I don't understand the economics of Facebook

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BackInTex
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I don't understand the economics of Facebook

#1 Post by BackInTex » Sat Sep 29, 2012 9:13 am

There is an article about Facebook policing fake accounts and false or fraudulent 'likes'. It talks about them now being a public company and being able to accurately report the number of users is important. O.K. I get that. They sell ad revenue and those revenues are dependent on the number of users.

However, say I have a commercial Facebook page. Why would I pay someone a couple thousand dollars to get 60,000 'likes'.

Are people really making buying decisions based on that? Or does the number of likes increase the likelyhood of showing up at the top of a search engine results page?

I know I'm not a 'Facebook' junkie but is there really that much buying going on on Facebook? I, nor myb kids, have spent a dime. And I ignore all the 'ads' and stuff.
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Re: I don't understand the economics of Facebook

#2 Post by bazodee » Sat Sep 29, 2012 12:40 pm

I wish I could provide exact details for you as this is a little squishy.

I have a friend who has a nascent clothing reselling business on eBay. He applied for something like an SBA or other local economic development loan or seed-money. One of the metrics that was being used by the agency was the ability to generate a following for one's business; in this case they needed to see a couple hundred "likes" on Facebook within the month.

Not editorializing about the merits of this here. It seems that some people accept "likes" as a surrogate for testimonials.

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Re: I don't understand the economics of Facebook

#3 Post by etaoin22 » Sat Sep 29, 2012 2:57 pm

I agree, and I am reminded of the poker-player's maxim: If you don't know who the patsy at the table is, you're the patsy. Facebook plays IMHO individual users, business users and investors as patsies.

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Re: I don't understand the economics of Facebook

#4 Post by etaoin22 » Sat Sep 29, 2012 2:57 pm

I agree, and I am reminded of the poker-player's maxim: If you don't know who the patsy at the table is, you're the patsy. Facebook plays IMHO individual users, business users and investors as patsies.

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Re: I don't understand the economics of Facebook

#5 Post by themanintheseersuckersuit » Sat Sep 29, 2012 3:02 pm

I don't understand the economics of Facebook

Congratulations you are now qualified to be a major investment bank
Suitguy is not bitter.

feels he represents the many educated and rational onlookers who believe that the hysterical denouncement of lay scepticism is both unwarranted and counter-productive

The problem, then, is that such calls do not address an opposition audience so much as they signal virtue. They talk past those who need convincing. They ignore actual facts and counterargument. And they are irreparably smug.

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Re: I don't understand the economics of Facebook

#6 Post by etaoin22 » Sat Sep 29, 2012 3:10 pm

themanintheseersuckersuit wrote:I don't understand the economics of Facebook

Congratulations you are now qualified to be a major investment bank
It appears that from the banking point of view, the economic theory may well have been "Take the Money and Run", effectively reversing the direction of cash flow in the Steve Miller song.

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Re: I don't understand the economics of Facebook

#7 Post by MarleysGh0st » Sat Sep 29, 2012 5:59 pm

themanintheseersuckersuit wrote:I don't understand the economics of Facebook
Even after the sharp decline in value from its IPO, Facebook is selling at a P/E of 75 and pays no dividend. I'd say Wall Street doesn't understand the economics of Facebook, either.

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Re: I don't understand the economics of Facebook

#8 Post by jaybee » Sun Sep 30, 2012 1:52 am

The sheeple will follow and add their 'likes', therefore giving it 'value'.

Safe to say I am not a facebook fan and consider it the Kardasian equivalent of a social network - It has no substance & has no value so it only exists as long as it is "in". Eventually a new and more popular technology will come along and Facebook will fade away.
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Re: I don't understand the economics of Facebook

#9 Post by franktangredi » Sun Sep 30, 2012 6:37 am

jaybee wrote:The sheeple will follow and add their 'likes', therefore giving it 'value'.

Safe to say I am not a facebook fan and consider it the Kardasian equivalent of a social network - It has no substance & has no value so it only exists as long as it is "in". Eventually a new and more popular technology will come along and Facebook will fade away.
Aren't "substance" and "value" entirely dependent on what each individual puts into it and gets out of it, rather than the vehicle? At the moment, I find Facebook useful and enjoyable and occasionally very interesting. And I pay no attention whatsoever to the ads. So it's working fine for me.

