What (outside of speculation) exactly is making FB so valuable at the moment? Sheer volume of users? While Google’s revenue source may not be obvious to the average user, anyone in the know is aware of what innovative technology they developed with their various advertising methods - and how profitable it is, and why the company is worth so much.
But what is Facebook doing? I know they do advertising as well, but how does theirs work? Are they making money through their apps? Licensing? Do they have some kind of quiet breakthrough technology like Adwords?
I should confess, I do not have a FB page (and so thus there may be a fairly obvious answer to my question) and have no intention of walking that path, but I am curious as to where their revenue is derived from. I know that a lot of companies have taken to maintaining FB pages, and I’m curious as to how that works too - do companies pay fees for those pages? Do they pay for fans to come and like their pages?
And a good number of them don’t have a clue about how (or why) to protect their private data or that of their relatives and “friends.” It’s a marketing bonanza.
I’m not sure how large a source of profit it is for them, but they skim off the top on all of the social games and arcade games which sell in-game items.
The games revenue is a significant portion of revenue for FB, somewhat north of 50% of total revenue. FB’s #1 ‘vendor’ is Zynga (FarmVille, etc) which provided ~12% of Facebooks gross revenue in FYE11.
They have done very well at getting personally connected to the people. For the most part Google and all their services are replaceable by a competitor if one was to arise.
But FB OTOH is associated with years of personal input and part of a person’s appearance online - Google does not have this (as Google plus seems a no-starter). So FB has become a extension of the person in the online world. Sort of a cybernetic appearance of that person.
Also much like Netflix streaming is near universal on new HDTV’s and Bluray players, FB has woven itself to many aspects on other sites. A simplified login procedure ‘sign in with Facebook’ instead of username and password. Again using the cybernetic extension example instead of the conventional login, your cyber identity is recognized and you are allowed in.
It’s tough. Facebook is incredibly valuable and will make a lot of money. But if something bigger and better comes they could be a shell of themselves in 2 years.
People keep saying that but I don’t think it is likely at all for the reasons that kanicbird outlined. Facebook is different than almost every other major website out there. It requires a critical mass of people to work well at all and it gets people to invest a large amount of time into building their friends lists, personal info, and photos plus all of the messages and comments history that go along with that.
Facebook was able to overtake Myspace because Myspace was developed before people knew what a social networking site could do (not to mention that Myspace is terrible in general). There is nothing wrong with Google Plus but it isn’t taking off because everyone already knows Facebook and has a lot of time invested in it. Most people don’t want to co-manage two or more social networking sites with the equivalent amount of energy.
Facebook has has enough inertia to keep it going strong for a very long time. They also have the money to buy any promising upstarts that threaten them and incorporate the new technology and ideas into themselves.
People keep saying that but I don’t think it is likely at all for the reasons that kanicbird outlined. Facebook is different than almost every other major website out there. It requires a critical mass of people to work well at all and it gets people to invest a large amount of time into building their friends lists, personal info, and photos plus all of the messages and comments history that go along with that.
Facebook was able to overtake Myspace because Myspace was developed before people knew what a social networking site could do (not to mention that Myspace is terrible in general). There is nothing wrong with Google Plus but it isn’t taking off because everyone already knows Facebook and has a lot of time invested in it. Most people don’t want to co-manage two or more social networking sites with the equivalent amount of energy.
Facebook has has enough inertia to keep it going strong for a very long time. They also have the money to buy any promising upstarts that threaten them and incorporate the new technology and ideas into themselves. Facebook has great long-term potential for the same reasons that companies like Coca-cola do.
The catch is that the Google+ experience suggests that a newcomer would have to be significantly better to displace the 800-pound incumbent. About the only thing I recall Google+ purporting to do better was privacy protection, but there’s no real indication that they actually do so (particularly as they have the same You Must Use Your True Name policy, which cuts off the one and only effective method of insuring that your personal information won’t be stolen and/or come back to haunt you some other way).
G+ is much better at asymmetrical relationships. Facebook assumes that my interest in reading what you post is equivalent to your interest in reading what I post, which is often not the case.
I spend most of my time on G+ these days. It’s where all the interesting stuff is. I only check Facebook if I want to find out what my old friends from high school had for lunch.
Yes, those are the upsides to Facebook. But the history of the internet is littered with companies that were huge and then just got creamed rapidly. AOL, Yahoo!, are two examples I can come up with right away that were worth a ton of money and are now just worth a fraction of that.
I can see a privacy backlash against Facebook and I can see a new model based on better integration with mobile devices beating them out.