Facebook's fail is going to be epic

http://www.theregister.co.uk/2008/02/21/fb_nielsen_fall/

by nickb • 18 years ago

55 71 18 years ago

theregister.co.uk

Not epic, just predictable.

nickb2• 18 years ago

Epic, in current internet meme speak, means great or huge. When they say that they're worth $15B and the reality strikes and they lose $10B off that valuation, the fall will be huge (especially to investors).

run4yourlives3• 18 years ago

I don't see the reality of the old adage "A fool and his money are soon parted" as being epic though.

Bigger fools is all. I won't lament their loss.

tlrobinson4• 18 years ago

Err, hasn't epic always meant something like that?

mynameishere2• 18 years ago

What would happen if they just said, "Okay, no more access to your site unless you pay 12 dollars a year". Or...no more than 50 page views a day without a subscription, or similar.

Would it be a total collapse? If advertising isn't working, well...

batasrki• 18 years ago

I think that would be a total collapse. Well, maybe not total, but there would be a flood of people leaving the service, for sure. I, for one, would not pay a cent to access Facebook. I just may copy down information for the people that I've gotten into touch with over Facebook and deactivate my account.

As for page views option, that wouldn't work either. I, personally, don't do more than 10 page views a day and most of my friends are the same. I suspect many people just check their profile, answer wall posts or messages, look at some apps and log out. There is not much there that can hold your attention.

All Facebook can really do now is pray that people still find it interesting. I think the Beacon was their attempt at monetizing the interest. That got shut down, so they're SOL.

mynameishere2• 18 years ago

* I suspect many people just check their profile,...*

I suspect many people spend hours and hours on it. These are the ones who should, perhaps, be urged to pay. The light users are more likely to leave on any harassment.

rms2• 18 years ago

I can say with completely confidence that it would be a total collapse. Among the core of college students, almost no one is going to pay. And the site becomes practically useless once the penetration rate is no longer 100%.

pg2• 18 years ago

Would it be a total collapse?

Possibly, because it wouldn't happen in isolation. Some still-free FB competitor would make a huge effort to get all the users who didn't want to pay, get most of them, and then most of the paying users would leave FB because their friends had.

mtts2• 18 years ago

If history is any indication, then yes. The Dutch website http://www.schoolbank.nl that let you get back in touch with former school mates tried just that and saw their users leave, for example to the Dutch facebook workalike http://www.hyves.nl

phil• 18 years ago

Facebook's execs take great pains, at every opportunity, to point out that they don't plan to do this and that they see Facebook as an ad-supported product.

I think that they think that charging for access would be a disaster

hobbs4• 18 years ago

Most commentators thought Zuckerberg was an idiot to turn down the $1 billion offer. My guess is that they can't wait to have their opinion vindicated.

Personally, I've yet to find a reason to even visit Facebook. I still have plenty of old friends - don't need any replacements yet, nor a different way to keep in touch with them.

jmtulloss• 18 years ago

Facebook is less about making new friends as it is about communicating. I know you mention that you don't need any new ways, and I used to agree with you, but the plethora of options it provides for pinging your friends makes it quick, easy, and fun to keep in touch with far more people than you would otherwise. I'm not saying it deserves the hype it's gotten, but I definitely think it has some value.

klein_waffle• 18 years ago

No, he was not an idiot, at least in my opinion. Nobody's done what they've done before. Practically everyone I've ever met can now get in touch with me. Nobody's ever created a platform like F8. A lot of people are still obsessed with Facebook.

The problems they have come from too much success, too soon, and some boneheaded mistakes that they made in the glare of a media spotlight.

henning• 18 years ago

At least we know now that memcached really, really works.

mrtron• 18 years ago

But but but its beta.

My next app I am going to put in 'zeta' for the duration of it's lifespan, to show that its super-duper mature.

staunch• 18 years ago

memcached is not in beta and hasn't been for a very long time as far as I know. Maybe you're thinking of memcachedb?

pchristensen3• 18 years ago

Is it that big of a fail if it stabilizes with 50 million users? The real question is if they can find a way to monetize that (like AdWords did for Google) before they run out of cash.

hobbs4• 18 years ago

Considering that Facebook has been "valued" at $15 billion, yes, 50 million users is a failure. That would mean that they'd have to justify why each and every user is worth $300. A good percentage may be worth close to that much, but certainly not every one.

timr2• 18 years ago

That's a failure of the investors, not the site.

mkull• 18 years ago

Not saying that 15Billion isn't ridiculous, but the formula is n't nearly as simple as

value_per_user = valuation / num_users

nextmoveone• 18 years ago

Well, technically if you want to use that model, then if each user spends $25 a month on products/services they find on facebook, then after a year(collectively) each user will have at least spent, $15 billion, which I think is worth...well... $15 billion.

yters• 18 years ago

Networks are worth more than the sum of their parts.

xirium4• 18 years ago

$15 billion / 50 million users = $300 per user.

