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Mark Cuban: Facebook Is Driving Away Brands - Starting With Mine (readwrite.com)
142 points by neya on Nov 13, 2012 | hide | past | web | favorite | 138 comments



Good riddance! What he and others are complaining about is that Facebook has started to use pricing to stop them from spamming users. This is a good thing!

We're free-marketeers, right? Prices allow scarce resources (eyeballs, users are the product, remember?) to be rationed in an efficient manner. Would he prefer some nameless, faceless bureaucracy determine who gets to see his messages?

This is a commons problem on some level. Very similar to the issue with push notifications written about elsewhere. Too many companies used Facebook as a way to get around email spam filters, and now everyone (good actors included) is suffering.

Cry me a river.


If you are constantly getting spammed by a fan page that you explicitly liked or followed, then the appropriate answer is to unlike or unfollow it. There's no reason to curate information that you wanted to get to begin with.

What if Twitter implemented something like this where certain tweets from a person you are following do not appear? How would that feel?

This strikes me totally as a money play and not for the user.


> There's no reason to curate information that you wanted to get to begin with.

But are you sure users actually wanted that information? I strongly believe this assumption is false.

If I "like" something, I want to express that I like it. I want my friends to know it. It's not a "subscribe" button, it's a "like" button, and contrary to what people in spam^H^H^H^Had business may believe, people actually attach meaning to what is written. It's not a #:G4202 button, it's a "like" button. If you call it "follow", you get a different meaning and different expectations.

> What if Twitter implemented something like this where certain tweets from a person you are following do not appear? How would that feel?

Twitter is not Facebook. Twitter is about following people. Facebook is about showing people (my friends) what I like (and not necessarily caring what it has to say).

I, for one, welcome these new changes and want to repeat by GP: good riddance!


I think you've touched on the base problem of both sides of the argument -- it's a UX issue.

Facebook has given too much power to the 'like' button. There should be a different 'follow' or 'subscribe' button. If you subscribe to a page, you would expect to always get updates from it.

I only subscribed to facebook to be able to watch some dev videos. As I slowly became more used to it, I wanted to know how to get updates from the company page I work for. When I asked how to do this and was told to 'like' the company, that made no sense to me. What if I don't actually "like" something, but I still want to watch its activity?


Yes..this is exactly what I mean. If you don't want to be spammed from liking something, then don't allow the brands to reach out to users who liked their products. You can only do this with "follow."

By this definition, brands won't tell people to "like" their pages anymore, they will just say "follow" them. FB blurred the links and now no one knows what "like" or "follow" will do.

I can follow a brand and still not get all the information from that brand. This is ridiculous.


> Facebook has given too much power to the 'like' button. There should be a different 'follow' or 'subscribe' button.

Oh yes, please. I want to see the epic torrent of butthurt from "Brands" like Mark Cuban when that happens and they find that less than 10% of their "fans" are actually interested in their "messages" so their reach is far smaller than now.


I agree with everything you said, but as a practical matter I wanted to point out that it is possible on Facebook to like something and then "hide" it from your newsfeed. This allows you to register your like without all the spam. This is what I did with "Barack Obama", because I do support him and wanted to publically acknowledge that, but I don't need to see three captioned photos of him per day.


That doesn't stop your likes resulting in targetted advertising to your contacts (depending on their how-closely-they-follow-you settings, presumably).

For instance I sometimes see "sponsored links" of the form "<sister-in-law's-name> likes <retail-outlet>, here is an offer that they have on at the moment" - I've never liked <retail-outlet> on facebook let along done that and subscribed to see absolutely all posts from them.


Yeah you're probably right about that. I think they can each individually hide those though, right? In any case, I agree that the UI for this is terrible and that's probably by design to make it less likely that the masses will hide everything.


Well, that's not the way the like button works. The like button is the "follow and get updates" button. Like it or not (heh) that's the use of the button, and I believe people get this.


I didn't. It was a complete surprise to me when I realized it. And then I unliked everything.


When I look at the button, I see the word "Like", not the words "follow and get updates". Why should anyone assume something else that what is written on the button?

BTW. it's my anecdote vs. your anecdote; I wonder if there are any studies on the topic of how people perceive likes.


I don't think the answer is so binary. Just because you like a product/company/person's page does not mean that you always want to hear from that page. The EdgeRank algorithm is supposed to rank social response and especially your friend's engagement in determining the importance of a post. However, there are clearly cases where the poster would want to attribute increased importance to that post and make sure that more people than usual see it (e.g. an important announcement). That is what Facebook is charging for: the ability to get around its algorithm. I think the problem in the past year for many brands is that Facebook has not had this feature, and the fact that you can pay for it is probably reassuring to many companies because it means they have a guaranteed channel if they need it. The alternative: people get annoyed with liking pages because they are too noisy and start unliking everything and you ruin the channel.


For those who don't know what EdgeRank is, start with this primer: http://edgerank.net/


However as you can see from that screenshot, a brand can target fans and friends of fans, so even if you don't like it a brand, you can see see the ad if your friend does


Yes, but it as the screenshot says, it costs a lot to just reach your fans. Reaching friends of fans is a different issue.


