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After Facebook fails

blogs.law.harvard.edu

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Re: After Facebook fails

#181

Post by a3d6g2f7 »

JonnieCache wrote: post #163
Aramgutang wrote: post #90

Earlier quoted context omitted.

While I agree with your point, a part of me can't help but wonder about the possibilities that would open up if we had the capacity to extract enough semantic information from a photo: If I'm looking at my old holiday snaps and reliving the good times I had, I might be tempted by an ad for cheap flights to a similar destination. If I'm looking at recent photos of my relatives' adorable children, I might be tempted by…

The key word there is "might." FB and its believers think that the chances are high enough to make big money, or at least that they can make them high enough. In actuality they aren't. You might think about booking the flight, but the chances of you actually reaching for the credit card based on idly looking at photos are too small to do worthwhile targeted ads. The idea that FB can just tune their algorithms until t…

"everyone is a rational actor"

And that's why the message to Harvard graduates[1] (purportedly America's brightest rational minds) makes deliberate reference to a man[2] who has consistently proven this to be false. The message also is centered around another pillar of rationality: the idea of "luck".

1. A link to this was recently posted here on HN.

2. One who was "lucky" enough to be awarded a Nobel Prize.

Re: After Facebook fails

#182

Post by a3d6g2f7 »

Swannie wrote: post #115
a3d6g2f7 wrote: post #54

Earlier quoted context omitted.

Imagine an apartment. Google is like the copy of the yellow pages by the telephone. FB is like the photo-album in the closet. People generally do not open these two books for similar reasons. They have very different usage. One is recreational, the other is not[1]. But FB believers do not want to accept this difference. And it's this difference that makes FB a dud compared to Google. The question I have is what is go…

I'd say Facebook is more like the front of your fridge (cool pictures of your friends/kids), plus your kitchen notice board (that wedding invitation from last year, that save the date card for next year etc) - the shoebox that you put all that stuff in, and never really sort, plus the photo album ;-)

OK, so if your wife says to you, e.g., "Swannie, we need [description of rarely purchased, high priced product]. The old one has stopped working." Do you check the front of the fridge, your kitchem notice board, the shoebox and then your photo album to find the contact information for who sells [product description]? Maybe you have the name of who to contact in one of those places? Or you need to call your friend to get a recommendation? Anything is possible, but what do you think is what people do _most of the time_?

FB is the next Pets.com

But it's going to be a slow, painful decline. They have raised billions to stay alive.

Solution for FB: Build a search engine and put it where the display ads are. Keep people inside the walled garden by removing any possible reason for them to leave. Like 1990's "framing" reborn. FAIL.

The whole notion of FB is utterly absurd. Tell us who all your friends are and we'll "enable" you to communicate with them (even though it's trivial to do yourself without us). We reserve the right to analyse all the information you give us and monitor everything you do on the FB site and elsewhere on the web to _try_ to make money, in various sneaky, deceptive (but really clever!) ways. FAIL.

Re: After Facebook fails

#183

Post by a3d6g2f7 »

Retric wrote: post #155
Swannie wrote: post #115

Earlier quoted context omitted.

I'd say Facebook is more like the front of your fridge (cool pictures of your friends/kids), plus your kitchen notice board (that wedding invitation from last year, that save the date card for next year etc) - the shoebox that you put all that stuff in, and never really sort, plus the photo album ;-)

I know plenty of people with really interesting things pinned to their fridge. It often takes them a while to remember anything about pictures that have been staring them in the face for years. Why? Because, you go the the fridge to get food. People are terrible multitasking which is why Facebook advertising has such a low click-though rate and a high accidental click rate.

"you go to the fridge to get food"

Hungry. Get food. How much thinking is involved in that?

Do you know what has a very high clickthrough rate on FB, probably their highest CTR ever (but which is no longer allowed)?

Pop-up styled ads for "party poker".

Not much has changed since the 1990's in this regard. Web advertising is still much the same. And anyone who has been using the web since then, such as the author of the MIT article, sees and knows this.

But do the kids with advanced degrees being hired by FB at $100K/yr know it? Nope. They believe that watching your every move and analysing who your friends are is a path to riches.

I'm not sure what's worse. The knee-jerk response of web users to blinking poker ads, or the blind allegiance of otherwise intelligent young people to a sociopath who thinks destroying privacy is a "goal" worth pursuing.

News flash: Communication on and above the scale of FB is possible without destroying privacy.

Re: After Facebook fails

#184

Post by TazeTSchnitzel »

gvb wrote: post #136
mike-cardwell wrote: post #102

Earlier quoted context omitted.

