Why Facebook Will Have a Big 2009
sitepoint.com
sitepoint.com
Great time of year - when you can make absurd statements that no one remembers. So, I guess I'll join in on the fun.
1. Facebook continues to loose money at a rate that makes the government (really any government) look good. They quickly burn through their cash and raise more cash and then raise some more. Their growth is phenomenal, but it becomes apparent that they aren't quite able to monetize.
2. Facebook tries a bold new strategy of invasive advertising. Lots of analysis of all sorts of things that piss off users.
3. Alternative services create an interoperable system that doesn't suck. Users are able to create friend relationships across domains. All of a sudden, social-network lock-in crumbles.
I think that last one is the coolest thought. There are things stopping an open network from working:
1. Logins. OpenID is poorly implemented - it should work like email. Put in your email address, get the format of the OpenID url by checking the domain part and then put the username together in the format specified by the site for login. Profit! Most banks already have a two screen authentication (first just username, then just password) so it's not so outrageous to think users won't accept that.
2. Friends. There needs to be a cross-service friend system. This isn't so hard to implement. We already have a unique ID (the OpenID/Email). So, now we can say, bill@microsoft.com is friends with steve@apple.com even if only steve has signed up for the service because we import the bill email address as an ID to the service when we sign-up/sync. Now, that's a SPAM haven. So, why not hash the first part. So, bill becomes xc78901@microsoft.com as the ID and when bill@microsoft.com signs up, we hash it to see the ID and realise that he's already friends with others using the service. Cool! That way, we can take our friend network with us to whatever service and have it sync up easily.
This prediction is made on the previous 3 predictions made by mdasen.
Maybe they should tighten their grip.
If I can share what I do on other sites with my friends on Facebook (presumably people I know and/or care about), that's a value gain for both me and anyone adopting this, because I'm likely to use these other sites more often.
If, on the other hand, Facebook Connect isn't well adopted or it's a miserable experience, the Facebook really is just one locked in social network, and someone will come along and connect my profile across all websites. Someone other than OpenID which is the most annoying login system devised.
How is Facebook not already able to sell marketing information? Nobody wants to know which bands are suddenly becoming more popular (and where)? Or which movies are being looked forward to by which people?
Personally I don't think there is enough advertising money available regardless of economic conditions to keep this behemoth afloat. I'd love to know what alternatives those clever FB MBAs are cooking up.
How will FB Connect help pay the bills?
Still, you don't think they could sell for $2b right now?
My point about Facebook Connect is that it's the one thing that can "lock them in" as the social network of the internet... the place where everyone has their real profile and shares what they really do on other websites. If leaving facebook means screwing my account on 10 other sites on I use, then I'm not going to leave, even if you do slam ads down my throat.
How to monetize. Well, if I was a website using facebook connect, which we have to assume they'll be thousands, I'd surely pay facebook to serve up meaningful ads that use information I've sent them: eg: "4 of your friends recently visited Hackernews"
Another thing which I haven't seen a good implementation of is showing off what people buy. If I bought something online I wouldn't be against sharing it with my friends if, for example, it was a cool product or on sale. Facebook could make money from that. With FBconnect, services might start doing this, and facebook can get a piece of the action for showing news feed items that boost sales.
By the way, are Facebook's numbers even public? How do you know they're losing money?
http://money.cnn.com/2009/01/07/technology/hempel_threepoint...
"[FB] Revenues for 2008 are expected to be about $275 million this year, according to several sources, and it is still not profitable."
it's common knowledge that none of the recent major "web2.0" players have made any or significant profits.
Those departments, even though they lose money, have value to that company.
With start-ups you can make something profitable, and surely that's preferred because you get your money back sooner, or you can build something that has value to someone else. In the end, you need just need to build something with value.
Facebook will make money, that is the least problem. Facebook connect is going to evolve to merge with MySpace, WindowsLive, StudiVZ, Xiaonei identities. People no longer identify themselves by their email addresses, they do so by their social networking account, and he's right there.
And people don't like changing their social network, they are too entrenched. Americans like to think that Facebook is so dominant, but lots of people like Hi5 and cannot imagine using anything else, because their friends are all there.
There will come a system where people can sign-in anywhere using their personal page. But such systems come slowly because of all the competing interests each pulling another way.
I don't find that to be true at all. Social networking sites have a long way to go before get anywhere near the ubiquity of email with the general adult population.
I could take a trip around my office and everyone has email, maybe 5 of the 30 use myspace or facebook. Grown ups still prefer email and see facebook/myspace as nothing more than a silly website kids like.
The young ones are the ones that change technology, not the ones who have already adopted a technology. It's difficult to shake off the inertia of an existing method, but when you see someone young compare two technologies (email vs social-networking mail), and in almost all cases choose one option, then that option has won.
People who have to choose for the first time are overwhelmingly choosing one side. So it does not matter what the grown ups in your office are using because those grown ups are being replaced.
Email is not going anywhere soon, it has its place, but for sending messages to friends, social networking has already won.
Perhaps the kids just haven't been around long enough to see that walled gardens are always fads and never last while true open systems like email, IRC, and the web as a whole cannot be displaced by any such private system.
Sure, kids like facebook, but then they grow up, get jobs, and discover the rest of the internet and actually start using it. The older folks aren't stuck on using old technology, they're wisely using the better technology rather than following teenage fads which won't last.
The same is not true of twitter/facebook/myspace, email is just as simple to use and works in browsers as well. I'm not oblivious to the social aspects and the hooking up factor going on but that stuff only appeals to very young single folks.
Social networking has not won anything yet, it's too young to even be over the fad phase, it has it's place but it won't be replacing email anytime soon. I'm also a programmer in my early 30's so I'm hardly an old foggie that just doesn't get it. My mind's open but my eyes aren't shut.
Facebook can't keep burning VC money forever and it's not yet figured out a profitable way to monetize its eyeballs. In this economy, which still hasn't hit bottom, it's not looking very good for them.
i think you meant to say text messaging, not social networking. go to any middle school or high school, it's all about the phone platform. the parents of these kids would rather pay $15 for unlimited text plan than $30 for an unlimited data plan.
That's an argument FOR OpenID, not against it! If every social network has to invent their own sign in protocol, they have two choices: roll their own, or use OpenID. The smart ones will use OpenID. They're welcome to disguise it under a "log in with MySpace" button, but under the hood it makes sense to use the existing protocol with the pre-written libraries rather than invent something new from scratch.
OpenID was not intended as a method for sites to perform communicating between themselves, and even if you can use it for that, why not create a protocol that faces the reality of auth methods right now.
Do you have evidence for that assertion? I use OpenID every day. If OpenID doesn't succeed, I'm sure something like it will.
> Americans like to think that Facebook is so dominant, but lots of people like Hi5 and cannot imagine using anything else, because their friends are all there.
That's a good point.
It's like playing monopoly - at the beginning of the game you concentrate on buying as many properties as you can, because you know later they will bring you profits. If you immediately start building when you have just 3 cards, then you will earn money right at the start, but you will suffer later.
Facebook can sell itself at any time it wants to. Money is not the issue.
A business does not choose to run at a loss. They are currently running at a loss because they have failed to monetize. Investors keep giving them money because they assume (have faith) there will be some way of turning a profit in the future.
I think their success in getting more investment money comes from the mindset that something this big can't fail.
I'm really curious to see if they come up with a working solution.