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Re: I don't understand the economics of Facebook

#10 Post by vettech » Sun Sep 30, 2012 6:47 am

franktangredi wrote:
Aren't "substance" and "value" entirely dependent on what each individual puts into it and gets out of it, rather than the vehicle? At the moment, I find Facebook useful and enjoyable and occasionally very interesting. And I pay no attention whatsoever to the ads. So it's working fine for me.
Where's the "like" button?

:mrgreen:

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Re: I don't understand the economics of Facebook

#11 Post by littlebeast13 » Sun Sep 30, 2012 7:53 am

Facebook is evil®.....

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Re: I don't understand the economics of Facebook

#12 Post by jaybee » Sun Sep 30, 2012 8:55 am

franktangredi wrote:
jaybee wrote:The sheeple will follow and add their 'likes', therefore giving it 'value'.

Safe to say I am not a facebook fan and consider it the Kardasian equivalent of a social network - It has no substance & has no value so it only exists as long as it is "in". Eventually a new and more popular technology will come along and Facebook will fade away.
Aren't "substance" and "value" entirely dependent on what each individual puts into it and gets out of it, rather than the vehicle? At the moment, I find Facebook useful and enjoyable and occasionally very interesting. And I pay no attention whatsoever to the ads. So it's working fine for me.



Yes, that's what gives it it's value but it's all backwards. I do not dispute that Facebook has many uses - you cannot deny the millions that are on it every day. However, it is the users themselves that generate the numbers that in turn gives it 'value'. Facebook is not so much a "If you build it, they will come" type thing but more of a "If they come then we have built something". Facebook is the very definition of a fad and fads will always end. All it takes is the next new thing to come along.

Facebook is a business and a business must sustain a profit to survive. Ads on Facebook can be sold by quoting impressive numbers.....millions of hits on a page could in theory mimic Super-Bowl-like ad exposure. But the reality is that internet ads are ignored by most and in some cases cause a negative effect by just being in the way - those ads have very little, if any value. Eventually, somebody realizes that the emperor is naked, the word spreads and the whole thing falls apart.

Imagine a new medium that offers all the pluses of Facebook yet takes things a step farther and is just better in whatever way you want to imagine - faster, easier to use, 3-D projection directly to your I-pod 8, more features .... whatever. Once the masses decide to move then Facebook is gone. All it has are clients, it has no assets. In this internet age a baseless company like Facebook could be wiped clean in a matter of months. Sure, Facebook itself is in a prime position to periodically reinvent itself but that doesn't stop the lure of innovation from another direction - there's just too much money involved.

MySpace anyone?
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Re: I don't understand the economics of Facebook

#13 Post by silverscreenselect » Sun Sep 30, 2012 9:11 am

jaybee wrote: Facebook is the very definition of a fad and fads will always end. All it takes is the next new thing to come along.

Facebook is a business and a business must sustain a profit to survive.
Every business is to some extent a fad. Automobiles were a fad in the 1890s and television was a fad in the 1940s. Every product has a lifecycle. It's been very long for automobiles and TVs, a few weeks for singing bass trophies. Businesses needs customers to survive, and if someone else designs a better or fancier or more interesting product, it suffers. And, as we progress, the lifecycle of a lot of products gets shorter and shorter.

If Facebook does the same thing it's done, the same way they've done it, they will suffer the fate of MySpace. But Apple and Google were fads too. Apple started as a niche computer company with a small but devoted segment of the market. When Steve Jobs left, his successors nearly ran the company into the ground by continuing to do the exact same thing. Jobs came back and moved Apple from a Mac company to an i-anything company and it's now the biggest in the world.

Google started as just a search engine, better than Altavista and the other search engines that were around a decade ago, but still just a search engine. If they limited themselves to that, they'd also be a bypassed relic. Instead, they've stayed up with or ahead of the innovation curve. Facebook hasn't had the need to expand until now, and it remains to be seen if they can do that. But if they can use their customer base as the foundation on which to build other products or services, they can succeed.
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Re: I don't understand the economics of Facebook

#14 Post by minimetoo26 » Sun Sep 30, 2012 9:17 am

silverscreenselect wrote:
jaybee wrote: Facebook is the very definition of a fad and fads will always end. All it takes is the next new thing to come along.

Facebook is a business and a business must sustain a profit to survive.
Every business is to some extent a fad. Automobiles were a fad in the 1890s and television was a fad in the 1940s. Every product has a lifecycle. It's been very long for automobiles and TVs, a few weeks for singing bass trophies. Businesses needs customers to survive, and if someone else designs a better or fancier or more interesting product, it suffers. And, as we progress, the lifecycle of a lot of products gets shorter and shorter.