"Visit any Like-enabled site and you see a small piece of content from Facebook that tells Facebook all the sites you visit. It's a tracking cookie like any other and personally I have no problem with that" I understand that you work for Google and that not holding this opinion would mean that you have to conclude that your employer is also very much in the wrong. But how do you justify it? It's clearly not informati…

It is MUCH more than a tracking cookie. The more useful XFBML version is a snippet of JavaScript. JavaScript can do a lot more than a cookie. http://developers.facebook.com/docs/reference/plugins/like/?... (function(d, s, id) { var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) return; js = d.createElement(s); js.id = id; js.src = "//connect.facebook.net/en_US/all.js#xfbml=1"; fjs.parentNode.insert…

It's not a lot, really. If you look at it, you see it simply includes the entire FBML widget set, instead of just the Like button.

Re: After Facebook fails

#185

Post by polemic »

jerf wrote: post #128
polemic wrote: post #16

I have no idea if Facebook is valued correctly or not, however I think this misses a vital point. Facebook is not nearly the same as other web ventures. It's ability to target ads seems secondary to this: From http://www.kenburbary.com/2011/03/facebook-demographics-revi... , slightly out of date, but still useful: - Average user visits the site 40 times per month - Average user spends an 23 minutes (23:20 to be preci…

Facebook didn't start yesterday. It's years and years old, with massive amounts of engineering resources and resources of every other kind poured into it. The fact that they have the numbers you say they have, which they do, and that after all these man-millenia of work, are essentially doing just better than break-even, is an enormous flashing red sign to me. Revenue in this sort of area typically has a low-hanging…

On the flip side though, isn't this a matter of scale?

What if: Facebook is not building a website - it's building a sub-section of the internet; a private walled garden for it's enormous userbase; an ecosystem of subscribers to rival the viewer-ship normally attributed to mass media outlets.

Yes, the infrastructure investment is enormous. But if this is true, revenue comes through efficiencies and leverage further down the track. The 'low hanging fruit' problem that applies to the players who feed off ecosystems doesn't apply to the player who operates it.

100 P/E today? That's almost certainly wrong, I think, but it'll be interesting to see what they do with what they've created, now that earnings pressure will start to really screw down.

Re: After Facebook fails

#186

Post by brudgers »

jbooth wrote: post #179
brudgers wrote: post #176

Earlier quoted context omitted.

> "unless" You, me and The Lorax all agree its possible. We just hold different opinions regarding under what conditions it is likely to occur. Google or Facebook's proprietary access to the data they have collected only makes strategic sense so long as there is strategic value in exclusivity. Given that there already are a variety of ordinary existing circumstances in which exclusivity is not strategic - e.g. subpoe…

I'm saying it's very low on the list of possibilities. Most of the data is of transient value (browser cookies last around 30 days on average). If Google is whittled down to a shell of its former self, to the point where they'd consider selling that data, presumably what data they have at that point isn't really that valuable.

On the one hand, I find it hard to believe that Google is not extracting data from cookies and looking at it over the long term.

On the other hand, I know that much of the data which Facebook is collecting will be pertinent twenty, thirty and forty years from now...e.g. my cousin will still be gay in 2036.

Finally, the notion of Google selling their data only seems remote given the current state of affairs. If Facebook starts selling direct access to their data, it makes Google far more likely to follow suit not only based on a need to stay competitive but also because the standard of acceptable behavior has been lowered and a new status quo has been created.

One need only look at the speed at which telephony has changed over the last five years or the music industry over the last ten to realize that business models of established companies can change rapidly.

Re: After Facebook fails

#187

Post by r00fus »

jonnathanson wrote: post #178
maxerickson wrote: post #138

Earlier quoted context omitted.

So by saying that you think they went public too early, you are maybe implying that they could have made much more money later, or maybe implying that public perception of the stock will interfere with their ability to operate. Are either of those things true? Is there some other difficulty?

"implying that they could have made much more money later, or maybe implying that public perception of the stock will interfere with their ability to operate." I'm implying both. First, if they'd have shrugged off the early pressure to take on too much VC money, they wouldn't have been propped up with an indefinite runway and would have been forced to get creative, and quickly, with monetization. They'd probably be i…

Not so sure that Facebook's strategy would be in-line with early monetization.

Their business strategy was clearly to rapidly gain default status and solidify the barrier to entry of being the de-facto social network... by monetizing you either piss off or scare away users, or decrease your eyeballs (that you can sell in-aggregate to advertisers).

