Viewpoint West Partners

Facebook Founder Finally Finds a Way to Profit

Networking site cashes in on friends

Facebook founder finally finds a way to profit from its 150m members' private data

 

By Rupert Neate and Rowena Mason
Last Updated: 9:45PM GMT 31 Jan 2009

Mark Zuckerberg finds ways to create revenue from Facebook's 150m members

Facebook is planning to exploit the vast amount of personal information it holds on its 150m members by creating one of the world's largest market research databases.

In an attempt to finally monetise the social networking site, once valued at $15bn (£10.4bn), it will soon allow multinational companies to selectively target its members in order to research the appeal of new products. Companies will be able to pose questions to specially selected members based on such intimate details as whether they are single or married and even whether they are gay or straight.

The company, which has struggled to make money from advertising, has been demonstrating the benefits of its new instant polling tool to some of the most influential business leaders at the World Economic Forum in Davos.

In an interview with The Sunday Telegraph, Randi Zuckerberg, Facebook's global markets director and sister of founder Mark Zuckerberg, 24, said multinational companies had been bowled over by the ability to receive real-time feedback from the site's millions of users.

"I had tonnes of people saying 'this could be so incredible for our business'. It takes a very long time to do a focus group, and businesses often don't have the luxury of time. I think they liked the instant responses," she said.

At the conference, Facebook asked a range of questions to its users around the world, before feeding the answers back to delegates within minutes. It selectively-targeted users in Palestine and then Israel with the same question about global peace, before debating the results at a discussion forum. It also asked 120,000 US members whether US President Barack Obama's economic stimulus package would be enough to save the US economy. Almost 60pc said it would not.

"Davos is really a key place to launch an instant tool like this," Ms Zuckerberg said. "It's beneficial for everyone to see us as a global community of 150m users. The vast majority are not just college students in the US talking about things in their bedrooms. We are showing how we are a serious and insightful community."

Facebook's presence at the economic and business summit is a radical image change for the social network, which is stereotyped as a website used by students or schoolchildren. It now promotes Facebook users as "serious and insightful" adults in an attempt to advertise its members as a useful demographic for marketers.

Marketing experts have said the vast amount of personal information Facebook holds, together with the loyalty of its users, could be worth "untold millions" to companies engaged in market research.

The power of Facebook, and its members, in driving corporate decisions was illustrated last year, when a campaign on the site led to Cadbury reversing its decision to withdraw the popular Wispa chocolate bar. Cadbury has sold 70m Wispas since it reintroduced the bar in October after the Facebook campaign attracted 40,000 signatories.

Facebook has already sold the new polling system, called engagement ads, to CareerBuilder, a global graduate recruitment company, and AT&T, the US telecoms giant, is trialling the system. A Facebook spokesman said the company's advertising department is marketing the new service to thousands of companies worldwide and it hopes the polls will go live this spring.

All the company's previous attempts to monetise the site have failed after members railed against the site's invasion of their privacy. Mr Zuckerberg pulled Beacon, a service that notified users of their friends' purchases on external sites such as Amazon, after members launched a campaign in December 2007.

Mr Zuckerberg said the coming year will be "intense" for Facebook as advertising revenue dries up.

Facebook was valued at £10.4bn in 2007 when Microsoft paid £175m for a 1.6pc stake, but analysts have dismissed the valuation as "ridiculous" as the site has failed to find ways of exploiting its vast membership for commercial gain. Madan Sheina, at technology consultancy Ovum, said: "With the economy spiralling into a downturn, that figure might seem to be exaggerated right now."

The company has denied reports that it is so strapped for cash that it has been forced to approach Middle Eastern sovereign wealth funds for emergency funding. It has also cancelled plans to allow employees to sell off their shares early because of the economic climate.

(more)

Long Tail Theory Contradicted As Study Reveals 10M Digital Music Tracks Unsold

From The Times

December 22, 2008

Digital sales figures dent niche market theory

Patrick Foster, Media Correspondent

The internet was supposed to bring vast choice for customers, access to obscure and forgotten products - and a fortune for sellers who focused on niche markets.

