After Facebook’s baffling IPO back in May, Zuckerberg’s brainchild posted very modest gains (some might call it losses) in its first earnings report today.
The California company went public a couple of months ago, leading me to think that one of the world’s most important website is well past its apex, and will make its slow descent into irrelevancy.
Why do I believe this? It all comes down to common sense. For social media sites like Facebook, and its predecessor, MySpace, there is either a plateau of earning, or they must make a grab for the proverbial “brass ring,” or snuff out. It seems like, once these social media companies go public, they must do everything they can to become more and more profitable.
The problem is, websites like Facebook are about people interacting with each other–not about buying things. They aren’t e-commerce sites–they provide a social gathering forum, and the most profitable thing (to date) they can offer is advertising — which is intrinsically the antithesis of what a social gathering place is. If people want to buy something–they aren’t going to click advertising on Facebook, they’re going to visit Amazon.com, or be “old-school” and run down to the local store.
That’s where Facebook is limited as a corporation. They can only go so far–and then they have to find ways to make more and more money. So, what do they do? Ramp up the ads on it so we (the users) are so choked by advertising that we can’t see which FB friend had a baby, or read about what another friend had for dinner? That would be irritating and make me want to leave.
And that’s what will happen, I think. People will leave if they feel put out. They will look for the next great thing that doesn’t irritate them.
What else can Facebook do? Become a search engine? Well, they will have stiff competition from Google, and, um, Bing and Yahoo. (Remember them?)
Facebook might be able to leverage their current user-base and offer a portal to their own e-commerce site–let’s name it “Facemazon.com” Then again, they have stiff competition there from, ahem, Amazon.
So, what can they do? Well, they can’t really do ANYTHING, in my opinon. All Facebook can do is slowly fade away.
But, the NEXT startup Facebook-clone should just stay private (and safe)–or its owners can just keep up the IPO burn-up cycle, and opt to be the next Zuckerbergs: totally rich.
Then again, what do I know? I’m sure Facebook will be fine.