That's a bargain compared to GeoCities, which, I believe was purchased by Yahoo for $1100 per user.

pchristensen3• 18 years ago

Well, let's look at it from an investment perspective. Growing tech stocks trade at 20-50x earnings, but an especially hot or new stock can trade at 100x (I'll use that for Facebook). So for a $15B valuation at 100 P/E, they'd have to make $150 million in profit per year or $3/user. I don't think they're there yet (I think revenues are in that ballpark, not profits), but it's not unreasonable.

Of course 100x is an extremely high valuation multiple for a company based on fundamentals instead of speculation, so if they can't monetize, or if they stop growing, or if attrition goes up, then their multiple goes down and then they might have to make $6, $12, or $24 in profit/user/yr, which I'm pretty sure is unreasonable.

Moral of the story: we're all guessing. If they can monetize, then every doubter is wrong. If they can't, then every doubter says "I told you so."

johnrob• 18 years ago

I don't know... we could simply be entering the trough phase of the hype cycle. What might follow is a wave of more interesting apps that bring traffic back in full force. Time will tell.

DaniFong2• 18 years ago

I wonder if it crosses the mind of anyone else that Microsoft is using its billions as weapons. Facebook is a massively successful site. But by investing in a small stake of a company at some huge, overestimate of a valuation, Microsoft is shuttering the valuation of Facebook, and pretty well all of social networking.

dpapathanasiou2• 18 years ago

If that were true, then Facebook would have declined letting MS have a stake.

Rather than stunting social networking, it seems MS is just trying to get in the game, since their home-grown efforts to date have been lackluster.

DaniFong2• 18 years ago

It might actually be an advantage to facebook to see the social networking investment market turn sour temporarily, to keep out big VC funded marketing campaigns that you have to do something to compete with.

Besides, typically, if someone is going to give you money at an absurd valuation, unless the terms are particularly onerous, it makes sense to take it.

jdueck• 18 years ago

Many of the people I know are withdrawing their profiles from Facebook. Not deleting them, but removing 80% of the information.

Facebook is a LOUSY ad platform because users are interested in interacting with friends, not watching ads.

The subject is bang-on: Facebook's fall will be EPIC

tx• 18 years ago

Well... FaceBook has attracted quite a lot of money and a very serious number of smart folks who aren't sitting idle as we speak. They must be working on something: generating ideas, bouncing them off each other, coding, etc.

Articles like this one tend to neglect the fact that armies of smart people concentrated in one place worth not less (perhaps more) than previous achievements, be it user accounts, traffic or revenue.

mechanical_fish2• 18 years ago

One wonders whether the stable number of Facebook users is approximately equal to the number of high school and college students.

The hypothesis that high schoolers with Facebook profiles will continue to use them throughout life is only now being put to the test. And here's the thing: In high school, many people really care to know exactly what each of their classmates is doing and who they are dating. Sometimes that continues through college. But eventually people grow older, and they escape the social fishtank that is school, and they go out into the world... and, what do you know, eventually you stop hanging around with all of your school friends. You make a big show of keeping up with all of them for a while... but eventually it tapers down to sending Christmas cards now and then. You visit every few years. And you certainly don't visit them all.

I'm not saying that you'll ever stop using social networks. But there are a lot of social networks now. They're not that hard to develop, and they're just going to keep getting easier. And the result may well be that different people will gravitate to different ones as they go through life.

Facebook's counterargument is that they are going to be the generic platform on which all future special-purpose social nets will be based. But Facebook wasn't designed as a generic platform. It was designed as a social network for college students. And I'm not sure that opening the user base and tacking on a thousand third-party apps has really changed that. It's hard to take a tool that was carefully optimized for one task and repurpose it for N other tasks... especially when there are a thousand competitors with similar technology, and the lock-in isn't that strong.

brlewis• 18 years ago

I actually keep up with a lot of old friends even though family life keeps me very busy, but I had to create ourdoings.com to do it.

It's not a social network in terms of meeting new people, but it serves well the purpose of keeping in touch with people you already know.

xirium4• 18 years ago

This would be circumstancial evidence for school being a popularity contest ( http://www.paulgraham.com/nerds.html ).

mechanical_fish2• 18 years ago

Well, that argument feels very circular to me, since I had PG's essay firmly in mind when composing my words about Facebook. :)

But PG's essay is mostly about high school and earlier, as I recall. Facebook was originally designed for college students. So I wouldn't want to suggest that the app was built around the kind of warped prison-yard junior-high-school culture described in the essay. The situation is not that bad: Facebook is an app for adults, and it remains relevant for adults. But it is primarily an app for young adults, of a certain age and social position.

pg2• 18 years ago

Judging from the eager way in which people are seizing on this tiny bit of evidence, it seems like a lot of people want FB to fail. And when you want something to be true you should be especially skeptical of evidence for it.