Typical HN Top-poster - up in arms about one point they care about, misses entire point of article. The issue is not that there is pricing, the issue is with how the pricing is presented and handled verses how most business people view the concept of likes/follows/subscribers.

> The right price is to charge an upfront fee for brands. In the current system there is complete uncertainty on the cost. And even worse, at least for our size brands, you have to deal with the pricing for each posting, which is a time waster."

> "I'm just suggesting that a single upfront fee or a monthly fee where there is certainty of cost would allow brands to focus on bringing in consumers to like the brands knowing that they can always reach everyone that likes them. I don't know what that number should be."

He's voting with his feet - like any of us would tell others to do - and saying without more sane pricing, he's looking elsewhere. Good riddance is a bad strategy for long term customer growth, methinks... but I'm not a business person.


Nailed it. The top post is just the sort of middleware dismissive posting that PG talks about trying to filter out.


You've created a straw-man so big it's trying for the basketball team.

As arron said, the relation between you and the brand can and should be moderated by you. Furthermore, just because a monetary transaction is involved doesn't mean it's a free market at all. Facebook is the faceless bureaucracy you rant against when it's trying to gate brand communications like this.


So Facebook can't run it's own business? Facebook charging for "reach" is the essence of the free market. They have developed something valuable and now they are going to sell it.

And no, it isn't a straw man. Users suck at moderating and curating. If curating a Facebook presence becomes a great deal of work, users won't do it and will just stop using the service.

Some of the comments above also make the point that "Like" is terrible UX, it doesn't communicate what it should.


If you want to follow the brand directly, bookmark their site or read their rss feed. It's their playground, we're just using it.

The sense of entitlement is overwhelming.


You're just falling into Facebook's ostensible justification for aggressive monetization tactics. This is content that users voluntarily signed up to receive. Facebook is already setup for users to curate what content they receive. They chose who to friend, what personalities to follow, and what fan pages to like. They have the additional option to limit certain types of posts from certain people. They also have the ultimate means to limit content by blocking, un-friending, un-following, and un-liking pages.

This is simply a weak excuse given by Facebook to charge brands, which they have every right to do. But to say their motivation is to stop spam is simply dubious.


As TeMPOraL correctly pointed out, it is not content users voluntarily signed up to receive -- its content that they "liked."

Facebook is following the same game plan Google has used: give away free traffic at incredible volume, then start charging for it.

I believe Facebook's mistake is that they should have some sort of transparency in regards to why they are charging what they are charging. In Google's case, what you are charged is based on what your competitors say its worth (ok, not really but that is Google's story and pretty much everyone believes it.) From what I see, Facebook is just throwing out a number which page owners see as extortion.


There used to be a list of groups I liked on my profile. It was a way of highlighting a few things that amused or attracted me.

"I want to punch slow walking people in the back of the head" or "The skeffington 19 bluepoint appreciation society"

User content not brand content. The latest changes might push facebook back in that direction and I wouldn't be sorry. I don't see it making them a lot of money though.


Dude, if I follow a page, I want to get updates on it.

Now he's having to pay extra to make sure I get updates? There are other systems out there that we can use to maintain the "interested party" connection, e.g., twitter, email, rss feeds, g+, $your_system_here.


Yea but Facebook is relying on their massive userbase as justification for the additional reach cost per post. I guess the $3k is the "price" for having access to all of those subscribers in FB. They're welcome to take their posts to Twitter or G+ but are they going to get the same value?


What on earth are you on about? Facebook doesn't just put stuff in your feed for no reason. Brands I like appear in my feed because I like them. If you consider this spam, why on earth would you follow the brand? This argument is just so so so bad and it is used over and over whenever people talk about facebook advertising. Its basically like signing up for a mailing list and then freaking out when you get an email. You got it because you opted in to seeing updates. If you don't want those, there is a simple way to opt out. You don't need to defend facebook no matter how wrong they are to do that...


Not true on mobile. I see advertisements for Samsung, Amazon, even Salesforce (what the hell?) right in between all the things I care about, just because my friends like them. Believe me, I can't express how much I don't want to see them. But there they are. I bet if I pull up the Facebook app I can find one sitting there right now.

One: http://i.imgur.com/0FXVv.png

Two: http://i.imgur.com/3Xfbj.png

We'll see them on the website soon enough.


There are other ways to limit the onslaught of spam: user-defined filters. Facebook could have gone that way, but then, giving users control isn't lucrative.


What about the organizations that can't afford this pricing model? There are quite a bit of non-profits and small businesses I follow that simply can't afford to sustain this. They're not spamming me if I voluntarily chose to Like their page. I did that so I can get updates, coupons and specials. Costs will force them back to email marketing, and if that's the case we all lose.


+1 he's being a crybaby billionaire. He cries about paying $3000 to reach 1M users when I have to pay $1 in transaction fee to withdraw money from my bank.


