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Facebook To Reach 7.3 Billion Users By 2015
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Original Post (Facebook Is Worthless):
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 adn 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
Once Apple or Google makes an unbeatable bid for Zynga and slowly carves it from Facebook, Facebook will gradually become irrelevant in its current form. Zynga has been hyperstaffing to handle the volume they have yet to achieve and on a game buying spree – just to have the games in the barn.
Facebook is poorly designed and run – it reminds me of one of those early ridiculous dotcoms that made no practical business sense. “How does the company make money?” Nobody here can answer that question, including the executive team at Facebook. And one bit of advice to those seeking the answer to that question. Anyone who hands you the stock answer of “subscription” is an idiot. The list of poorly run technology companies who gave their “must have” service away free, then had every attempt to monetize shoved back in their face is endless.
Customers buy a recurring subscription to something because there is personal value assigned to the product or service. Magazines, food/beverage of month, dvd’s, premium television/movies etc. and video games.
Think of Facebook as a prime piece of specialized internet meat. Its parts are greater than the sum of its whole. Once Apple/Google strips away the Zygna games, Facebook loses 40%(+/-) of its market value and daily users immediately. The social part of the Facebook carcass will end up being stripped away by Apple/Google/MSFT and included in one of their “social media” platforms.
I think that the business lesson to be learned is how one company (Zynga) managed to build a viable, valuable, fully functioning business on the back of a company (Facebook) that is/was not viable or valuable as a standalone business.
I agree with this article.Super crapitalism gone wrong again and the description of typical posters applies here in Jockland also.
horrible article, social networking sites success is based almost purely on the “networking effect” something that putting up a pay wall ultimately defeats. Likewise, facebook is cash positive, so that whole point of this article is wrong. Actually I’m done, obviously you’ve done ZERO research.
I don’t think I’ve ever disagreed with an article more in my life.
Look, Matt from Facebook – the only people who defend Facebook are people who work at Facebook or people who are related to people who work at Facebook. Yes, everybody uses Facebook but only because EVERYBODY USES FACEBOOK – not because everybody likes Facebook. The only reason people at Facebook defend Facebook is because they want to be rich after an IPO. That’s it. That’s the only reason people hang around there. But it’s over. It ain’t gonna happen.
This makes no sense. I hate facebook but from an unbiased pov it is certainly very far from worthless.
Comparing fb with a cable company is just stupid. If fb starts charging money people will move to another site. Just like that.
In the cable market it is normal to charge for the service in the social networking market it is not.
Regards
I don’t know from business models, but I am not bored. Maybe I am easily entertained, or maybe I am lucky to have interesting friends. Recent discussions include the root causes of the Civil War and the lingering effects of slavery, the propriety of loyalty oaths in American life, good books on writing fiction, and the Saudi government’s mistreatment of Moroccan women on pilgrimage. Sure, Facebook leaves a lot to be desired, but for me it is a good way to keep up with people I care about.
great post jill, but you are totally wrong. Facebook will grow and it will keep growing as long as human beings are curious about knowing whats happeing in someones life. in the 21 first century there is 3 things that are important to people their Family, their House and their “FACEBOOK” friends.
You have boring friends and a lame social circle. My facebook is nothing like You described. And your comparison to tv, well, facebook is where network tv was fifty years ago. Except more time is spent on facebook now than tv for most important advertising market segments. Let alone personalized ads. Why would facebook make people pay and lose 500 million captivated users? And by users I mean ad targets.
Actually you’re right, nothing that isn’t subscription based is worthless. Like billboards, major tv networks, traditional radio, google, yahoo, pandora, and any advertising campaign.
Oh, and Kevin, I suppose I forgot to mention all the Farmville and Mafia Wars updates that you no doubt clutter the system with. I love to get those updates. So much fun.
Facebook is already pulling in close to $1 billion in revenue per year and is on track to double that this year, most likely making it profitable. They don’t need to charge for users because in doing so they lose the ability (from the users perspective) to run ads which are worth far more on a CPM basis.
Youmshould cover playboy covers, not social media
*you don’t understand how facebook makes money or their business model
*just because it is free doesn’t mean it is not profitable
*Google makes tons of money every year off a free search service
An interesting discussion on this article – http://news.ycombinator.com/item?id=1654778
Thanks for the link on the discussion Jack – except when I click on it the first post says “this is a lame post…” But I appreciate the spirit.
Facebook has no soul and Mark Fuckerburg is the man who the world. The 2010’s are set to be a time of great chaos and creation, something like the 60’s. Facebook’s facade will melt in this furnace. Once the shepherd is gone, the sheep will scatter. You and I both saw it coming, along with a few other outliers…
So what we’re saying is : FB is useless to users, essentially. BUt Zynga is making money from the users buying pigs on Farmville.
So Facebook is a good business model for Zynga
So charge Zynga
The good part of this article is the one about the main type of people that can be found on Facebook. That’s true and funny. And a real threat to the business itself on the long run (the danger of people leaving it). But the proposal with taxing membership is the worst they could do. They could live well out of advertising, provided they invest some in content and addons that would make it more attractive and addictive to as many users as possible.
That’s a really silly argument, do you even understand what the business model for .coms is? If it were the same ‘wishy washy’ bs that caused the bubble to burst in 2001, then yes, they would be doomed. However, ten years have passed. Advertisers will pay billions of dollars a year for views, and tens of billions for clicks. Why start charging the users?