Facebook is doing more than just taking away something from their users, they're being downright dishonest. Until recently Facebook's pitch to users was that it was a way to connect with people that you actually know. They were deliberately closer to the closed/private end of the spectrum. And back when they had real competition (myspace), privacy was one of the key differentiators. I still think privacy is one of the big reasons that Facebook's popularity took off like it did.
Now they're pulling a giant bait-and-switch. Attract users with privacy, kill competition, then kill privacy to gain easy profitability. This alone is pretty disingenuous, but to make these changes behind users backs (for example, pictures that were once private became publicly viewable) shows a blatant disregard for the trust that users gave Facebook when they signed up.
I think you've nailed it, bait-and-switch is the frustrating bit.
That said though, I wonder if there is a way a big corporation can avoid this path, they'll have to monetize somehow and once they're monetizing they'll have to do better and better every year of they will look like they are stagnant.
So the only way to maintain that - and for facebook monetization has always been an issue - was to squeeze the lemons a bit harder.
Some of them will squeal, but as long as the majority stays you can't really fault them, no matter how sleazy it is.
Bingo! Facebook is the best available means of keeping up with geographically distributed and loosely connected friends and family, which was the core conflict I faced when I decided I didn't like how I was being treated by Zuckerberg, et al.
I resolved it internally when I realized that they were essentially holding my relationships hostage to get what they want out of me. After that it was easy to leave.
Yes, and another aspect of this is that Facebook has a network of users who feel trapped in Facebook rather than happy with Facebook. They talk about this on and off Facebook. Facebook's brand is hurt, its level of respect goes down and a mass-exodus becomes more likely when the means appear for users to leave taking their friends with them.
"That said though, I wonder if there is a way a big corporation can avoid this path, they'll have to monetize somehow and once they're monetizing they'll have to do better and better every year of they will look like they are stagnant."
The way to avoid it is to align the incentives of customers and users, ideally making them one population.
Google faces the same issues that FaceBook does, but less so. With targeted advertisements, the user has at least indicated their intent to buy something: they want something, the advertiser wants the same thing, and both their incentives are at least partially aligned. The happiness breaks down when the incentives come out of alignment, eg. when advertisers advertise (and Google collects money for) things that people don't want to buy.
Apple has a more pure form of this. Its users pay for products - the user is the customer. And so Apple does everything they can to keep them happy. That's why Apple customers tend to be fanatically loyal: they want a good product, Apple derives all their revenue from giving them a good product, and so Apple has every incentive to keep giving them a good product.
Note that this doesn't preclude Apple from pissing off other groups. They're notoriously developer-hostile, for example, because Apple doesn't see third-party developers as being critical to its bottom line.
Follow the money if you want to see who a company is really working for.
Facebook was monetizing just fine. They had simple ads that were generating millions in revenue and profit.
The problem is that they are trying to hyper-monetize. Zuckerberg turned down a $2BN offer from Yahoo, so clearly he believed he could make the company worth more than that.
On that scale the money they were making was relatively little compared to other sites (for instance google, yahoo) with the same number of pageviews / uniques.
Zuckerberg is actually proving that they're worth more, the way in which he goes about it is not the most elegant though. I'm still willing to bet he'll succeed but the image of facebook is tarnished for ever, and it could very well be that if he does manage to sell for a much higher valuation that the buyer will find themselves with another broadcast.com.
Back when that deal was being floated, it was pretty obvious that most of the potential buyers would probably cause users to leave in droves. Especially since the most likely buyer was looking like Microsoft.
Facebook is very dependent on being a single entity. If it sells, it has to sell to a company larger than itself, and that's about the only thing scarier from a user standpoint than what Facebook has already done.
Microsoft didn't offer 15bn... they invested a couple hundred million (~250mm, if I recall) to buy a certain percent of the company. That led to a 15bn valuation.
But Ballmer had come with something more sweeping in mind. "Why don't we just buy you for $15 billion?" he replied, according to a very knowledgeable source. Zuckerberg was unmoved even by this offer. "I don't want to sell the company unless I can keep control," said Zuckerberg, as he always did in such situations. Ballmer took this reply as a sort of challenge. He went back to Microsoft's headquarters and concocted a plan intended to acquire Facebook in stages over a period of years to enable Zuckerberg to keep calling the shots.
Zuckerberg also rejected that offer. The deal that was struck was for $250M at a $15B valuation
They also got something else (an exclusive contract of some kind, I can't remember exactly) for that $250 million, so the $15B valuation was always phony.
I like the Ning model. I think the value of a social network is in the common traits among users. Ning facilitates this extremely well by allowing users to create their own social network. The creator of the network pays for the network so no need for Ning to monetize people's private data because the users are the customers unlike facebook where they're the product.
