Why Facebook isn't the reincarnation of Google

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Owen Thomas

07/12/07 04:53PM

Filed to: mythbusting

(Valleywag Emeritus Nick Denton took a break from playing with his iPhone to pen this screed. Enjoy! - Ed.)

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NICK DENTON — People assume that Facebook will find some way to make money besides traditional advertising, which is clearly not working. And why do they assume that? Simply because Google was equally clueless about its business model, and look at the company now. But they're drawing the wrong lesson. Just because a company has no idea how it will make money, doesn't mean that there is always an answer. Even for a site as hugely popular as Facebook. Google's discovery of its search goldmine should be seen as an anomaly, not an endless source of hope for popular Internet sites.

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Magister Owen Thomas 07/12/07 06:27PM

Nick - Haven't you heard?

Eyeballs equal... uh... er... eyeballs and web-saavy, ad-weary twenty-somethings will undoubtedly... uh... never mind.

Figaro Owen Thomas 07/12/07 07:49PM

@Alex: Alex, you fail at the basic "what's in it for me?" department. Sales 101, chap.

>Why not give users access to intelligent, premium publications (WSJ, The Economist, Nature) with advertising subsidization, through Facebook?

What exactly does WSJ gain?! Shitty CTRs?

>Why not partner up with Amazon and become the veritable Newegg of textbooks?

Home come none of the splogs have Amazon Associate products and opt instead for AdSense?! Once you figure the answer to that one, it will be clear why your idea won't fly.

>I guess basically what I'm saying is that I still don't understand why Facebook doesn't leverage the size of the user base by offering product and service tie-ins with established organizations

Once you start spamming your userbase, people will start leaving in droves. You are faced with the problem of how to reach all these people. You have 3 options:

1) Spam them through email

2) Spam them through Facebook inbox

3) Show them ads

First two will be despised by the masses and you WILL alienate your userbase. And we all know how well the third option works: 0.04% CTR and a $2CPM. Shittiest in the industry.

Facebook would need to clone other successful businesses (think along eBay type stuff) to really make some serious money. Advertising is peanuts and they're making $50+mm simply because Microsoft was dumb enough to guarantee them minimum revenue.

Philipp Lenssen Owen Thomas 07/13/07 06:54AM

It's funny, you can draw so many conclusions from success/ failure of a company or person. What we really need to look at is not what happened in the past of a successful company, but look at how many of these traits statistically result in success most of the time. "Almost everyone taking heroin used to smoke — that means smoking will make you take heroin"? No — "most smokers don't end up taking heroin, so there's no significant proof of cause & effect".

Alex Owen Thomas 07/12/07 05:48PM

Why not give users access to intelligent, premium publications (WSJ, The Economist, Nature) with advertising subsidization, through Facebook? Why not partner up with Amazon and become the veritable Newegg of textbooks?

Facebook, plz hire me ;)