Social networking will become ubiquitous, but that doesn't mean it's a business.
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Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#2A rare article on the business of the Internet from the best news magazine on the planet...
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#3Took me a while to figure this out. Press release in disguise.
I'd not be so harsh if the predictions weren't so vague.
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#4I don't think the predictions are vague at all. Businesses that don't profit don't stay in business.
Facebook and MySpace are both examples of companies (or corporate divisions in the latter case), as best I can tell, that are surviving only thanks to massive quantities of outside investment. If the investments were made with a realistic expectation of return, it would be one thing, but given the economic realities of social networking that this article points out (and not for the first time), these investments are looking more like gross market distortions than anything else.
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#5[deleted]
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#6I don't think the predictions are vague at all. Businesses that don't profit don't stay in business. Facebook and MySpace are both examples of companies (or corporate divisions in the latter case), as best I can tell, that are surviving only thanks to massive quantities of outside investment. If the investments were made with a realistic expectation of return, it would be one thing, but given the economic realities o…
Facebook and MySpace are great businesses. Sure, valuing Facebook at $15 billion dollars is preposterous, but that doesn't mean it can't make some money; that doesn't mean it can't make more than enough money.
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#7I don't think the predictions are vague at all. Businesses that don't profit don't stay in business. Facebook and MySpace are both examples of companies (or corporate divisions in the latter case), as best I can tell, that are surviving only thanks to massive quantities of outside investment. If the investments were made with a realistic expectation of return, it would be one thing, but given the economic realities o…
Facebook and MySpace are great businesses. Sure, valuing Facebook at $15 billion dollars is preposterous, but that doesn't mean it can't make some money; that doesn't mean it can't make more than enough money.
MySpace and Facebook aren't making more than enough money. That's why FIM doesn't break out MySpace numbers and why Facebook raised a huge round. Business rolling in profit don't need anybody else's money.
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#8Earlier quoted context omitted.
Facebook and MySpace are great businesses. Sure, valuing Facebook at $15 billion dollars is preposterous, but that doesn't mean it can't make some money; that doesn't mean it can't make more than enough money.
MySpace and Facebook aren't making more than enough money. That's why FIM doesn't break out MySpace numbers and why Facebook raised a huge round. Business rolling in profit don't need anybody else's money.
If you don't think Myspace and Facebook could be profitable, then I don't know why you are in this business.
They are not profitable now because they are investing in growth (which, like any investment, is a gamble). They could scale down their staff and achieve a very good return on capital.
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#9Took me a while to figure this out. Press release in disguise. I'd not be so harsh if the predictions weren't so vague.
I don't know how you could say that. If anything, the article calls for the demise of walled gardens:
“Early services, such as CompuServe, Prodigy or AOL, began as ‘walled gardens’ before they opened up to become websites. The early e-mail services could send messages only within their own walls (rather as Facebook's messaging does today). Instant-messaging, too, started closed, but is gradually opening up. In social networking, this evolution is just beginning.
“‘E-mail…is the most important social network’… because the extended inbox contains invaluable and dynamically updated information about human connections.”
Without pressure to make it a business, e mail “can remain intimate and discreet. Facebook has an economic incentive to publish ever more data about its users…but [traditional e mail] can let users minimise what they share.”
Re: Social networking will become ubiquitous, but that doesn't mean it's a business.
#10Earlier quoted context omitted.
MySpace and Facebook aren't making more than enough money. That's why FIM doesn't break out MySpace numbers and why Facebook raised a huge round. Business rolling in profit don't need anybody else's money.
If you don't think Myspace and Facebook could be profitable, then I don't know why you are in this business. They are not profitable now because they are investing in growth (which, like any investment, is a gamble). They could scale down their staff and achieve a very good return on capital.
I think this article's sentiments is just to point out how tech business that are given highly speculative valuations rarely pan out.
Think about Facebook's implied value of $15 Billion. A traditional company is valued at about 2 or 3 times annual revenue, or perhaps 8 to 10 times annual EBITDA. This would require Facebook to mature with revenues around $5 Billion a year, and EBITDA of $1.5 Billion. Their speculated revenue of $50-$60 Million last year is about 1% of that mature target.
This article is saying that these tech companies may have indirect benefits that are hard to quantify, their core value continues to be questionable.