But a study of digital music sales has posed the first big challenge to this “long tail” theory: more than 10 million of the 13 million tracks available on the internet failed to find a single buyer last year.

The idea that niche markets were the key to the future for internet sellers was described as one of the most important economic models of the 21st century when it was spelt out by Chris Anderson in his book The Long Tail in 2006. He used data from an American online music retailer to predict that the internet economy would shift from a relatively small number of “hits” - mainstream products - at the head of the demand curve toward a “huge number of niches in the tail”.

However, a new study by Will Page, chief economist of the MCPS-PRS Alliance, the not-for-profit royalty collection society, suggests that the niche market is not an untapped goldmine and that online sales success still relies on big hits. They found that, for the online singles market, 80 per cent of all revenue came from around 52,000 tracks. For albums, the figures were even more stark. Of the 1.23 million available, only 173,000 were ever bought, meaning 85 per cent did not sell a single copy all year.

Mr Anderson told The Times yesterday that he accepted that Mr Page and his co-researcher, Andrew Bud, the head of mobile software company mBlox, had found a dataset in which the “long tail” principle did not apply. But he said further conclusions could not be drawn until the data and its sources were published.

Mr Page and Mr Bud believe, however, that their findings seriously undermine Mr Anderson’s thesis, which came with subtitles such as: How endless choice is creating unlimited demand and Why the Future of Business is Selling Less of More.

“I think people believed in a fat, fertile long tail because they wanted it to be true,” said Mr Bud. “The statistical theories used to justify that theory were intelligent and plausible. But they turned out to be wrong. The data tells a quite different story. For the first time, we know what the true demand for digital music looks like.”

Mr Page, who carried out the economic modelling for Radiohead’s In Rainbows album, which was released free on the internet, said: “The relative size of the dormant ‘zero sellers’ tail was truly jaw-dropping. Rather than continue to believe the selective claims of ‘here’s another great example of the long tail at work’, we wanted to find out how longtail markets should be analysed, plotted and interpreted.”

However, Mr Anderson named by Time magazine as one of the world’s 100 most influential people - told The Times: “There is a reason why the ‘long tail’ has become a fixture in the technology world over the past five years - it fits countless phenomena we see every day.

“I respect what Will’s done and have no doubt that he has indeed found a dataset where it doesn’t work, but I’m not sure you can conclude much, if anything, beyond that. If he’s trying to undermine the entire Long Tail Theory, he’ll have to provide a lot more evidence. I welcome the debate, but until Will’s prepared to publish data and sources we don’t have much to talk about.”

Mr Page and Mr Bud found that, rather than following Mr Anderson’s predictions, online music sales followed instead a sales distribution laid down by Robert Goodell Brown, an American economist, in 1956.

Mr Brown, who was an academic at Yale, outlined the theory in Statistical Forecasting For Inventory Control, a landmark tract on inventory control that focused on the sales of industrial items such as rivets and widgets.

Mr Page said: “There is an eerie similarity between a digital and high-street retailer in terms of what constitutes an efficient inventory and the shape of their respective demand curves. I think there’s something more going on there: a case of new schools meets old rules.”

Mr Page and Mr Bud are working on a book of their findings and hope to stage a debate with Mr Anderson in Brighton next May.

The long and short of it

—Chris Anderson’s The Long Tail challenged the “80/20 rule” widely accepted in retailing. This suggests that selling the most popular 20 per cent of products is the way to make a profit as they will account for 80 per cent of sales

—Anderson’s analysis of online music sales suggested that, thanks to the cheapness, simplicity and global accessibility of searching for products online, retailers could make money from more obscure products because they would always find an audience

—An employee of Amazon, a company seen as an example of the Long Tail Theory in practice, once said: “We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday”

—Eric Schmidt, the CEO of Google, described The Long Tail as “brilliant and timely”. Malcolm Gladwell, the writer and sociologist, labelled it a “Truly Big Idea”

—Critics suggest the book is more a projection of an idealised market place than a model of a real one

(more)

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The Challenges of Citizen Journalism ...

