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The Problem with Facebook

April 23, 2014 8:36 am

I agree with Veritasium wholeheartedly on this topic, but I’ve never seen it put so eloquently.  (I may disagree with his assessment of online video’s opportunity but that’s another story):

Allow me to summarize:

1. FACEBOOK HAS PROBLEMS WITH PLATEAUING REVENUE
2. FACEBOOK IS ACTIVELY CONSTRAINING/FILTERING WHAT USERS CAN SEE
3. FACEBOOK IS INJECTED ADS INTO PEOPLE’S FEEDS BECAUSE THEIR EXISTING ADVERTISING DOESN’T STICK
4. FACEBOOK IS CHARGING PAGE OWNERS TO ALLOW THEIR FANS TO SEE THEIR POSTS

This is angering both their users & their advertisers… and they’ve only just started.

I will add in one more thought:  I’ve spoken with a very intelligent, highly credentialed researcher who’s been invited to both tour & speak in front of virtually all the major online players including Microsoft, Google, Amazon, Apple, Yahoo, Twitter, Instagram,  Yelp, FourSquare, Tumblr, etc. 

He made a few very sobering comments:

1. He understood the monetization model very clearly for all the major online players that he’d visited & could see the growth trajectory for all of them… except Facebook.
2. He noticed that Facebook, fascinatingly, even with its billion users, can’t seem to get even a small fraction of their users to provide credit cards, leaving them entirely at the mercy of their advertising strategies.
3. He noted that based on his discussions with Facebook strategists, it seemed clear that they were riding a wave and even with their massive graph, they seemed confused as to how they were going to continue to grow.
4. …

He had several other things to say that I can’t post here but the jist is that he was least confident in Facebook’s long term potential amongst all the companies he’s been invited to.  So when I see things like the model described in the above video, it becomes apparent to me that Facebook, for all it’s growth & size, still hasn’t been able to persistently monetize its user base for long term growth.

I’m curious what that means for them long term.

Posted by kurtsh

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