Well maybe Ning's execution of the model leaves much to be desired but what I wanted to express was the idea that a social network where the owner of the network paid for it is a good system because the provider of the service has to cater for the needs of the customer. And if the customer is a user and not an advertiser then I think the user should get better service.
I think you're focusing too much on Ning. What I am really referring to is the business model that it uses. As you've suggested it's imperfect and maybe Ning hasn't run their business very well but I don't think because of that we should say that another company cannot implement the model successfully.
The model I envision is very similar to the shared hosting model employed on the web. You sign up for hosting and you install a CMS like drupal or wordpress and you have yourself a community and you pay a subcription fee. But instead of drupal there could be a social networking application. Each network creator would be responsble for it's promotion and marketing but I think it's a viable model because there are existing real world communities that would like to establish an online presence and something like this may be a great way to do that.
With or without Ning, someone still has to pay the associated software/server/maintenance/bandwidth costs.
You are not taking out the incentive to abuse peoples data to increase revenue with your model.
Funny you should say that, after the reocities project I was approached by a number of parties that were 'locked' in to ning without an export facility if I could please get their data out of the walled garden for them in a way that they could import it elsewhere.
> I wonder if there is a way a big corporation can avoid this path, they'll have to monetize somehow and once they're monetizing they'll have to do better and better every year of they will look like they are stagnant
You just proved that no big corporation is to be trusted. Each will eventually abuse its position, should that look profitable.
Facebook's buisness model was prone to abuse from the start. They were bound to turn evil at some point. It is worth bearing in mind when (if) singing in. Too bad so much users didn't.
A business founded on the values of a generation, such as Facebook, has to keep up with, and respect, evolving lives and needs.
The classic example of a company intelligently growing up with a generation is McDonald's and baby boomers.
First, cheap food at drive-ins where teenagers can hang out, check out cars, and find dates. Then happy meals for their kids, who can stay in their car seats in the drive-thru. Now, healthier choices and high end coffee.
Intelligently growing up with a generation, or just trying to stay ahead of plain 'ol American competition?
McDonalds got it's kickstart because it was cheaper and faster (self-service) than drive-ins. Happy Meals kept parents from choosing other burger chains. Salads and low-carb choices came in response to dieting trends. Coffee was upgraded to avoid losing breakfast business to Starbucks.
But I'd wager none of these innovations would have come as quickly if there wasn't a business threat to the company.
You make it sound as if it was bad of them to do so. Any financial organization responds to only one stimulus very quickly, that is financial. If they are responding to such stimuli and moulding their services accordingly where is the harm? The customers are at a net gain anyway.
The author of the original post was saying that Facebook was failing to do exactly that.
Using the McDonald's example, it could be akin to McDonald's making all of their burgers out of ground turkey because they got a huge deal with a turkey meat distributor, the customers saying "no, give us hamburger!" and McDonald's saying "fuck you."
What happens to those customers wanting hamburgers? They go to Burger King.
I appreciate your point, but you are confusing users with customers. For Facebook users are a product, advertisers are customers. Same is true for Google.
The problem is: suppose they weren't making a profit on the hamburger and so serving the turkey was the only way they knew how to make profits. But also suppose that it would be quite hard for customers to switch to Burger King.
Then you have characterized something of the paradoxical condition of the Facebook. Making money while accumulating ill-will.
Well, to make the analogy a little more accurate, suppose they weren't making as much profit on the hamburger as they are by serving the turkey...
Facebook and Twitter both have the problem that they have to justify the amount of investment they raised, and both are doing things that are unpopular with their community (users for Facebook, developers for Twitter) to make a bigger business than the original things that got them popular can sustain.
Thirty-five or forty years ago, McDonalds got caught out serving kangaroo in their hamburgers. Much more recently it was found flavoring the french-fry oil with a bit of tallow, to the great offense of vegetarians and I think a few Hindus.
However, it has always been much smoother at the apology business than Facebook now seems to be.
The kangaroo thing is an urban legend. Think about it, why would shipping kangaroo all the way from Australia be cheaper than locally sourcing beef? Hell, kangaroo in Australia costs more than Australian beef.
And, kangaroo is actually a very lean meat, much better for you than beef. Plus kangaroos are much better for the environment, the don't fart methane, like cows do.
The introduction of healthy choices on the menu back this up. People don't want to eat food that's bad for them. McDonald's can either respond to this or wither away.
But Facebook is really only 6 years old right? That's not really enough time for a generation to grow. I think what we're seeing is that Facebook's user-growth is being driven by older and older people.