Sites have flat spots. I would be careful before counting those guys out.

utnick• 18 years ago

totally agree. especially since the stats this article cites are just a 5% drop in UK users month to month

hardly indicative of epic fail

You have to understand that the average facebook user doesn't know who created facebook or what beacon is. Facebook will be around for a long while yet because it provides a useful service with a really big inertia.

eusman2• 18 years ago

stars fall too, explode to be precise, leaving a big black hole.

aston2• 18 years ago

You think people want Facebook to fail? My impression is the opposite.

Seems like everyone with money invested in web 2.0 really wants them to succeed. Your argument works equally well there. Don't be so sure of Facebook's infallibility, either.

Basically, everybody just chill out.

ldambra• 18 years ago

True. If Facebook fails then it's all the "web 2.0" world that will be affected, I hear a lot of people talking of another bubble about web 2.0. Some want their convinctions vindicated, others want to save their start up and money.

My bet is that the truth is in the middle as usual, just like when the first bubble bursted, it was a godsend who cleaned up all the mess produced by the basical non-understanding of the internet.

wallflower• 18 years ago

How many of you haters have a facebook account?

tlrobinson4• 18 years ago

Have, yes. Use regularly, no.

breily• 18 years ago

I only still have one because they won't let me delete it.

xirium4• 18 years ago

No, but in my last job, I ran an internal FaceBook Haters mailing list. Predictably, the people who worked the hardest didn't have time to create a FaceBook account. So, every other member of the mailing list was a member of FaceBook and didn't want be on the outside of this group.

amohr• 18 years ago

The thing here is - for every social app, people are going to ask a) is it worth my effort to join this social network? or b) can this leverage my existing social network? And so, facebook, being the largest 2.0 social network becomes a cornerstone of the next generation of social apps.

I see it like the free-rider problem: facebook is like roads or plumbing or some other infrastructure, everybody profits from having one central established social network, but the reason it is in that position is because it's free. The hard part is just like paying for roads - you have to find a way of getting people to pay for it without diminishing its appeal

tlrobinson4• 18 years ago

A total of 400,000 seem to have become bored with the social network and didn't bother to return.

I guess I'm not the only one...

joe24pack• 18 years ago

I became so bored with Facebook before I joined, that I never actually joined.

Spyckie• 18 years ago

I bet you Facebook has some statistical models that estimate when their user base will stop growing/start shrinking, so they probably knew at least a month ago that this would happen.

daniel-cussen• 18 years ago

The Register's fall is going to go unnoticed.

simianstyle• 18 years ago

Well from my experience dealing with facebook's salespeople - it costs approximately $160,000 to have a facebook.com/mybusinessname page made for your company. So long as companies believe the social-media hype enough, facebook will be making money from at least that (and you'd be surprised at the companies that have already signed up).

Let's not forget the $1,000,000 initial retainer to do any kind of partnership with them (i.e., Beacon).

rms2• 18 years ago

plus the sponsoring of free gifts... I would be surprised if a round of free gifts was as cheap as one million.

xirium4• 18 years ago

Some people keep using FaceBook because it doesn't easily let you delete your account and your peers have an expectation that your account should be current. In the long term this may work against FaceBook. The popularity of a social network site evaporates when the proportion of inactive web pages hits a threshold. A similar phenomen occurs in online games. The online worlds expand with the number of users but then interaction becomes very sparse when the number of users declines. This creates a downward spiral of decline. Anyhow, if FaceBook can reduce the prominance of dormant accounts and rely on peer pressure then an active user base can be maintained. However, social network sites don't have natural monopolies because sooner or later, you'll encounter a stage five clinger.

BrandonM• 18 years ago

In w3m:

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  [grayarrow] Facebook's fail is going to be epic (theregister.co.uk)
              48 points by nickb 1 day ago | 68 comments
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   ¢          [add comment]



    [grayarrow] 14 points by pg 18 hours ago | link
   ¢            *Judging from the eager way in which people are seizing on
                this tiny bit of evidence, it seems like a lot of people
                want FB to fail. And when you want something to be true you
  *             should be especially skeptical of evidence for it.

                Sites have flat spots. I would be careful before counting
                those guys out.

   ¢           nreply

Facebook has already failed ;).

/sarcasm (just in case)

Facebook's fail is going to be epic

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