He's not crying specifically about paying $3k, he's annoyed because Facebook moved the goal posts in a completely opaque way to the people already resident and established, which echoes a lot of sentiment I've heard recently.


Or exactly because he cries about paying $3000 is the reason why he is a millionaire.


*billionaire. Just so we are all on the same page.


It seems there are two different "Facebooks" - one for people, a real "scoial' network, the other for commercial entities and their customers. And this unacknowledged duality seems to be slowly coming apart.

There might be a huge opening here for a "companies only" facebook clone, where you can only get updates from your favorite brands and service providers, not socialize with friends.


And a separate subway, with just the billboards and no travelers!


"There might be a huge opening here for a "companies only" facebook clone, where you can only get updates from your favorite brands and service providers, not socialize with friends."

Isn't this just Twitter?


No it's called LinkedIn.

And while valuable in it's own right has no where near the engagement numbers of Facebook.


I don't think LinkedIn is good for this at all. I see things like earnings press releases on LinkedIn, or "XYZ, Inc. invents new 2nm transistor that won't be around for 300 years." on LinkedIn. LinkedIn presents itself as a social network for professionals, and I think they cover that quite well.

Twitter doesn't quite fit nsns's description as a 'Companies Only' social network, as much of it is social. I don't necessarily know that anyone would willingly sign up for a companies only social network, despite what companies may dream and pray for :-)


On the surface it may seem similar, but are actually quite different:

LinkedIn is mostly about connecting professionals to each other and companies

Facebook (in a business context), is mostly about connecting brands with consumers.

Consumers are not professionals, although the underlying people that participate in those roles may largely overlap (if you think about it as a Venn diagram)


The reason it works for companies right now too is because everyone and their mom already on Facebook. I doubt a new "companies only" Facebook would really do well.


It would essentially be a 'like' button on Superpages.com -- and like you said, it wouldn't catch on. Communication would be glorified, targeted mailing lists.


What would be more likely is a "people only" Facebook clone.

The more a particular company or service (or musician for that matter) deviates from the original product that attracted its user base in the first place, the greater its susceptibility to clones becomes.

I think all people want is simple and private social networking among their friends.

Facebook no longer offers this. Google+ certainly never did. There is a strong case that Myspace fell because at the time, Facebook offered more simplicity and more privacy.

Myspace was being deluged by spam during the summer of 2008 and that marked the beginning of the end for them ( http://www.google.com/trends/explore#q=facebook%2C%20myspace... ) Facebook is becoming equally noisy, except they are getting paid for the "spam."

As Facebook continues to aggressively attempt to increase its monetization, both on desktop and mobile, I think its going to get worse.

There is clearly an opening for a competitor coming along. I'd like to think of them as the Dropbox of social networking.


I don't understand. You can only have a Facebook for brands platform if the audience is there first(ie the social network). Who are the brands going to promote to without the social network there to consume and spread the brand's content. The audience is an integral part of it. That's how it was for Facebook, Twitter, and even MySpace.


The difference lies in that companies think that Facebook users are an audience which is there to listen to them (aka. eyeballs), whereas a normal user is on Facebook to interact with their friends, to share photos and funny stories, organize parties and share their thoughts. With friends, not with companies. But brands, in their pursuit to monetize the "audience" somehow forget that it's not them the users are here for. And so they ruin the experience for everyone.


It should be acknowledged however that today for most people some commercial entities are "friends". If a small publisher I like publishes new books, my favorite sport team has some important news, etc., I'd like to know about it, and Facebook slowly became the best facilitator of such "friendships". I think it is somewhat different from normal advertising, and was slowly transforming the perceptions of the commercial entities themselves.

But now, FB has strated breaking that model, differntiating between human friends and the other (paying) kind.


I don't think most people want to limit their interactions to their close social circle. The Dallas Mavericks have 2+ million likes - I'd guess a majority of those fans would want every single update they make in their feed, and would value those updates much more than the photo of an ex-coworker's baby making a mess. Do they want Walmart updates? Probably not, but I think the Twitter model for the feed works better for users than the Facebook model (unsubscribe to things that clutter your feed).


Without meaning to be unnecessarily negative; what I find most interesting about this post is that neither the article, nor any comments in this thread so far, even mention Google Plus. Cuban seems to write it off as a contender, even a revived MySpace seems more likely to him as an alternative. Why?


Because outside of Silicon Valley, Google+ is perceived as a ghost town.

Every time someone says this in a HN thread, dozens of people respond with cute anecdotes about how great their experience is, but this place is like an echo chamber. If you actually go out and get the public _perception_ of G+ it's quite negative.

I mean Vic got his big G+ talk at I/O completely cut off for the sake of another product. That should show you the shift in Larry and Sergey's priorities


He's bluffing, and could have easily said Orkut or Pinterest.


Good point, last I remember pintrest is more popular than MySpace.


while g+ haven't yet (like the linux desktop year yet) reached the average joe crowd, and I really like this guy, mentioning myspace sound bonkers. another possibility is some of his businesses just go well with the myspace crowd.


