Facebook

Quick aside before we begin: what the hell is going on with MySpace? The company has dropped the ball, big time. The embedded Snocap music store plugin has been broken for years now, yet it’s still there taking up space and dragging on the already abysmal loading time. I thought at the very least the company would try to keep the musicians happy.
Facebook Logo Grayscale
I just read “The Facebook Effect” by David Kirkpatrick. It was great, and I recommend it to anyone with an interest in technology, marketing, or business. Although I am an avid Facebook user, I always thought that even the best social networks were destined to become obsolete, primarily because our children will not want to be part of the same network as their parents. LinkedIn, arguably the only network people don’t begin using until after they’ve grown up, was the only service I thought would age well. Not anymore.

Zuckerberg is Facebook’s young founder & the hero of the story. He describes his company not as a hot internet property but as a boring utility, similar to Con Edison or AT&T, that facilitates communication and transparency. He says that in “a more ‘open and transparent’ world, people will be held to the consequences of their actions and be more likely to behave responsibly.” This is an interesting point that deserves reflection. Although there will doubtless be growing pains as we adjust to our new, less duplicitous selves, this really does sound like an improvement, doesn’t it?

Zuckerberg also talks about the “gift economy” that exists in small towns (and to a lesser extent, everywhere), in which gift-giving is obligatory and is more social lubrication than well-wishing or congratulation. Zuckerberg believes that this custom makes sense only when “the community is small enough that people can see each other’s contributions,” and that within one’s Facebook network, that kind of a system could really take off. Although I really hope that kind of a culture doesn’t start to take hold – after suffering a gift economy first-hand in rural Japan, I think it’s wasteful and inefficient – I don’t think it’s quite as far fetched as it might appear. After all, tipping is basically the same thing, and Facebook already sells virtual cupcakes for friends’ birthdays.

Zuckerberg’s prediction that we will begin ostentatiously showering each other in virtual currency is likely of little consequence to Facebook’s business model. The company is sitting on a goldmine of consumer data, and according to the book, Facebook is already handling something like 15% of all advertising on the internet. CPM and CPC rates have increased between 3x to 10x in the two years since I first bought my first ad on Facebook. It should be noted that these multiples are over and above the exponential growth in site usage, since that contributes an equal amount of additional inventory which offsets the demand. So I guess the moral of the story is don’t ignore Facebook, and if you have to advertise with the company, do it now before rates triple again. Oh, and if you want to help me build a top-secret Facebook application, get in touch :)

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