Wednesday, October 31, 2012

Facebook and the Commons

Should we think about Facebook business model or insist on it becoming ... a public utility ?

I was going through my reader a few days ago, and learnt that Facebook had just reached 1 billion users. The article focus was on whether Facebook would be able to generate revenue from its next billion users in the same way it has from the first billion, which is in itself an interesting question. My feeling, though, is that revenue is not the issue for Facebook. The question is, what is the nature of Facebook ?

Challenges to Facebook business model are not where you might think

It's difficult for any brand not to be tempted to be present in a space where there are 1 billion potential customers ! So my feeling is Facebook will keep growing advertising revenue (it has definitely chosen who its customers are, not us, not companies, just advertising agencies), as its models gets more sophisticated, as Facebook usage also gets more sophisticated and the ways of accessing Facebook expand - mobile as we know it is probably just a first step. But trust the guys who built this company to leverage technological innovation.

Obviously, it will be a different kind of revenue, as the user experience is very different in mobile devices. That might impact revenue per user, which is already below what investors expected. Now, is this a problem for Facebook or for investors ? Investor expectations (or dreams) have always been a key innovation and growth driver, regardless of whether they held true or not. This will very probably be the case here. I can't help thinking about other technological revolutions, say, the railroad one ...

Facebook should also see another impact on its revenue per user from competition building up. And I am not only thinking of the "next Facebook" or innovative social network. I am thinking about the arrival of new entrants to the "attention market". Follow my thinking: companies are beginning to build internal social networks that could be as attractive to people as Facebook can be. In this internal corporate social networks, relationships are not based on public social objects (or consumption, or friendship), but on professional interest. Professional interest can be a very powerful driver if it is conveniently aligned with individual professional development (let's put it even more bluntly, personal growth), and it is very likely some people that now spend time on Facebook will spend less time when companies learn how to mobilize minds in ways that are different from what they do today.

Professional interest will not be the only new entrant in this attention space. Learning and personal growth will take place outside corporations, because most existing academic institutions are already working on new learning experiences and because learning itself is changing.

And last, Facebook is not that old. It might just be that the generation that allowed Facebook to grow as it has so far decides to migrate. Not permanently, no. Just spending more time somewhere else ... As I see my kids usage of Facebook evolve, I would bet they will outgrow it.

Thinking of Facebook as just a company might not be enough

That is probably the most interesting evolution to come, and it should not take long, as some disenchantment about Facebook is slowly building steam. One is allowed to think that the choice of advertisers as their real clients was made by Facebook because of short-term financial reasons ("monetizing"). From a strategic viewpoint, though, that would be just a first step on building something different, say the first public infrastructure of the Attention Space.

Because, we've seen it, there are definitely huge risks on Facebook revenue per user. That would be really worrisome for investors if Facebook had not a more sophisticated vision, for instance, becoming the more sophisticated of a new kind of infrastructure that is expanding our ability to share, to relate, to travel indeed. After roads, railroads, telegraphs, phones and internet, social networks are building new avenues for relationships. Different kind of relationships.

Is Facebook just another road ? Or has it learned from other social networks fates that it holds the potential to transform just what a virtual network for relationships is supposed to be ? Will it keep its focus on advertisers or was that just a short-term move ? Disenchantment might not wait for the answer before it goes viral ...

Wouldn't it be interesting if Facebook was just the infrastructure and service provider and if the data belonged to the commons ? That would made Facebook concentrate on serving users of the infrastructure (not just those that advertise on it), and would give others incentives to build new offerings based on those data and existing infrastructure.

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