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Facebook floatation: We're all products now

Posted By TelecomTV One , 03 February 2012 | 3 Comments | (0)
Tags: Facebook IPO behavioural online advertising Finance Technology

So, as anticipated and expected, Facebook is planning a US$5 billion IPO that will value the social networking site at $100 billion. Apparently it'll make several hundred new millionaires and quite a few billionaires from some of the people who already own Facebook shares. It will also turn anyone who uses the site into even more of a "product" than they already are. By Martyn Warwick.

Facebook operates and makes its money by selling to advertisers the personal data, including details of personal relationships and family ties, of individual Facebook users. And the more sheeplike and biddable those users become, and the more they reveal about themselves to the vast and increasingly intrusive machine that Facebook has become, the more valuable they will be to Zuckerberg et al. No wonder Facebook constantly reasserts that access to its services are "free and always will be."

Of course they will - provided the punters keep on providing more and more intimate details about their lives and relationships. That's the deal. If you pay for a service or goods, you are a customer or client. It you don't and the quid pro quo of a commercial relationship is that you drop your drawers and expose yourself to Facebook's server farms and data twiddlers it's you that become the product.

It's brilliant and utterly cynical business model.

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The users freely provide all the raw data that Facebook can cajole or otherwise wring out of them for the privilege of "belonging" to a what seems to be a gargantuan but benign international "club" whose only purpose is, as Facebooks so altruistically claims, is "to help you connect and share with the people in your life."

Yes, users can do that but, when the do, they willingly but perhaps very stupidly and certainly permanently give away information about themselves, family, friends and business contacts and colleagues that will be collected,collated,manipulated and sold on to advertisers who will then use that intimate knowledge to bombard individuals with so-called 'targeted' behavioural online advertising.

And remember, Facebook doesn't have to go to the trouble and expense of advertising itself and its services in papers and magazines or radio and TV. It gets all its data for free. At present 850 million users are giving their lives away to Facebook, and more and more join up to do the same each and every day.

Once users could shutter-off various parts of their Facebook lives and allow only those designated as having a particular status to have access to certain areas, but not any more. Facebook's new Timeline feature whips away the veils and makes every part of everyone's Facebook history available to anyone else. That is both dangerous and sinister.

Two telling points:

1)  Mr. Zuckerberg is on record as saying, "In the future, things should be tied to your identity, and they'll be more valuable that way."

2) Analysts reckon to to justify it's massive floatation value Facebook will have to capture 25 per cent of the advertising revenues, from all the media, across entire globe over the next five years.

Now go to the Registration Statement on Form S-I submitted by Facebook to the US Securities and Exchange Commission, and to the 22 pages of submission (Pages 11 to 33) on risks to Facebook's business. It makes for sobering reading through all the champagne bubbles.

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3 comments (Add Yours) - click here to sign in

(1) 03 February 2012 17:03:01 by Robin Burton

Have you heard about the onset of behavioural pricing? According to some 2012 is the year when this lurches closer to reality.

This means, for example, that you may be charged more for an air ticket to Barcelona if you list "Drinking Guiness in Molly's Bar off of the Ramblas" as one of your Facebook "likes"


(2) 03 February 2012 17:46:19 by TelecomTV One

Ah, but Robin, you know I would never be a part of any club that would have me as a member so no Facebook for me, thanks all the same. And yes, I have heard of behavioural pricing. It's all about twiddling with personal data gleaned from social networking sites, it's based on pernicious greed and it stinks. I reckon we should all take on alter egos as elderly clergymen and nuns and plead poverty if this Orwellian nightmare comes to pass. Martyn Warwick, a.k.a The Reverend X


(3) 09 February 2012 09:47:39 by Paul Moorhead

it's a tad ironic that when I go to share this excellent story with someone, I have to log in to facebook.
No thanks.