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The Real Problem with Facebook (diegobasch.com)
38 points by diego on May 21, 2012 | hide | past | favorite | 13 comments

Well, that and there's nothing that really provides places where new relationships can form casually. FB is a tangle of little fiefdoms, with little opportunity to expand your personal circle except through existing connections. This is quite limiting.

The polar opposite is something like HN or Reddit, which is all casual contact with random people, albeit those who are likely to share our interests. This allows for often more fulfilling discussion than what our immediate circle of friends can provide. It's why we're here rather than on FB or G+ right now. We humans have always liked marketplaces and pubs in addition to private venues.

"the big bet is that some of those users. . . will some day pay a lot of money to Facebook. For what?"

Surprised to see zero mention of "credits" in the article.

Credits was $557-million in 2011 and expected to grow 4x this year.

That alone isn't going to justify the valuation, but still odd to leave out of the discussion.

ref - http://techcrunch.com/2012/04/22/40-billion-facebook-credits...

There is also the consideration that they could extend their offerings. People spend a long time on Facebook, especially when compared with the amount of time they spend on Google. If Facebook wanted to extend into search, or business applications, or anything online really, they are working with a base of close to a billion customers. That's a billion users who they have the opportunity to introduce a new service to.

Any potential new service could provide a more effective platform for ads.

That line of argument is much more effective for young companies. FB has plenty of cash to say buy duck duck go, but they are still focused on social and making less than 1$/user/month.

Why? They can change their focus. With all that money and talent they can build and buy almost anything.

  "So far, Facebook has defaulted to the laziest of all revenue models: 
  ads. It is clear that Google is the king of ads, 
  and this is because intention beats behavior."
A well-turned phrase, but actually Facebook has intention in a way far more nuanced than what Google captures. When I "like" something on Facebook not only am I sharing my intention, but a very focused one that directly reflects my interests. I may search Google for things not directly relevant to me (homework, curiosity) I may buy or look for things on Amazon that are not for me (gifts, price comparisons) but if you like something on Facebook chances are that Facebook can strongly infer what other things you may like--Netflix has in fact profited off of this exactly (as has Amazon) and it is possible to build a recommendation engine from this data that will have greater potential than Google's because it can predict what ads will be likely to resonate with customers.

The money is in display ads. It's not about intentions only.

You don't buy a can of coke online. But coke definitely want to advertise online and be able to target very specific crowd based on an FB profile.

I would not be surprised if FB is positioning itself to be the "front page of the internet". Many people spend lots of hours on Facebook and most of the time FB serves as their portal to current events, news, events, etc. Search is definitely missing, but I am sure that is in the works. FB is still a relatively young company and it's exciting to see where they are headed, especially now that they have plenty of cash to invest in the business.

Of course, this is all just conjecture at this point.

You know who else tried to be the 'front page of the Internet?'

Yahoo Lycos AOL MSN

It's not going to happen. There is little to no value in being the front page of the Internet. People are very good at ignoring the screen when they're typing their search query in the address bar.

"Google has been trying to diversify their business and create another significant revenue stream for years. No dice so far."

I look forward to seeing the next full quarterly results that include the new Google Drive & additional storage plans. It was such a big price increase from the old plans I would think there will be an impact even if sign up #s of paid plans were low.

History repeating itself, Facebook will go the way of AOL and Yahoo. The real winners are the future entrepreneurs who will receive funding from the thousand odd millionaires this has made

And the counter argument is television.

They can't preempt their content with ads like television. That'd be the signal for half their users to leave and the stock to tank. The user don't view Facebook as entertainment, so they won't be willing to sit through ads.

More likely, the distinction between content and advertisement will erode until you can't tell the difference anymore, e.g., product placement.

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