Is it just me or does $3000 seem like a really cheap price for the Dallas Mavericks to reach 1M+ fans? Would it make any significant difference to their marketing budget if the price were cut to $1000 or doubled to $6000?


I had the same thought.

Think of when you go to an NBA game and they give out some sort of "freebie". I would imagine those game "freebies" cost much more than $3000, and regardless of that, with Facebook you are potentially reaching the 1M+ fans where as those game "freebies" might only be handed out to a measly 5K. It seems like a no-brainer to use Facebook to reach 1M+ fans at that price, vs what they traditionally pay for other forms of marketing.

Also, you could easily be selective on what sort of post validates for a $3K (post) promotion. Not all posts are worth promoting to every one of your fans, doing so would just weaken the brand image (in my eyes).


The problem is that you got that reach before for free. It's the change that's upset people. If Twitter started charging companies for tweeting there would be a similar backlash.

People feel betrayed by a company desperate for new revenue.


Yeah, very true. That makes much more sense why people are upset. However, I still think they should just take a step back and just look at the cost of more "traditional" alternatives that, what it seems like, are never even questioned for their price to value ratio. An extreme example would be how the Ford Explorer launch on Facebook generated more traffic than a Super Bowl ad [1].

[1] http://www.socialsyntax.net/2012/02/facebook-trumped-super-b...


What was the "acquisition cost" of those 1M+ Facebook fans (likes)? Ostensibly, this is "double dipping" on the part of Facebook from the perspective of businesses and brands who've been marketing their FB presence in aims of adding subscribers they can reach.


Regardless of what they paid, its already been spent and its likely that Facebook did not see much of that anyway. Even if they were to move to another social network out of spite they'd still have to pay that acquisition cost again and more since that network will be much smaller making it harder to drive more likes/follows/whatevers there.


One of the complaints in the article is that it's billed per message. $3000 is a bit much for some low level employee in the social media department to sign off while pushing ads.

I guess any kind of prepaid arrangement (with some reasonable quotas, or upfront costs + small price per post) would be more manageable.


Considering a few weeks ago, you could 1M Facebook users information for $5, I'd say 3K is pretty expensive.


I don't get it. Facebook isn't working out so they are considering a change to MySpace or Tumblr? How about changing your focus to oh I dunno ... your website!? Moving from one free, closed-garden system to another isn't progress.


This - it's so dumb to cry about that. Build your brand on our website, your own social network, & your own smart phone apps. They can push/pull/interact with any other - but not building your own with that type of budget is assinine.


Website is a great place to host content, but they still need sources to drive traffic. They should be using all of the platforms to drive people there and then capture their emails and other data.


Know what drives away consumers, Mr. Cuban? Awkwardly obvious product placement: http://www.youtube.com/watch?v=HEBtJqze0rE&t=8s


I'm so glad other people noticed this. They did it quite a few times in recent episodes with the T-Mobile phone. Another episode it was used was when Robert Herjavec visited a past invested project (where they show the "how they are doing now" segment) and they exchanged a document by holding the two T-Mobile phones back to back, and then proceeded to say some cheesy line. I typically love the show, Shark Tank, but the recent blatant product placement is starting to rub me the wrong way about the shows integrity, and the people coming on the shows.

Also, slightly more off-topic, but is anyone else annoyed with the recent emotional break-downs on the show that, in a few cases, led to getting investments over the person awkwardly crying and/or having a break-down? It was also more obvious it was only cause of the break-down (it seemed) because on one of the instances everyone was "Out", but then a "Shark" came back in after the break-down. It's starting to feel too much like a reality show to me, as of this season. Which disappoints me, because the show used to be one of my favorites.


> It was also more obvious it was only cause of the break-down (it seemed) because on one of the instances everyone was "Out", but then a "Shark" came back in after the break-down.

I remember that situation only with the fitness-dancer dude, actually the only one I was really sorry for (the FuBu dude chaced him because he just didn't understand the concept of distribution and was missing a deal that could change his life). but most of those 'my story is so sad and life is so hard' people are pathetic, you're right.


It _is_ a reality show. The decisions are made before the person ever gives their first on-camera pitch.


That is actually not true, according to a past contestant: https://www.quora.com/Shark-Tank-TV-series/What-is-Shark-Tan...

Quotes from the first-hand account of a Shark Tank contestant:

> "I was strictly forbidden to have any contact with the Sharks before taping. I had never even seen any of them in the flesh until I walked out onto the soundstage and the cameras were rolling. "

> "The Sharks also have absolutely no idea what is going happen with each company that comes on, they haven't even seen the pre-roll that the audience sees (where the camera follows the contestant around their home town, etc)."


I don't see how those statements invalidate my claim.


You said:

> "The decisions are made before the person ever gives their first on-camera pitch."

The contestant with firsthand knowledge said:

> "The Sharks also have absolutely no idea what is going happen with each company that comes on, they haven't even seen the pre-roll that the audience sees (where the camera follows the contestant around their home town, etc)..."

