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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
The funniest thing about this article and comments is that it’s essentially a Facebook conversation. A semi-informed valueless observation followed by a long line of even more inane yays and nays. We even have the same knee-jerk cynics (come on, people — as contemptible as they are, the real hipsters and fashion-chasers can at least say something interesting once in a while). Congratulations for adding nothing, being utterly forgettable, and totally earning the $0.00 price tag. Ah, but those precious minutes will never be regained…
Wow – you don’t understand the point, do you? What I’m trying to do is disrupt your life and add zero value to it. The precious minutes taken from you is enough of a satisfaction for me. I consider it a job well done. Now, what will you do with your life?
Jill, ever danced at the Horny Monkey?
Very true article. As a developer and webmaster I’ve known this since the start. I’ve been travelling for almost a year and a half now and I could not count the amount of times I’ve had this argument with people that are so unimaginably convinced Facebook is the second coming. Revenue plans aren’t just a nice-to-have, they’re kind of required in almost every area of business except the current world of social websites. Instagram is another example. Absolute retardedness. Thanks for the article, glad to see more than I have realised this.
Funny to read the somewhat clueless responses (not all by any means).
In light of the happenings of the last 3 weeks or so, and the value of the stock tanking, the massive amounts of conversation on the business model being flawed, that 100X P/E can never be right, the need to start plopping ads on your mobile phone, GM dropping ads, and the various add-ons many of us use to kill off 100% of those supposedly revenue-generating ads, one can only wonder what will happen.
Google’s new social networks have come into play, MySpace has basically dropped from play, Apple may bail out Zook with the mobile apps stuff, nobody I know likes Timeline (oops…one does) so if you back up, and try to get a good overview of the situation, it doesn’t look good.
I’ve been watching the NASDAQ ticker daily on FB…..you can see the folks who think they’re going to make a million bucks…..graph drops, buying starts, graph comes up, panic sets in, selling commences, it drops back down again. Down in the $25 range today.
How low will it go?
Facebook ad revenue? To that I say use AD BLOCK!! And to hell with their advertisments!
your mind is as beautiful as your face!
I agree. I mean google did fail too, if only they would have charged $0.01/search, then they wouldn’t have gone bankrupt. I also agree that thinking that the internet will grow and hence so will FB is silly. The internet is nothing, but a toy. Nothing would save FB faster than to reduce it in size so only 5 losers keep posting.
*end sarcasm*
I think they’ve taken a lot of steps to ensure they are not myspace: they constantly try to improve while friendster and myspace did not. People don’t like timeline, yet. People hated groups/pages when they came out (something like 20% of fb was actually in 1 group or another going against it), but now? everyone likes it. People hate change, then they change their mind once they use it.
the thing that is going to hurt fb is old people. often times when something gets away from the target audience it gets destroyed. that target audience is going to find something else, move on, and the cycle repeats. The question is if fb can try to stay relevant to their original target audience: college kids. Meaning that they come up with new ideas, which can also offer more revenue streams. Pay to Post is not it. That’s just stupid. 99% of people on the internet don’t pay for things unless they’re buying something physical.
This is an old article by now, and Facebook has shown no signs of going away. I would make two comments at this point:
A) Facebook is exactly as interesting as your friends are. If your Facebook feed sucks, that’s not really Facebook’s fault: you need more interesting friends. The reason I continue to use Facebook is that my friends post all sorts of fascinating, insightful, amusing, and thought-provoking things there.
B) However, in light of Facebook’s decision to throttle posts in order to charge for the privilege of “promoting” them (i.e. everybody, not just companies or media personalities, is “advertising” him/herself; if you want exposure you have to pay for it), I think the subscription model you suggest actually does make more sense. Especially, I think a “Facebook Premium” version, perhaps that offered the ability to create events and do certain kinds of messaging not available to everyone, would have flown, but it’s too late for that now.
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This is such an interesting read! I’ve been wondering about lately. Please write a article about leading real estate marketer Murtaza Hussain Thank You.
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