So What if Facebook Fails?
Posted on April 2, 2009
By Joe Miller |
Facebook is in the unique position of being able to change the entire online ecosystem–if it hasn’t done so already. The five-year-old company expects to register its 200 millionth user this week, making it equivalent in size to the sixth-largest country. But despite its massive growth, Facebook is still lagging in profits. While the number of Facebook users surpassed the number of Newscorp’s MySpace last June, MySpace earned an estimated $606 million in revenues in 2008, compared to Facebook’s comparatively paltry revenue target of $300 million. So why hasn’t Facebook been profitable? And, from a public interest standpoint, does it really matter?
Edmund Lee over at Slate reported that Facebook is unlikely to succeed unless it changes its ways. MySpace’s model has always been advertising-focused. Facebook’s model has always been focused on building its user base. Previous attempts by Facebook to change the ways in which it relates to users have caused users to rebel by creating groups–within Facebook–that protest Facebook’s new Terms of Service, say. Users have essentially taken control of the company, making it very difficult for Facebook to figure out ways to make money. Lee suggests that Facebook is landlocked–it either needs to figure out a way to wrest control away from users, without pissing them off, or it needs to focus on traditional revenue models, such as the one used by MySpace, the very non-existence of which is Facebook’s primary competitive advantage.
But the social value of Facebook cannot be denied. The NY Times reports that Facebook has facilitated communication between a woman who wishes to locate relatives who were displaced by the Holocaust, and between a local teacher and the Prime Minister of Denmark. Lee’s analysis focuses almost entirely on the impending doom of Facebook from a profit-making perspective. But as the growth of National Public Radio has illustrated (the average daily audience size of NPR’s “Morning Edition,” which stands at around 7.6 million, is 60% larger than ABC’s “Good Morning America”), the potential for member-supported, public-interest oriented media outlets is clear.
Further, the users who are most likely to make large online donations to nonprofit causes are the fastest growing Facebook demographic. The number of Facebook users over age 35 doubled over the 60 days preceding March 25th, 2009. 3/4ths of Facebook’s users are older, wealthier Americans over age 25. A recent Mashable survey illustrates the power that social media companies wield in attracting donations. According to the Mashable survey, 20% of web-savvy survey respondents, between the ages of 30 and 49, gave donations of $5,000 or more–41% gave $1,000 or more. 47% of survey respondents age 50 and older gave more than $5,000 to social causes via the internet.
The philanthropic potential of Facebook cannot be overstated. Rupert Murdhoch’s other brands, such as Fox News, helped lead us into an unjust war and to enforce a decade of virulent backlash conservatism, culminating in February with a Jim Crow era cartoon, in the New York Post, depicting a chimpanzee–what social value can we expect from MySpace? Facebook’s future is bright–let’s keep them honest.
