Wednesday, August 22, 2012

Does Facebook present the penultimate challenge for monetizing "free" content?

The Washington Post has a front page story Wednesday Aug. 22 about quick decline of Facebook’s stock price (FB), with a very handsome portrait online (hoodie included) of founder Mark Zuckerberg. 

I’ve said before, I think it’s his creation; but I did not bite (although my own financial planner at Wells Fargo actually rather liked it before the IPO).  I share one trait: a liking of building recognition and global public presence before worrying about monetization. 

The story, by Craig Timberg, has link here.

Note the FB finance page on Yahoo! here

The hooker seems to be “free content”.  Broadcast channels had to wrestle with this as they went online, and a few newspapers have found they can sustain themselves by actually charging for it online (I subscribe to both WSJ and New York Tmes; it works economically if you get both online and print).  Companies that started as search engines (Google) benefit from the fact that many visitors actually are looking for services or products (for example, as I do, before going on the road to a particular city).  But readers of content (about politics – gay rights, free speech, Arab spring, etc)  often feel  intruded upon by ads.  (I can’t say whether I saw my Ford Focus online at a Washington Post site before I bought it in 2009 – I think I did.)

Facebook’s advantage may be the chance to monetize and sell “Likes”, but it’s going to be hard to do that within acceptable practices of privacy.  The scariest part of its plans may be those dealing with facial recognition.

Over time, the expectation of users to have content for free without intrusion or loss of privacy could become a serious business model problem for all service providers.  Those who provide free content with little income (to gain visibility) are riding on the backs of those who make money, perhaps.  That can’t be sustained forever.   Or can it?  It’s like saying credit card holders who pay off full balances every month freeload on those who pay interest. 

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