I'd argue that the HRB article is right in that people who signed up with Facebook in college six years have since moved on to a professional career, got married, and/or had kids. These are pretty big changes in peoples' life and what they demand changes respectively. People that were sharing keg stand pictures 6 years ago today want to share pictures of their baby running around.
Six years is a lot longer for a 20something than the same six years for a 50something. Both in overall life percentage and in major life changes during that timeframe.
I think it is, in the specific case of the generation Facebook initially targeted: college students in 2004. It's enough time for most of them to get their first job or two, and for some large fraction of them to start building a life with different requirements than college life.
Many of them will have gotten married (median age of first marriage in 2007: 27), and some will have had kids. There's a dramatic shift there: most "family" people I know tend to expect more privacy and control over their lives, and be less focused on expanding their social life and sharing details with their friends. But this is anecdotal, I know: I'd love to see a study on how social networking use patterns change during this age shift.
Dealing solely with information, Facebook has a "slightly" larger problem than McDonalds ever did.
It's not just that the Facebook needs to offer different fare but that the fare older adults want conflicts with the fare Facebook would like to offer in order to become profitable.
I think facebook is a perfect example of what happens when businesses are created "by accident", where a product is created first then a business model is grafted on afterwards. As the article mentions the needs of the users are in conflict with those of advertisers and it's a problem.
An increase in value for advertisers means a decrease in value for users. Users want privacy, advertisers want everything in the open. Facebook in an attempt to sustain growth has effectively forced users to accept people within their networks that they aren't really close to and this makes users less comfortable in their own space.
Facebook is at a critical juncture and its future depends on how it manages the problems they are facing now because the house of cards can come tumbling down at any moment. What they have going for it though is that there isn't really any clear alternative at the moment that users can turn to. What clear though is that people do want an alternative but till then I suspect most will bear with it till the alternative comes to their rescue.
The same things is happening with Twitter. It was just a cool little thing to do at the beginning, then they had issues scaling, now they're just co-opting whatever worked well in the ecosystem. It's the same bait-and-switch, just with developers around the API as the losers.
I think the biggest problem with facebook is that Zuckerberg is jealous of the Google guys and wants it to become a Google size company.
This started with the crapton of funding they've taken on. Which led to them hiring hundreds of Google level engineers. Which led them to needing even more funding to stay afloat.
And now that they have so many obligations to investors they need to monetize it at any cost to justify the valuation.
So they are doing it at the cost of user's privacy, since that's one commodity that most people don't really care about.
I wonder if Facebook would have done better if they had started charging power users. If users were the customers Facebook would have avoided this whole mess. Assuming a reasonable $10/month per power user, a conversion rate of 2-3%, at 500 million users they'd be generating $1.2-$1.8 billion in high-margin revenue. Instead, users are the product. Advertisers are the customers. And Facebook is generating maybe $1B in lower-margin revs. Admittedly the growth prospects of being the big display advertising/lead gen platform are better than being the leading social network.
On the other hand, isn't this great for HN users? Facebook is screwing up in some core areas. Up and at'em, I say!
a) people, often students who run their entire social lives on facebook, have 1000+ friends, and spend a long time every day on the site. Often students. Probably don't have much money -- but you might be able to get them hooked with small payments. Also, market it as a gift thing. Your uncle doesn't know what to get you for chrismas, but knows you spend a lot of time on facebook and has no problem spending $20 for a present. Also something to buy for the girl you're flirting with (and yes, it likely is that gendered). Livejournal made this work very well. In this situation it doesn't matter _what_ you offer for the paid account, just that it exists as an option.
b) anybody using it profesionally: event promoters, venue owners, bands, etc. May not deeply like or understand FB, but getting it right is worth serious money to them. Simplification, information management, statistics, maybe tech support.
c) Professionals who know nothing about facebook, but feel they should have a presence there. Sell them a service with lots of hand-holding, maybe integration with tools they already use.
This article is one of the more thoughtful ones on this.
I think Facebook is running up against human nature. Yes, humans are social, but we are also exclusive. Software that provides an outlet for the former but not the latter is betting against human nature. That's not a strong position to take, particularly when your success was built on both of those factors. Relying on lock-in to support these changes is hoping that the superstructure will compensate for removing a girder. It may work, but the fundamentals are against it. And there's a tinge of recklessness about it.
If facebook, with its more than 400 million users, and all the time its users spend on the site, can't figure out a way to make money on that without breaking privacy, then it deserves to fail.
People keep mentioning alternatives to FB but I feel pretty locked-in. I would be interested in joining a site that was a superset of Facebook... that is, a site where I could control and access my Facebook data but also interact beyond Facebook.