He invalidates your statement because how could they make decisions before the camera pitch, if they have never seen anything before the camera pitch? Unless someone from the set of the show could say something to help your statements, he is a much more reliable source than your intuition. Unless you have more evidence to validate your statement that you have not yet posted.


You'd make a terrible lawyer.

Let's deconstruct: > "The Sharks also have absolutely no idea what is going happen with each company that comes on"

Right. They don't know what's going to happen when they talk to the company. That doesn't mean they don't know anything about the company beforehand.

> "They haven't even seen the pre-roll that the audience sees"

Maybe so, but that doesn't mean they haven't looked over business plans, executive summaries, founder resumes, etc. first. Audience pre-roll would be useless to these judges. Pre-roll is probably created after the judge interview, anyway.


Who says the Sharks decide who ultimately wins or loses?

There are a lot of Producers and EPs who have a narrative to fulfill.


My wife now watches Shark Tank with me and is becoming rather shrewd in evaluating businesses. We both hate the product placements.

Speaking of business model that drives away customers. Did you know you give up 5% of your business to appear on shark tank because of the exposure? With or without the deal. That is why they do the follow-ups on companies that did or did not accept a deal. It's good for the shows owners.


I've commented about the Shark Tank 5% before [1]; I believe it's quite reasonable, why don't you?

Have you seen Dragon's Den (UK)? I saw Shark Tank first and thought it was great but the more hardline Dragon's Den grew on me and I believe I learned much more from it.

[1] http://news.ycombinator.com/item?id=3948913


Oh hell yeah. I'd give up 5% for the exposure (under the right circumstances and with the right business/product) the marketing alone is worth it.

I think this process skews the risk/reward relationship found in typical investments because the companies they invest in get 3-10 minutes of advertising. I'm sometimes surprised they don't do more deals at lower valuations on that alone.


Wow. I've watched the show with my wife and had been assuming that no one should take a deal they weren't really happy with. Better to walk out with no deal because even then you've gotten free advice from some shrewd, experienced people. But free ain't free, it seems.


Did you know that YC takes 7% of your business, whether or not you get funded a demo day? Shark Tank may be a better deal. Or not. But it is ridiculous to argue that based on the fee for a prime time infomercial.


7%, seriously? I had no idea.

Why are people clamoring to get accepted by YC? I'd be doing everything I could to make it a last resort, not a means to succeed.


Well, apart having personal advice on tap from a range of experts, the fact that on demo day your idea will be in front of the best VC groups in SV, access to YC alumni for help and advice, I can't imagine why people would give up 7% of their nascent startup either!

(this is sarcasm btw.)

More seriously: you're giving up 6-7% of your company in return for a whole swathe of things that are very likely to increase your chances of succeeding significantly. Most people don't have ready access to the kind of personal networks that YC offers: the combination of that access, plus the social proof of having the YC imprinteur massively increases the likelihood of success for many, many startups.

And I'm saying this as someone who's very unlikely to ever apply to YC, but even I can see the benefits in applying, as do many others who choose to go to YC even if they don't in fact need the money: the fringe benefits are worth far, far more than the cash.


Because owning 93% of a company that's even 2x more successful than it'd otherwise be is still a good deal for you.


His comment wasn't argumentative or anti-Shark Tank.

The owners are well aware of both situations, and it's their right to make the choice. For some businesses, that 5% is well worth the prime time informercial. And I imagine everyone who's received a YC offer has accepted as well.


True - I didn't argue it wasn't worth it.

I just stated that they do it.


I enjoyed reading your comment on my T-MobileĀ® device.


I had no clue who he was before watching Shark Tank. But it greatly impressed me when he straight-up called the woowoo "ions" guy on his bullshit and outright called it a scam [1].

Watching the YouTube video you linked it doesn't look like he seems to enjoy the T-Mobile product placement. Have I been brainwashed into liking him because of my earlier experience?

[1] http://www.youtube.com/watch?v=4XfXt93s1YE


yeah, that plugs in shark tank are ridiculous to the point of absurdity.


His vision of Facebook makes no sense. There is no chance in hell Facebook will allow every "Liked" product, service and company to spam the users' newsfeed as much as they want, considering the primary purpose of it is to keep up to date with what friends and family are doing.


> There is no chance in hell Facebook will allow every "Liked" product, service and company to spam the users' newsfeed as much as they want

Except that's exactly what they've done for years now. The real problem is that Facebook didn't limit this from the beginning, because now companies are going to complain. I removed all my "likes" several years ago for that reason.

Facebook likes to push out extreme changes and then walk them back to what people actually want. This is the opposite of the right way to do it.


That's usually how it works with commons - everybody can use it until someone starts to screw it up.

Facebook originally allowed this because it enticed both user and content engagement. Now, Facebook needs to reel it back in to preserve whatever value is left of it's activity feed - before it becomes the next useless myspace.


What FB should have done is let users control what is in their feed - give them options to define groups of people and let them view just certain groups in the feed, or split the concepts of liking and following. Instead it seems Facebook is happy to spam users for you if you'll pay for the privilege. Not really good for anyone involved, and not worth it for businesses long term to pay only to be perceived as unwanted spam amongst personal posts.