If Facebook does the same thing it's done, the same way they've done it, they will suffer the fate of MySpace. But Apple and Google were fads too. Apple started as a niche computer company with a small but devoted segment of the market. When Steve Jobs left, his successors nearly ran the company into the ground by continuing to do the exact same thing. Jobs came back and moved Apple from a Mac company to an i-anything company and it's now the biggest in the world.

Google started as just a search engine, better than Altavista and the other search engines that were around a decade ago, but still just a search engine. If they limited themselves to that, they'd also be a bypassed relic. Instead, they've stayed up with or ahead of the innovation curve. Facebook hasn't had the need to expand until now, and it remains to be seen if they can do that. But if they can use their customer base as the foundation on which to build other products or services, they can succeed.
If the fad is an actual product a competitor would have to come in with manufacturing infrastructure to overtake the innovator. If the fad is merely a service it is very easy for a competitor to move in with a better service. Facebook needs to stop annoying its customers or a better service will move in and become the next fad.
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Re: I don't understand the economics of Facebook

#15 Post by SportsFan68 » Sun Sep 30, 2012 9:51 am

Farmville is very annoying, but those annoyances don't impact the Facebook services I use which work well. If Facebook did go under, I would especially miss the sharing of photographs.

As annoying as Farmville is, people have substantial investments in it. When I complained about the things that were annoying me, I read some of the other posts, and one poster noted that she had 5,000 gifts stashed away. With that kind of investment, I doubt that Farmville or Facebook will be going away.
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Re: I don't understand the economics of Facebook

#16 Post by SportsFan68 » Sun Sep 30, 2012 9:54 am

littlebeast13 wrote:Facebook is evil®.....

lb13
This may be a good avatar, but it will not win. I can't figure it out.

Is that a baseball bat? It's a little small. Why is DK laughing?
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Re: I don't understand the economics of Facebook

#17 Post by jaybee » Sun Sep 30, 2012 10:17 am

Something is a fad if it exists only because it is popular. Chariots are pretty much gone but were never a fad - they just got bypassed by new technology. Social networks will probably be around forever, but any single one (including Facebook) can have the lifespan of a gnat purely at the whim of the masses.

Just a few years ago, many major auto companies went through extremely hard times - only restructuring and bailouts kept them alive. They did survive because there was more to them then just 'I am going to buy a Chevy because my best friend bought one too". If Facebook ever goes through a period of even just six months where the popular belief is that it's not the place to be....then it's gone.
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Re: I don't understand the economics of Facebook

#18 Post by littlebeast13 » Sun Sep 30, 2012 10:24 am

SportsFan68 wrote:
littlebeast13 wrote:Facebook is evil®.....

lb13
This may be a good avatar, but it will not win. I can't figure it out.

Is that a baseball bat? It's a little small. Why is DK laughing?

Sprots, do I have to draw you a diagram?

Actually, I guess I already did.... :mrgreen:

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Re: I don't understand the economics of Facebook

#19 Post by minimetoo26 » Sun Sep 30, 2012 10:32 am

littlebeast13 wrote:
SportsFan68 wrote:
littlebeast13 wrote:Facebook is evil®.....

lb13
This may be a good avatar, but it will not win. I can't figure it out.

Is that a baseball bat? It's a little small. Why is DK laughing?

Sprots, do I have to draw you a diagram?

Actually, I guess I already did.... :mrgreen:

lb13
I always get confused when you put Hooly in there. I missed so much those days! Oh, wait--I didn't miss a thing... :P :P :P :P

You'll have to spell this one out for me as well. :?:
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Re: I don't understand the economics of Facebook

#20 Post by littlebeast13 » Sun Sep 30, 2012 10:52 am

minimetoo26 wrote:
littlebeast13 wrote:
SportsFan68 wrote:
This may be a good avatar, but it will not win. I can't figure it out.

Is that a baseball bat? It's a little small. Why is DK laughing?

Sprots, do I have to draw you a diagram?

Actually, I guess I already did.... :mrgreen:

lb13
I always get confused when you put Hooly in there. I missed so much those days! Oh, wait--I didn't miss a thing... :P :P :P :P

You'll have to spell this one out for me as well. :?:

Sigh!

LB always says "Facebook is Evil!"

Devils are evil.

Devil Kitty is a... devil kitty.

