It's Publishing

12 April 2018


Cogito Ergo Non Serviam

Facebook's Problems Stem from its Business Model 


Mark Zuckerberg, the founder and CEO of Facebook, spent two days on Capitol Hill avoiding questions written by staffers who understand technology much better than the geriatric lawmakers for whom they work. A lot of the answers consisted of "I'll get back to you on that." The arcana of social media seems to confuse what is a very simple issue. Facebook is selling data about people without sufficient transparency. Regulation can address some of this, but the airtight solution would be for Mr. Zuckerberg to change his business model.

What is particularly galling about the multi-billionaire is his constant claim that his business is a platform and not a publishing entity. Third-party analysts have supported this likening Facebook to Gutenberg's printing press. This is a patently false analogy. Facebook provides content and sells ad. The genius is that Facebook gets its users to provide the content. When a newspaper comes off the printing press, the money is made on the sales of ads and subscriptions. It's the same thing. If Mr. Zuckerberg were truly running a mere platform, his business would resemble the manufacturer of the printing press. Parts, labor and a mark up for profit would be the model. Advertising would not factor into it.

Because he refuses to accept the fact that he runs a publishing company, he believes he bears little responsibility for what people say when they use it. Perhaps, he is naive. However, he is also a grown man in his 30s and runs a multi-billion dollar business. If he's naive, it's past time to wise up. In order to be a wunderkind, one must be a kind. He has not been that in years. In truth, he bears a moral responsibility just as Dr. Oppenheimer did in building the atomic bomb.

This is not to say that Facebook is evil or worthless. It has some 2.2 billion users, and not all of them are Russian trolls intent on destroying western democracy. Clearly, many of its users see a utility to it. Because it as value to them, they may be willing to pay for the privilege of posting content using it.

As things stand now, the users are the product. Mr. Zuckerberg makes billions by selling access to them, and there are countless companies that will pay for that access. Because they want well-targeted advertising, collection and parsing of the data on the users is necessary. Currently, the company's revenues stand at more than $12 billion per quarter.

The arithmetic is easy. At just over $20 per year per user, Mr. Zuckerberg could switch to an ad-free, subscription funded Facebook. The product would cease to be all those eyeballs and become the content itself. Naturally, some people would cease to use it. However, the music streaming service Spotify has seen its paid subscriber base rise from 30 million in 2016 to 70 million as of January 2018. It charges $10 a month and recently began trading on the New York Stock Exchange with a market cap of more than $20 billion.

Not only could Mr. Zuckerberg do that, but also he could continue to offer free Facebook for those who don't want to pay. However, everyone on the free service would be told, frequently and clearly (which heretofore they have not been), that such use would mean data would be collected and sold. One expects that the $20 per year anonymity fee would be gobbled up.

Mr. Zuckerberg said he built Facebook to help connect people, not to become a billionaire. All that money was just a happy bonus. If his priority really is connecting people and not making himself richer than anyone has a right to be, perhaps he could implement a new business model without being forced to modify what he now does by government fiat. The smart money, though, says he will not seize the opportunity to change his business on his own.

© Copyright 2018 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.

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