Facebook's business model
The recent round of Facebook rumors suggest that the site will start charging for membership as a result of the upcoming new profiles. The new Facebook does indeed feature some dramatic changes, but you can rest assured that one of them isn't that the site will start charging you.
Here's why: For starters, it doesn't need the money. Facebook is estimated to be on track to pull in around $4 billion in revenue in 2011 , and has raised more than $2 billion in venture capital. It's also on track to go public in 2012, a move that would bring in significantly more capital for the company and value it at between $80 billion and $100 billion.
More importantly, the company's business model revolves around having as many users as possible. Remaining free is paramount to doing that. Facebook makes its money on highly targeted advertising that's based on the plethora of data that its members share on the site. Restricting users' ability to use the site would actually be detrimental to that model.
Facebook didn't even introduce its ad platform until 2007 -- because the company wanted to focus on adding users as quickly as possible.
That's not to say social networking sites haven't found success in charging members for some services. LinkedIn offers premium memberships with features such as enhanced search, direct messaging and seeing who has viewed your profile. Some dating sites, like Match.com and eHarmony charge users to message each other. Still, those services are appealing to a specific audience -- Facebook's goal is to connect everyone in the world. That can't be done if you need a credit card to use the service.
0 comments:
Post a Comment