Facebook is dubbed as the next big thing in the IT industry. It is supposed to be on the verge of going public. There are many people moving to Facebook to make obscene amounts of money as and when it goes public. People who missed the previous bus (Google) want to get on board. Let us look at social networking sites in general and Facebook in particular (just coz it is dubbed as the next big thing).
It always intrigues me if social network sites can make money. If you see other ad companies, they bank on other things. Take Google Search for example. When Googling, people are looking for information and there are higher chances of they being interested in the relevant ads. Clear money.
On the other hand, on any social networking site, people go to socialize. Meet old friends, reunite with family members, keep track of what others are doing etc. So, they are definitely not looking for any serious information. I agree there are people who, on seeing ads, would go click and buy stuff (even if they are not looking for it) but how big is this number. Ads clearly do not suit these kind of sites. And, I don't find any other way by which they can make money.
When I mean money, I am not talking about money to break even. It seems Microsoft has valued a part of Facebook for a huge sum. And, extrapolating, Facebook is valued apparently at ~ 16 billion USD. Also, it doesn't bank on any strong technical finding. It just has a huge user base. But history has been showing - it might take long to divert the user base but it is very easy to do that.
Needless to say, it is the same with any social networking site. It is very very hard to make obscene amounts of money. The existence of more of these is just cutting the small cake into many more pieces. With this said, I open the discussion. People are welcome to discuss/argue on this.
Disclaimer: This is total speculation and as the blog title reads - Random Thoughts - it doesn't use any specific knowledge about any company internals. It is totally based on assorted discussions with friends - who again speculate.
It always intrigues me if social network sites can make money. If you see other ad companies, they bank on other things. Take Google Search for example. When Googling, people are looking for information and there are higher chances of they being interested in the relevant ads. Clear money.
On the other hand, on any social networking site, people go to socialize. Meet old friends, reunite with family members, keep track of what others are doing etc. So, they are definitely not looking for any serious information. I agree there are people who, on seeing ads, would go click and buy stuff (even if they are not looking for it) but how big is this number. Ads clearly do not suit these kind of sites. And, I don't find any other way by which they can make money.
When I mean money, I am not talking about money to break even. It seems Microsoft has valued a part of Facebook for a huge sum. And, extrapolating, Facebook is valued apparently at ~ 16 billion USD. Also, it doesn't bank on any strong technical finding. It just has a huge user base. But history has been showing - it might take long to divert the user base but it is very easy to do that.
Needless to say, it is the same with any social networking site. It is very very hard to make obscene amounts of money. The existence of more of these is just cutting the small cake into many more pieces. With this said, I open the discussion. People are welcome to discuss/argue on this.
Disclaimer: This is total speculation and as the blog title reads - Random Thoughts - it doesn't use any specific knowledge about any company internals. It is totally based on assorted discussions with friends - who again speculate.
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