Re: After Facebook fails

#188

Post by eurleif »

brudgers wrote: post #186
jbooth wrote: post #179

Earlier quoted context omitted.

I'm saying it's very low on the list of possibilities. Most of the data is of transient value (browser cookies last around 30 days on average). If Google is whittled down to a shell of its former self, to the point where they'd consider selling that data, presumably what data they have at that point isn't really that valuable.

On the one hand, I find it hard to believe that Google is not extracting data from cookies and looking at it over the long term. On the other hand, I know that much of the data which Facebook is collecting will be pertinent twenty, thirty and forty years from now...e.g. my cousin will still be gay in 2036. Finally, the notion of Google selling their data only seems remote given the current state of affairs. If Facebo…

>On the other hand, I know that much of the data which Facebook is collecting will be pertinent twenty, thirty and forty years from now...e.g. my cousin will still be gay in 2036.

I think Google could probably guess most gay people are gay from their searches, and the pages they visit.

Re: After Facebook fails

#189

Post by snowwrestler »

a3d6g2f7 wrote: post #54
cletus wrote: post #44

Here's my take on Facebook (disclaimer: I work for Google, these opinions are purely my own and not representative of the company, yadda yadda yadda). Display advertising works best when you have sufficient, quality inventory (publishers whose sites serve ads) such that you attract advertisers in sufficient quantity and quality. Targeting in display ads works because from the publishers, the intermediary has informat…

Imagine an apartment. Google is like the copy of the yellow pages by the telephone. FB is like the photo-album in the closet. People generally do not open these two books for similar reasons. They have very different usage. One is recreational, the other is not[1]. But FB believers do not want to accept this difference. And it's this difference that makes FB a dud compared to Google. The question I have is what is go…

Google is a tool and Facebook is entertainment. If you look at the history of advertising, entertainment companies have done far better than tool companies. Who made more money in the 20th century--the magazine publishing industry or the Yellow Pages?

Think of Facebook like a magazine. When people read through National Geographic, are they looking to buy a camera right then? No. And yet all the camera companies advertize heavily in Nat Geo because having their ad next those photos creates a positive brand association.

Facebook is developing the ability to show ads that are contextual to whatever you're reading or talking about on Facebook. Their success won't be measured in clicks, but in the same way companies have valued brand ads for decades--by statistical research.

Re: After Facebook fails

#190

Post by a3d6g2f7 »

snowwrestler wrote: post #189
a3d6g2f7 wrote: post #54

Earlier quoted context omitted.

Imagine an apartment. Google is like the copy of the yellow pages by the telephone. FB is like the photo-album in the closet. People generally do not open these two books for similar reasons. They have very different usage. One is recreational, the other is not[1]. But FB believers do not want to accept this difference. And it's this difference that makes FB a dud compared to Google. The question I have is what is go…

Google is a tool and Facebook is entertainment. If you look at the history of advertising, entertainment companies have done far better than tool companies. Who made more money in the 20th century--the magazine publishing industry or the Yellow Pages? Think of Facebook like a magazine. When people read through National Geographic, are they looking to buy a camera right then? No. And yet all the camera companies adver…

I agree with you entertainment is a cash cow. But FB is _free_ entertainment. As is your photo-album and the discussions you have with your friends.

You appear to be referring to future success. It's like Microsoft talking up "vaporware". It gets people's attention, maybe it convinces some to believe and some to invest, but it offers them nothing. Only a promise of some future of which no one can be certain.

We have almost two decades of web display ads and their effects on building brands. Advertisers are not too impressed. They have waited patiently for something that compares to a magazine ad. And no one has delivered. Maybe solving the context problem might not be so easy. Maybe a website is not a magazine.

Meanwhile people are looking for products and services via the web, with their credit cards in hand. And Google has been there to help advertisers reach them.

That's not some promise of the future, that's the here and now.

Facebook has real power for influence. And some of that can no doubt benefit corporations. But what Google offers is something much more direct and efficient. And it's not a pie-in-the-sky promise, it's proven to have worked year after year.

Facebook has no business model. They only have everyone's curiousity. And that's mainly because the "content" on FB is everyone's friends and family, not the type of packaged, commercialised "entertainment" you get from a magazine. FB is not a magazine. It's a photo-album. More specifically, it's a collection of personal photo albums.

It does have some added "features" to the traditional photo album. It comes with tacky, invasively personal display ads in the margin. And it comes with a team of "engineers" looking over your shoulder to log every photo you look at and every comment you make. And it's exposed to viewing by millions of strangers (this is totally unnecessary). I think we can have photo albums without all that cruft. And I think we will.

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