[... Written in response to Dan Gillmor's recent Letter to the Bayosphere Community ...]

The Challenges of Citizen Journalism

Content
Although this may seem obvious, the proper selection, timing and staging of content is a delicate and complicated task. It is not random. Participatory journalism is still presumably journalism, and requires discipline of vision like any other worthwhile endeavor.

Passion
The fuel which drives any great work is passion for something, someone, some place, etc. Without this vital ingredient, inane and banal ramblings masquerade for the genuine article. It is precisely this form of passionless journalism which drives audiences away from mainstream media, in search of "something real."

Capability
We all have different skills, and not everyone is equally gifted in the art of expression. The challenge is to enable those who desire a voice but can't quite sing yet. This requires a drive to achieve and a submission to the discipline required to get there on the part of the would-be Citizen Journalist. In other words, one must become a "humble student" in order to truly learn anything of value, especially how to be a great journalist.

Credibility
Everyone has an opinion, sometimes more than one. However, not everyone has the depth of background and experience to offer valuable opinions which can add substance to a topic of discussion. Many popular journalists are cast, for better or worse, into a "pundit" role over the course of their years of covering specific topics with some depth. This doesn't mean we should ignore fresh new insights, but if those insights waste the audience's time by not providing value, then the whole effort is on shaky ground.

Accountability
Screaming "fire" in a crowded theatre is ok if there really IS a fire. However, anonymous "bomb throwers" who engage in so-called 'yellow journalism' destroy the overall integrity of a publication, not to mention open it up for libel and slander. Defamation is not a valid form of promotion, and accountability of reporting and reporters holds this problem in check, although it doesn't completely eliminate the more subtler forms.

Compensation
In most societies, "Time is Money" and Citizen Journalists, even fledgling ones, need to be properly compensated for their efforts if those efforts are to continue. Hobbies are just that: hobbies. In order to break through to a higher level of quality, there needs to be a fair system of compensation or the term "Citizen Journalist" will become synonymous with "Unemployed Journalist."

Leadership
The role of the editor should be emphasized here. Without editorial direction, guidance and oversight, it is hard to deliver a quality publication. Even high school yearbooks have editors, and online publications are no different. There are various editorial styles and orientations, but they all share common journalistic ethics which define and shape the publication. Without this editorial leadership, whether it is in the form of an editor-in-chief or an editorial staff, the publication in question may never see its second issue. Perhaps this is just editorial Darwinism at work.

Conclusions
Great journalism is hard ... sloppy journalism isn't really journalism at all. And Citizen Journalism is quite challenging!

---

Mark Twain (a.k.a Samuel Langhorne Clemens) on Journalism

From an address to the Connecticut Evening Dinner Club, 1881:

"... If you don't want to work, become a reporter.  That awful power, the public opinion of the nation, was created by a horde of self-complacent simpletons who failed at ditch digging and shoemaking and fetched up journalism on their way to the poorhouse. ..."

---

"Steve Jobs" on Saturday Night Live

Just in time for the Christmas shopping season! Presenting the iPod Micro, Pecaño, and the amazing iPod Invisa.  Tweezers not included ...

Watch the video ...

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George Carlin: "I'm a Modern Man"

From HBO:

"... Direct from the stage of the Beacon Theater in New York City, a longtime HBO favorite returns for his unprecedented 13th stand-up comedy special. Uncensored and uninhibited, this all-new 75-minute show - his fifth live performance on HBO - will feature George Carlin's dead-on observations on such subjects as extreme human behavior; the feasibility of an all-suicide cable channel; and his inimitable takes on obscure American words and phrases. Don't miss the latest outrageous observations from America's original counterculture spokesman, Saturday, November 5 at 10 PM EST. ..."

In George's own words:

"... Hey, I got 341 days sober and next year's my 50th anniversary in show business.  Let's do a fucking show, haah? ..."