Facebook does have groups. But yes, what Facebook did was a bait-and-switch: there were likes, which were just biographical information, but then those turned into subscriptions.


I don't see how allowing things I've "liked" to send me messages was ever enticing to the user. Originally a "like" was just a thing your friends could see, it didn't mean "subscribe me to this marketing channel".


With regard to online advertising - companies follow people, people don't follow companies. Facebook gets this.

Let's play worst case scenario here - Cuban convinces all companies to leave Facebook. Then what? Do you honestly think there would be a mass diaspora of users because all the companies left? Hell no. Sure, Facebook's stock would plummet, but they'd still have options, because as long as Facebook has users, it has a future.

Now, let's reverse the scenario. All your friends leave Facebook. Then what? You leave too and so do all the companies, because after all, Pepsi doesn't hang out on Facebook to advertise to Coke. If the people leave, Facebook dies.

Facebook isn't a charity, nor a utopia, it's a company that is required by law to maximize value for shareholders. Facebook is already a master of providing value, they've built an empire by doing so. Now they have to learn how to extract value, and it's very smart of them to begin by extracting value from companies in a way that doesn't significantly impact user experience.

But this is just the beginning. Soon, Facebook will begin extracting value from people in more obvious ways. And I'd bet the #1 question on Zuckerberg's mind right now is, "How much shit will people take?" How many ads until everyone leaves?

I don't know the answer to that, but judging by how much shit is forced down the throat of an average American during a 30-minute episode of MTV cribs, I'd bet we'll take a lot more than we realize.


This is kind of amusing, in a way. It always seemed weird to me that large corporations were willing to invest so much in promoting Facebook - From CNN promoting it on every commercial to big brands creating departments to manage 'Social Media' - e.g. Facebook and Twitter.

Did they all think this was free advertising, forever? FB is (at least now) a publicly traded, 'walled garden' after all, and Twitter isn't much different.

Looks like the social media revenue model is becoming clear: All your customer are belong to us, pay up.


Isn't the model always been clear: advertising?

You can run around in circles moaning about how it isn't "fair", but it isn't the Mark Cuban who built the infrastructure or attracted the users with a core product on Facebook. Secondly, Facebook never guaranteed 100% reach, I'm not sure why Mark Cuban expects it (and for free!).


To be fair, he asked in his post for cost certainty, not "free."

Now, honestly, what I want as a user and as an advertiser is the ability for the user to turn up and down the volume of another entity, be it a person or brand. I may want medium on George Takei, high on King's X and low on Hormel's Spam (yes, I like Spam.) Do you think it'd be valuable to send things to different demographics as a brand? I know I think so, especially if I can get some cost certainty.

The problem is that the amount of likes and the value of the brand are unrelated. Takei is not going to pay as much as Quizno's, even if he has three times the fans.


If I recall correctly, I think Facebook used to allow you to fine tune who you saw on your news feed. Not sure if it's still buried somewhere, gone, or what the uptake on this feature was.


I dunno, I think businesses realize that reach comes at a cost. In FB's case, however, they interpreted the cost as the time, effort, and resources that it takes to build a fanbase and pump out relevant, interesting content. Now they have to pay more to reach people who've voluntarily said, in essence, "I want to read/see your stuff." It feels a bit like a bait-and-switch.


Mark Cuban is a primary investor in the patent troll Vringo. Why are we pretending he's some kind of tech trendsetter?


He's not pretending to be a tech trendsetter, he's being an investor, and hedging his bets, as all good investors do

This is a hedge against the unlimited patent exposure all the companies I have investments in face. Patent risk is impossible to quantify. It's unrealistic for most small to medium businesses to have any clue which patents they are at risk over. Vringo's IP from the merger is the flip side of that risk and offers an imperfect hedge. So, I made the investment.

http://www.forbes.com/sites/ericsavitz/2012/04/17/cuban-says...


Just because you don't like one of his companies doesn't mean he's not a very smart businessman.


Which is odd, because he's been quite vocal in his opposition to software patents.


> "The big negative for Facebook is that we will no longer push for likes or subscribers because we can't reach them all. Why would we invest in extending our Facebook audience size if we have to pay to reach them? That's crazy.

I think this mindset is the poisons venom in Facebook's revenue strategy. Facebook is seen as just a social network and not a legitimate communication or advertising platform like TV, radio, or mobile phones. Cuban has no problem paying for Ad's on Radio and TV, but is appalled when Facebook charges for a similar (And arguably more accurate) service. Facebook's response also makes little logical sense--On one hand they say the fees are to fight spam, but the screen clearly shows that the fees are to communicate with more people.


TV/Radio/Google Adwords/etc is drastically different from FB's advertising model.

The key point, as Cuban says in this article, is that companies spend real resources in trying to acquire "Likes" on FB. People build entire FB tabs. Curate what content gets posted. Build deep integrations on their websites. I've built a lot of this type of FB integration for clients...and I charge a lot, so I know this isn't cheap.