At the rate facebook is currently going, in a couple years all data on facebook will be world-readable. At that point it should be easy for anyone to download their facebook to another site. One could then clone facebook, and at an agreed-upon date, everyone could move over to the new site.
I say this only half in jest. One can't get 400 million + people to move, but niche sites could certainly peel off a substantial number of users over time. And facebook itself started out as a niche social netorking site...
I can't see that being easy. Since most of a social network is your relationships with other users, and those users may or may not exist on other sites (or may have duplicate people with the same name, etc), it seems like it would be quite a difficult problem. You'd also have to somehow convince one or more major providers to use it, but I don't see that being easy either.
That said, it would be a very useful thing to have if someone could get it right.
My biggest issue with Facebook is that it is so incredibly buggy. It seems like they don't run any testing before doing changes to the UI or releasing new features. Basic functionality seems to only be working off-and-on, and sometimes you just get periods where Facebook becomes totally unusable, for instance when your news feed (or "News Ahoy!" as it says on mine) is sorted completely randomly and only shows old updates (and no, I'm not talking about the "Shiniest booty" here, but the "Fresh booty").
Yes, I use Pirate as the language on Facebook, can you tell?
On a side note, does anyone think that given all this Facebook backlash, there will be greater user resistance to signing into a website using Facebook Connect?
At some point, I was starting to perceive FB connect as this holy grail that would finally bring some convergence and eliminate multiple logins and so forth. Of course, there are alternatives like OpenID, Google Friend Connect but they seem to be on the fringe still in terms of adoption and usage.
I run a site where the only way to sign up (as yet) is using FB connect, primarily to improve the authenticity of members (and it also reduces fake profiles by order of magnitude).
This backlash is definitely making me question if it's the right thing to do anymore.
This article basically says that Facebook is making its product worse for users to make it more valuable to advertisers. I don't think that's the case. A Facebook where users share most of the things they post with everyone but restrict the privacy of the few items that they don't want everyone to see is a more useful and interesting product to use. They just need to make it clear who will be able to see the item you're about to post instead of hiding it behind the lock button. A more open Facebook is more valuable to advertisers and users.
This was the technology platform they were born into
Erm...no. The technology this generation was born into was the internet, and it wasn't until barely 10 years ago that the social web became what it is. The aspects of social activity is the technology this generation was born into, and the only reason this is relevant for discussion is that just like we evolved out of IRC, ICQ and are moving away from AIM, too they will move away from centralized, top-down hierarchies of managing social interactions.
"A business founded on the values of a generation, such as Facebook, has to keep up with, and respect, evolving lives and needs."
I don't think the problem was with keeping up but rather staying the same service. Facebook needed to not evolve and remain the same way it always was when it was first conceived.
While we all argue, accuse and bemoan, my parents, grandparents, non-technical friends, and the rest of the world continue logging into facebook every day to post baby pictures and invite people to parties. They care not for any of this.
I don't have a lot of sympathy for people who expect to have a private playhouse online where they can say anything without any consequences, particularly if they want it as a consumer product.
If you're going to boast in public that you like to drink a Sparks for lunch, violate the open container law, and walk by the police station, don't be surprised if the cops notice.
In fact, if you're going to say something that you don't want to get out, you'd better be really careful of how you protect it. Nixon learned that lesson the hard way.
Are you saying that if I explicitly set my privacy settings on Facebook to be fully private, it is still o.k. for Facebook to make my data public because I should have no expectation of privacy on the Internet?
Doesn't sound at all like that's what the parent poster is trying to say. Sounds more like a caution against posting anything, anywhere, that could be harmful or damaging to oneself, while harbouring the unreasonable expectation that it will remain private for eternity. Whether that privacy breach comes from maliciousness, or negligence, the same cautionary principle applies.
The challenge is that there are two orthogonal issues here: Sympathy for users and criticism for businesses.
If someone spends thousands of dollars on hair implants because they believed an informercial telling them that they will get laid every night of the week, I would sit them down and have a long talk about tooth fairies, santa clause, bridges, and swamp land salesmen.
But I would still despise the businesspeople preying on the gullibility or naivité of their customers.
So perhaps it is a very good idea not to put anything online that would ruin you if it leaked. But it's still reprehensible to leak things after setting an expectation that they are private.
Now they're pulling a giant bait-and-switch. Attract users with privacy, kill competition, then kill privacy to gain easy profitability. This alone is pretty disingenuous, but to make these changes behind users backs (for example, pictures that were once private became publicly viewable) shows a blatant disregard for the trust that users gave Facebook when they signed up.