Listen to the audio ...

Watch the video ...

"I'm a Modern Man"

George Carlin, November 5th, 2005
Beacon Theater, NYC

I'm a modern man.
I'm a modern man.
I'm a modern man.
I'm a modern man.

I'm a modern man,
A man for the millennium,
Digital and smoke free.

A diversified multicultural postmodern deconstructionist,
Politically anatomically and ecologically incorrect.

I've been uplinked and downloaded.
I've been inputted and outsourced.
I know the upside of downsizing.
I know the downside of upgrading.

I'm a high tech lowlife.
A cutting edge state-of-the-art bicoastal multitasker,
And I can give you a gigabyte in a nanosecond.

I'm new wave but I'm old school,
And my inner child is outward bound.

I'm a hot wired heat seeking warm hearted cool customer,
Voice activated and biodegradable.

I interface from a database,
And my database is in cyberspace,
So I'm interactive,
I'm hyperactive,
And from time-to-time,
I'm radioactive.

Behind the eight ball,
Ahead of the curve,
Riding the wave,
Dodging a bullet,
Pushing the envelope.

I'm on point,
On task,
On message,
And off drugs.
I got no need for coke and speed,
I got no urge to binge and purge.

I'm in the moment,
On the edge,
Over the top,
But under the radar.

A high concept,
Low profile,
Medium range ballistic missionary.
A street-wise smart bomb.
A top gun bottom feeder.

I wear power ties,
I tell power lies,
I take power naps,
I run victory laps.

I'm a totally ongoing bigfoot slam dunk rainmaker with a proactive outreach.
A raging workaholic.
A working ragaholic.
Out of rehab,
And in denial.

I got a personal trainer,
A personal shopper,
A personal assistant,
And a personal agenda.

You can't shut me up,
You can't dumb me down.
'Cause I'm tireless,
And I'm wireless.
I'm an alpha male on beta blockers.

I'm a non-believer and an over-achiever.
Laid back but fashion forward.

Up front,
Down home,
Low rent,
High maintenance.

Super size,
Long lasting,
High definition,
Fast acting,
Oven ready,
And built to last.

I'm a hands on,
Foot loose,
Knee jerk,
Head case.

Prematurely post traumatic,
And I have a love child who sends me hate mail.

But I'm feeling,
I'm caring,
I'm healing,
I'm sharing.
A supportive bonding nurturing primary care giver.

My output is down,
But my income is up.
I take a short position on the long bond,
And my revenue stream has its own cash flow.

I read junk mail,
I eat junk food,
I buy junk bonds,
I watch trash sports.

I'm gender specific,
Capital intensive,
User friendly,
And lactose intolerant.

I like rough sex.
I like rough sex.
I like tough love.
I use the f word in my email,
And the software on my hard drive is hard core, no soft porn.

I bought a microwave at a mini mall.
I bought a mini van in a mega store.
I eat fast food in the slow lane.

I'm toll free,
Bite sized,
Ready to wear,
And I come in all sizes.

A fully equipped,
Factory authorized,
Hospital tested,
Clinically proven,
Scientifically formulated medical miracle.

I've been pre-washed,
Pre-cooked,
Pre-heated,
Pre-screened,
Pre-approved,
Pre-packaged,
Post-dated,
Freeze-dried,
Double-wrapped,
Vacuum-packed,
And I have an unlimited broadband capacity.

I'm a rude dude,
But I'm the real deal.
Lean and mean.
Cocked, locked and ready to rock.
Rough tough and hard to bluff.

I take it slow.
I go with the flow.
I ride with the tide.
I got glide in my stride.

Drivin' and movin',
Sailin' and spinnin',
Jivin' and groovin',
Wailin' and winnin'.

I don't snooze,
So I don't lose.
I keep the pedal to the metal,
And the rubber on the road.

I party hearty,
And lunch time is crunch time.

I'm hanging in,
There ain't no doubt.
And I'm hanging tough,
Over and out.

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