People do this with the expectation that they can reach the people who like their brand. When FB changes the game, it breaks this assumption and makes it doubly expensive to curate and communicate with your FB following. This is pretty much the gist what Cuban is arguing in the article.

On TV/Radio/Google Adwords/etc, there isn't a first step where a brand spends a lot of time and money sending users to said 3rd party advertising platform. You don't first spend development resources on integrating with the radio station's website, ultimately advertising their website for free and sending them tons of free traffic. You just give the radio or TV station your money, they play your ad, and that's it. That is the extent of your advertising investment. It's very concrete and simple to implement.

This is not the extent of the investments people have made in building up FB pages and followers. Brands have spent and continue to spend a ton of time and money on this and like Cuban, they are justified in being ticked off when FB changes the rules in an effort to squeeze revenue from them.

I have no doubt that money is the reason behind charging to communicate with your followers on FB. The altruistic motives like "fighting spam" would best be done with an algorithm. It surely wouldn't be something you could "opt out of" just by having a fat wallet. By FB allowing brands to pay them to spam people just means FB is fine with spam as long as they get paid. That doesn't seem like a stance that has the well being on their users foremost in mind.


It makes sense for him to want to leave considering Facebook is really just providing a newsletter service, and it was the marketing that the companies have done to drive them to their Facebook pages. It should be a mutually beneficial relationship, not one where Facebook is trying to milk both companies and consumers. The problem is they aren't making 'enough' off of consumers, and therefore are trying to go after companies too. It's chicken and egg problem, and now that Facebook has 'everyone' on it they are trying to milk it. Yes, there is value of guaranteeing that X number of followers will see a post in their feed - which true fans would want to see anyway (and based on algorithms likely would or would be an active visitor to their Facebook page), however Facebook is trying to prove their $100 billion valuation by essentially trying to extort companies, whereas it should be a slightly above cost of reaching (as the minimum). Facebook is trying to charge Advertising prices for something that is at its foundation a service being provided; Facebook has no monopoly on containing fans. If Facebook doesn't change this quickly it has no chance of ever becoming a $100 billion company, because by that time Facebook won't be freely marketed by big companies linking to their 'Facebook pages.' Facebook's abusing the relationship, and like anyone in an abusive relationship - it won't end well for the abuser, they won't get what they want. - at least not once more people realize it's abuse and they don't need to be in that relationship.


Agreed. It sounds whiny coming from Cuban, but imagine you're a small business owner who relies on your Facebook page to communicate with your fans. You put a lot of time and money into gaining those fans organically, and now Facebook is essentially holding them hostage. What was that little blurb that Facebook used to have on their sign-on page? "It's free and it always will be." Hmmm. Don't promise a free service and then reneg. Perhaps businesses wouldn't have been so eager to get on Facebook if they knew that access to their fans would come at a steep price.


One could interpret this as Facebook being a "victim" of their own success - they have so much demand for advertising that they have to limit access to their userbase in order to ensure that the advertising retains its value. Perhaps, as Cuban says, uninformed business owners think they're paying for something other than what they're getting and demand will dry up once advertisers get wise. Or perhaps Facebook's conversion rate is just that good.


More like so little demand for advertising.

FB has a massive supply of impressions which has bottomed-out remnant/auction CPM rates industry wide.

I see this as a move to try and introduce a (somewhat) premium ad product. Users have already indicated interest in the brand -- now they will have to pay to reach these intenders.


Why do brands keep pushing traffic to the Facebook/Twitter pages instead of their own pages? They should create dynamic interesting content on their main pages and use social media to push traffic towards it instead of using social media as a goal.

Ownership of your following is really important and at the end of the day the only way to do that is to have a proper standalone website.


Why do people rob banks? Because that's where the money is. Facebook and Twitter are where the people are.


He has a great point. It takes resources to build up an audience anywhere, and then the assumption is generally that once you have that audience you've gained the right to speak to it. Facebook expects you to pay to build your audience (via ads) and then again to speak to it (via "reach"). This makes it a pretty bad idea to spend resources on building an audience there.

Will Twitter do something like this? I don't think so. But it's also a crapshoot whether your tweet will actually be seen or too far down your tweet stream for someone to actually see it. I still believe that email marketing is The. Best. place to build an audience because you have permission to send a message to someone that is almost guaranteed to at least have its headline read.

Of course the rules of the road apply wherever you build an audience, meaning you can't spam or abuse the privilege to talk to them. But all things being equal, owning the channel has some HUGE advantages.


The power of owning the channel is a huge advantage, I wish more people understood. Email marketing used to be the best, but email read rates are usually less than 20% and it's over a few days. There is a better medium to build an audience that guarantees they get read...And definitely agree about not spamming or abusing the privilege.


Ok, now I'm curious... which medium/channel are you talking about?


It did sound a lot like he was assuming Facebook would act just like email, at which point you have to wonder why not collect email addresses.

As an infrequent and naive Facebook user, I would not expect that "Liking" a company page meant "Subscribe me to whatever they want to send me."