And she dislikes "Sunshine"

So she laughs in devilish delight as ES smashes Hooly's smartphone

Which she (still) no doubt uses constantly to post on Facebook

Consider this payback for esPhone.... :P :P :P :P :P

lb13
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Re: I don't understand the economics of Facebook

#21 Post by minimetoo26 » Sun Sep 30, 2012 10:57 am

littlebeast13 wrote:
minimetoo26 wrote:
littlebeast13 wrote:

Sprots, do I have to draw you a diagram?

Actually, I guess I already did.... :mrgreen:

lb13
I always get confused when you put Hooly in there. I missed so much those days! Oh, wait--I didn't miss a thing... :P :P :P :P

You'll have to spell this one out for me as well. :?:

Sigh!

LB always says "Facebook is Evil!"

Devils are evil.

Devil Kitty is a... devil kitty.

And she dislikes "Sunshine"

So she laughs in devilish delight as ES smashes Hooly's smartphone

Which she (still) no doubt uses constantly to post on Facebook

Consider this payback for esPhone.... :P :P :P :P :P

lb13
Okay--Old Lady Here doesn't associate phones with Facebook. I thought this was some chat conversation turned into an avatar for a reason I wasn't privy to...
Knowing a great deal is not the same as being smart; intelligence is not information alone but also judgment, the manner in which information is collected and used.

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Re: I don't understand the economics of Facebook

#22 Post by littlebeast13 » Sun Sep 30, 2012 10:59 am

minimetoo26 wrote:
littlebeast13 wrote:
minimetoo26 wrote:
I always get confused when you put Hooly in there. I missed so much those days! Oh, wait--I didn't miss a thing... :P :P :P :P

You'll have to spell this one out for me as well. :?:

Sigh!

LB always says "Facebook is Evil!"

Devils are evil.

Devil Kitty is a... devil kitty.

And she dislikes "Sunshine"

So she laughs in devilish delight as ES smashes Hooly's smartphone

Which she (still) no doubt uses constantly to post on Facebook

Consider this payback for esPhone.... :P :P :P :P :P

lb13
Okay--Old Lady Here doesn't associate phones with Facebook. I thought this was some chat conversation turned into an avatar for a reason I wasn't privy to...

Well, you don't work with a bunch of young whippersnappers whose phones are surgically attached to their hands.... just waiting for the next big social networking fad.... :P

lb13
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Re: I don't understand the economics of Facebook

#23 Post by minimetoo26 » Sun Sep 30, 2012 11:08 am

littlebeast13 wrote:
minimetoo26 wrote:
littlebeast13 wrote:

Sigh!

LB always says "Facebook is Evil!"

Devils are evil.

Devil Kitty is a... devil kitty.

And she dislikes "Sunshine"

So she laughs in devilish delight as ES smashes Hooly's smartphone

Which she (still) no doubt uses constantly to post on Facebook

Consider this payback for esPhone.... :P :P :P :P :P

lb13
Okay--Old Lady Here doesn't associate phones with Facebook. I thought this was some chat conversation turned into an avatar for a reason I wasn't privy to...

Well, you don't work with a bunch of young whippersnappers whose phones are surgically attached to their hands.... just waiting for the next big social networking fad.... :P

lb13
I have kids with iDevices. But no Facebook for them! MOM is evil!!!
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Re: I don't understand the economics of Facebook

#24 Post by SportsFan68 » Sun Sep 30, 2012 11:12 am

Whew!

Sometimes you gotta draw me a picture, and then remind me that you drew it.

YOU SMASHED A VALUABLE SMARTPHONE!! It will not win.
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-- America would be a better place if leaders would do more long-term thinking. -- Wilma Mankiller

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Re: I don't understand the economics of Facebook

#25 Post by littlebeast13 » Sun Sep 30, 2012 11:12 am

minimetoo26 wrote:
littlebeast13 wrote:
minimetoo26 wrote:
Okay--Old Lady Here doesn't associate phones with Facebook. I thought this was some chat conversation turned into an avatar for a reason I wasn't privy to...

Well, you don't work with a bunch of young whippersnappers whose phones are surgically attached to their hands.... just waiting for the next big social networking fad.... :P

lb13
I have kids with iDevices. But no Facebook for them! MOM is evil!!!

That's funny. My Mom practically BEGS me to get on Facebook, because she has an account for one reason only.... to snoop on everyone. I don't even think she posts on it, but she's constantly creeping on FB from her phone while we're out eating, and it drives me effing insane when she starts spouting off about what my sisters or nephews are doing, or the stupid shit her sister posts while she' supposed to be working...

lb13
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