Facebook’s Fundamental Problem

I read a great post that opened my eyes to something interesting going on about Facebook’s privacy issue.   The issue has to do with how they position themselves in regard to being either a communications platform or a content platform – and how this impacts how they treat privacy.  If you look at this chart:

You see there are two sections: Communication and Content.  Both are directions that a company can focus on.  What’s interesting is the relationship between virality and revenue potential.   The more focused an application is on Communication, the easier and more quickly it spreads – but it can’t easily sell ads or monetize.  The more Content-centric an application is, the easier it is to monetize (ads are more relevant with higher CTR) but it’s hard to get the app to spread and grow.

Facebook started, of course, as a closed network for college students where they could “connect” and communicate.  As the statement above would suggest, this caused it to spread very quickly.  And it did.  However the site wasn’t making much  money.  Now, they find themselves with a slew (if you can call 500 million people that) of users and a desire to monetize.  It then makes sense for it to move up the scale and become more of a content company.  Thus, you see lots of Like buttons all over the place, a payment platform, and an ad platform to make this as effective as possible

The problem is with privacy.  Users were led to Facebook thinking it was on the Communication side of the fence.  However, it’s ambition is to be more in the middle because that is where it can both spread quickly and make money.  The privacy rules of a Communication web application and Facebook now are longer in agreement .  You can’t ask people to “Friend” and communicate with work people, parents, and close personal acquaintances and then also ask them to make that information public as if it is Content.  That there is a fundamental problem.

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