As with all new ad platforms you have to test the ROI. Apparently in his businesses he didn't see the benefit and did what all good marketers would do, pull your inventory. As Facebook tweaks it's EdgeRank Algo I am sure they will figure out how to get the most "bang for the buck". If not their stock price will continue it's slide.


Here's another way to look at this.

When I subscribe to a page, I expect to get updates on new postings.

Because Facebook is using their EdgeRank to filter out those postings, I'm no longer get updates on all the postings. As such I've to go to the subscribed page manually.

No wonder I'm getting so few updates lately. Because Facebook is filtering out everything. How backwards is that?


Go to your profile, find the list of things you like.

https://www.facebook.com/[user ID or name]/favorites

Tell me, do you want to receive updates on all of 0.5k things you liked? Because if each of them writes even one post a week, you can forget about ever reading things from your family and friends. And the latter is what Facebook was designed for.


I don't know the FB advertising system inside & out either but like Cuban, I'm miffed by this. The implication here is that companies essentially don't own their own "likes." What value do they have outside of being a vanity metric if you can't reach them aside from coughing up thousands of extra dollars?


They don't own their "Likes"! Has that ever, even for one single moment, really been in doubt? Facebook owns the platform. You play in their sandbox, you follow their rules. They own all the toys.

Look at Twitter locking down their API or Apple inconsistently enforcing arcane app store rules. When someone else owns the platform, they effectively own anything you create with it.


You nailed it. Lots of great arguments for both sides, but FB owns the platform and all the toys. All big brands know the risks of making big bets to sell stuff in another guy's yard. In a free market FB can move the goalposts all they want,but the reach is still worth the risk until the cost of doing business with them makes the roi equal to or less than other big reach platforms.


Why not use all social networking avenues? I use Instragram, Tumblr, and Twitter alongside Facebook, but even without paying anything on Facebook, I get views and interaction from users that I wouldn't get if I said "fuck it" about Facebook.


My impression from the article is that's what he's doing. He's still going to use FB, just de-emphasize it as the main source for fans to follow the Mavs.


I feel like totally different people use Twitter compared to FB, with some intersection. I x-post everything.


With so many social services, it seems like some meta-service or RSS-like application will subsume them all.


He makes fair points. Though the one thing that really grinds my gears about Facebook (and I will state it so that Facebookers can consider the issue) is that I cannot use their Open Graph API to build FB apps without being an active member of the network. Being an active FB member requires me to give them my mobile number, an spend a questionable amount of time using it. Time better spent working. I wish I could just pay them a developers fee ($50/year ? ), and have my own little dev account with no other feature other than being able to use the API.


> "Being an active FB member requires me to give them my mobile number"

That is not true. I have a Facebook and no where have I ever been required to give my mobile number. I think you only need an email (and I think, it doesn't even necessarily have to be valid) to create an account.

> "...spend a questionable amount of time"

I created a test account for an app I'm working on (the other month) in less than 5 minutes, give or take. For an app you are building with their API, 5 minutes of time and getting to use it for free is the same as "($50/year)" as you mentioned? That seems a bit exaggerated to me.


But what kind of apps do you want to make on Facebook if you don't use Facebook yourself? How do you plan to test it, or even make sure if it fits the ecosystem?


The developer account should allow me to test for that.


I wish you could pay for a developer account just so they will bother to manage their bug tracking system.


If anything the situation is worse than he makes it out to be because apart from Edgerank factors there's also the ease with which fans can permanently hide the visibility of page posts. All it takes is disapproval of one post, followed by a single unsubscribe.

No easy way around this maybe, since fans have to be able to easily unsubscribe, but it's another big reason why collecting a ton of likes for your Facebook page may be largely wasted energy.


How about not posting shit as a way to prevent people from unliking? I see more and more companies posting things without any value just to make sure their logo pops up regularly on user's news feed.


I think that misses my point. I'm all for easy hiding of page posts for fans, but the honest thing for FB to do is call a spade a spade and remove the Like when that happens. As things stand the page still thinks they have a fan when they don't - it's not a good reflection of reality.


>"I haven't bought and I wouldn't buy here. I think they have to determine what their business is right now and how they will make money at it. I don't believe they are clear about either."

Odd. I distinctly remember Cuban saying how he bought FB stock as a trade, and exited the position at a loss when he saw that the initial rally wasn't going to materialize.


He did, I think the key word in that thread is the "here".

A lot of analysts like Facebook at the $18-$20 price point, something reflected in the stocks relative stability since August.

He did buy into the IPO expecting a quick bump which didn't materialize. And he doesn't blame Facebook for it.

http://blogmaverick.com/2012/09/04/facebook-handled-their-ip...


He's not doing anything other businesses haven't considered. I'm sure he'll go back.


FB is probably the last social network I'll ever use. If it goes, I'm back to email plus a whitelist and updating my webpage once every two years or so.


How does Cuban make money these days?


Maybe when the "brands" are gone, Facebook will stop driving away users.


Easy fix: change the text on the like button to 'spam me and my friends'.




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