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I agree with you entertainment is a cash cow. But FB is _free_ entertainment. As is your photo-album and the discussions you have with your friends. You appe

I agree with you entertainment is a cash cow. But FB is _free_ entertainment. As is your photo-album and the discussions you have with your friends. You appear to be referring to future success. It's like Microsoft talking up "vaporware". It gets people's attention, maybe it convinces some to believe and some to invest, but it offers them nothing. Only a promise of some future of which no one can be certain. We have almost two decades of web display ads and their effects on building brands. Advertisers are not too impressed. They have waited patiently for something that compares to a magazine ad. And no one has delivered. Maybe solving the context problem might not be so easy. Maybe a website is not a magazine. Meanwhile people are looking for products and services via the web, with their credit cards in hand. And Google has been there to help advertisers reach them. That's not some promise of the future, that's the here and now. Facebook has real power for influence. And some of that can no doubt benefit corporations. But what Google offers is something much more direct and efficient. And it's not a pie-in-the-sky promise, it's proven to have worked year after year. Facebook has no business model. They only have everyone's curiousity. And that's mainly because the "content" on FB is everyone's friends and family, not the type of packaged, commercialised "entertainment" you get from a magazine. FB is not a magazine. It's a photo-album. More specifically, it's a collection of personal photo albums. It does have some added "features" to the traditional photo album. It comes with tacky, invasively personal display ads in the margin. And it comes with a team of "engineers" looking over your shoulder to log every photo you look at and every comment you make. And it's exposed to viewing by millions of strangers (this is totally unnecessary). I think we can have photo albums without all that cruft. And I think we will.

uncr3ative 14y ago
It really isn't "free" entertainment. There are many companies making lots of money (zynga for instance) selling virtual goods on facebook with FB credits. FB gets 30%. I'm not trying to say it's the same amount of money that google makes, but that alone is in the millions of dollars per month of gross profit.
- a3d6g2f7 14y ago
  You mean the same Zynga whose stock price has dropped 50% in 60 days? Let's assume you are right and I am wrong. Let's assume FB is not "free" entertainment. And in fact all those people who sign in to view/edit/upload profiles, photos, statuses and messages who do not also spend money on games and virtual goods are actually "freeloaders". Because they are using FB as if it's some kind of "free" service. To save costs, shouldn't FB drop all the freeloaders? The ones who sign in to FB and do not spend any money. They are just wasting FB's resources. (This is a very old question that has been discussed many times.) If FB is not "free", then why is FB letting all these users sign in and use FB's computing resources when these users never spend any money? But here's the question I really want you to answer: Why are all these users signing in and not playing games and purchasing virtual goods? How do you explain this? Is FB some kind of "entertainment" to them? Some sort of recreation? I don't get it.
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snowwrestler 14y ago
Facebook made almost a billion dollars in profit last year on gross margins of around 25%. They obviously have a business model and it's obviously working pretty well. Now--could they fail? Of course, but I don't see any reason now that they must fail, based on what we know now. I find it kind of funny to see the complaints about Facebook's financial future...I'm old enough to remember when Google was a cool new free technology, but no one knew how the heck such a simple search engine was going to make money.
- a3d6g2f7 14y ago
  IPO means that $1BB was the plateau. They waited for this. Time to cash out. All down hill from here. How fast? Don't know. FB CFO probably does. FB business model is display ads plus fad factor. Recent survey said 1/2 people think FB is a fad. What happens when fad dies down? Display ads alone are not a viable business model for a growth company. Hence we say FB has no business model. There is no reason that FB _must_ fail. But there's nothing to suggest they will succeed. That's the problem. They do not have a business model that will allow growth. FB now has $15BB to burn through while they keep competition in check (M&A but also G+) and wait for a business model to appear (more M&A). How fast will they burn through $15BB? Meanwhile they have to deal with Wall St. Zuckerberg is still a kid; he's an unproven CEO but has unfettered control of the company. There is no Eric Schmidt to help him. What about morale? What if FB believers start to doubt? And then there's that sociopath/privacy thing... and peer-to-peer. People are thinking about what happens after FB fails. And that's smart thinking, in my opinion, even if you're not in advertising. From a consumer perspective, and we are all consumers, FB has a ridiculous amount of personal information. Imagine what happens if it finds its way into the junk mail/direct marketing/spam industry. One big mess.
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uncr3ative 14y ago

It really isn't "free" entertainment. There are many companies making lots of money (zynga for instance) selling virtual goods on facebook with FB credits. FB gets 30%. I'm not trying to say it's the same amount of money that google makes, but that alone is in the millions of dollars per month of gross profit.

a3d6g2f7 14y ago
You mean the same Zynga whose stock price has dropped 50% in 60 days? Let's assume you are right and I am wrong. Let's assume FB is not "free" entertainment. And in fact all those people who sign in to view/edit/upload profiles, photos, statuses and messages who do not also spend money on games and virtual goods are actually "freeloaders". Because they are using FB as if it's some kind of "free" service. To save costs, shouldn't FB drop all the freeloaders? The ones who sign in to FB and do not spend any money. They are just wasting FB's resources. (This is a very old question that has been discussed many times.) If FB is not "free", then why is FB letting all these users sign in and use FB's computing resources when these users never spend any money? But here's the question I really want you to answer: Why are all these users signing in and not playing games and purchasing virtual goods? How do you explain this? Is FB some kind of "entertainment" to them? Some sort of recreation? I don't get it.
deleted 14y ago
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snowwrestler 14y ago

Facebook made almost a billion dollars in profit last year on gross margins of around 25%. They obviously have a business model and it's obviously working pretty well. Now--could they fail? Of course, but I don't see any reason now that they must fail, based on what we know now. I find it kind of funny to see the complaints about Facebook's financial future...I'm old enough to remember when Google was a cool new free technology, but no one knew how the heck such a simple search engine was going to make money.

a3d6g2f7 14y ago
IPO means that $1BB was the plateau. They waited for this. Time to cash out. All down hill from here. How fast? Don't know. FB CFO probably does. FB business model is display ads plus fad factor. Recent survey said 1/2 people think FB is a fad. What happens when fad dies down? Display ads alone are not a viable business model for a growth company. Hence we say FB has no business model. There is no reason that FB _must_ fail. But there's nothing to suggest they will succeed. That's the problem. They do not have a business model that will allow growth. FB now has $15BB to burn through while they keep competition in check (M&A but also G+) and wait for a business model to appear (more M&A). How fast will they burn through $15BB? Meanwhile they have to deal with Wall St. Zuckerberg is still a kid; he's an unproven CEO but has unfettered control of the company. There is no Eric Schmidt to help him. What about morale? What if FB believers start to doubt? And then there's that sociopath/privacy thing... and peer-to-peer. People are thinking about what happens after FB fails. And that's smart thinking, in my opinion, even if you're not in advertising. From a consumer perspective, and we are all consumers, FB has a ridiculous amount of personal information. Imagine what happens if it finds its way into the junk mail/direct marketing/spam industry. One big mess.
deleted 14y ago
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