be considered. 

People love (and some actually depend on) Facebook, but it is too late to right the ship - and not just because no one cares or pays any attention to the banner ads that are thrown up against everyone's status updates.  It's because people are starting to get really bored with it. 

There are some late adapters that are still in the ecstasy phase of seeing their old high school friends as they look today (Facebook has ruined surprise factor of high school reunions forever, but I digress), but for the most part - at least in my case - most of my Facebook friends have stopped participating.  They will pop on once a day or so just to see if anyone has posted any new drunken pictures or family photos of the new baby, but that's about it.

My Facebook experience now is basically the same five people posting the same boring crap.
 

• The Bored Office Worker who posts about "needing coffee" - and "can't wait for Happy Hour!"

• The Super Mom who claims every morning - "Went to 8 museums and made banana bread all before 10am!  My kids are awesome and sooooo funny!"

• The Quoter who searches quotation websites looking for some daily affirmation that will get about 15 "Likes" and a few "I'm going to use that!" replies.
  

• The Reviewer who writes stuff like "Smoke Monster?  Shit Monster if you ask me!"

• The Pissed Off Traveler with daily pearls like "10 hours on the tarmac!" and "Yet another delay, thank you American Airlines!"

And that's about it.  Every day, the same five people and I have over 300 Facebook friends (even though I only see about three friends actually in person in any given month).

The valuation on Facebook is so high that no one could possibly acquire it now (not even my employer, the insanely deep-pocketed Manka Bros. Studios) especially considering there is really no monetary growth story. 

As it becomes more of a digital dumping ground, costs continue to rise.  It has peaked as a global fascination.  Check the value of Bebo, Myspace, Friendster, etc. and you'll see the future of Facebook.  Even though Mark Zuckerberg claims he's different than all the others.

So here's what Facebook needs to do - start charging every current or new user $0.99/month.  Just ninety-nine cents per user per month to use all the features they currently use.  New services may make it possible to bump that up to a premium fee down the line. 

Millions will leave and start some "Facebook Should Be Free" movement, but other millions (like my five daily posters who feel they need to be heard) will definitely pay.  Because $0.99 is nothing.  It's the purchase price of a pig on Farmville.  There will still be advertising and cross-promotional opportunities and corporate sponsorships, etc. - multi revenue streams. 

But the free culture has to change or Facebook is Worthless. 

Deep down, at least to me, this seems to be the reason the IPO hasn't happened.  Zuckerberg says he's not interested and will delay the IPO as long as possible.  Yeah, because it's a $15 billion company (so they say) with costs that exceed revenue - and no signs of that ever changing. 

I wouldn't be interested in an IPO either. 

Someone enlighten me and correct my ignorance.

Jill Kennedy - OnMedea