Tuesday, April 7, 2009

The Facebook Revolt

NY Mag's 4,000 word feature on Facebook:

"This is a crucial moment for Facebook, and a delicate one, because We, the users, are what Facebook is selling. “Facebook is walking a fine line of keeping the trust of its members, and wanting to exploit them for profit,” says Nicholas Carr, author of The Big Switch. “It’s having a tough time balancing the two.” In 2007, the company was valued at $15 billion, after Microsoft bought a 1.6 percent stake for $240 million, but profit has been elusive. If they can solve this problem, come up with a viable business model—one might note that if they charged $1 a month for the service and even half its users stuck around, it would take in $100 million each month—it could go public and even become the first big IPO to reinvigorate the market; if Facebook doesn’t, Zuckerberg & Co. will struggle to resist a takeover by a very rich tech company (well, Microsoft) for a fire-sale price of a billion or two. After CFO Gideon Yu announced his exit last week, the company claimed that it was looking for a replacement with public-company experience, but the way forward is far from clear. The history of social networks is an absurd one of missed opportunities, from Tripod to Geocities to AOL, though Facebook thus far has avoided their pitfalls. It’s been unaffected by Friendster’s technical glitches and its taint of uncoolness; Facebook’s antiseptic design clears away the lascivious, spam-ified, knife-wielding clutter of MySpace, a site that was double Facebook’s size in the U.S. eight months ago but whose technological innovation has been stymied by News Corp until recently."

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