Join the debate: Is Facebook's business model doomed?


#1

From what I read here, there are two major social networks that still stand: Linkedin and Facebook. While I terminated my Linkedin account as I see no value in whoring my detailed resume around for no apparent benefit, I see the network as solid, as most people are loathe to eradicate a supposedly useful network of valuable professional connections it took them a long time to build (I mean, one of those headhunters could out of blue offer me a tremendous opportunity, right? Wrong). Anyway.

But Facebook? If I were an investor, I would ditch the stock immediately. We’ve seen high-profile people leaving the platform in the wake of the Cambridge Analytica scandal. Highly educated, high-income people say they “don’t have time for this shit.” It’s been long overdue that advertisers recognize that most people who click on their ads (ads made visible to them based on their self-declared “interests”) have absolutely no intention to buy their products or services. These people would just click on anything that pops up.

Case in point. I once ventured into advertising on Facebook. I picked the geography, the age group, and the interests that were compatible with my business (very specific). From the “likes” and comments I got on my campaign, it did not take me long to realize the vast majority of people who actually clicked or commented were all from a very small segment of the population. I will not go into specifics, but let us say this segment is characterized by ultra-low incomes, professions that have absolutely nothing to do with their professed interests, and therefore zero likelihood they would ever pay a dime for my services.

It seems to me that Facebook is likely to experience an internal meltdown, and that eventually, most active Facebook users will be people who face financial difficulties or hardship (far from their families, e.g. migrant workers), definitely not high-rolling individuals on whom you don’t mind spending USD2.0/click.

What are your views? Are you still a FB user, or not, and why? Do you believe their business model is sustainable? Do you still believe that the return of advertising on FB is really several times that of traditional media?


#2

Yes, LinkedIn is more purposed. They are also less obviously tracking you and advertising (but they are doing both). Their content is much less toxic, discussion more high quality (but it is deteriorating here), and for specific use cases it can be a very useful social network (this is true even for FB).

Their usefulness is dimishing because the quality of conversations (comments) and the news feed is going down. LI can be used as an alternative to FB and more people are using it like that. LI influencers are not helping here, posting only superficial positivity quotes and such. Also 80-90% of recruiters are sloppy and giving you silly, crappy mailmerged job positions.

But if you are in the right lines of work you get the good head hunters and you can easily land a job via LinkedIn. And if you want to do targeted networking - e.g. for your enterprise - then it can be very useful too.

In general people have less qualms to have their data harvested on LI, because it is the stuff they have carefully prepared and would like potential employers to see. They don’t see it as too intimate and personal (but in fact it is). There is a network effect at play, but it is much weaker than the on FB has.

Facebook is a different story altogether. The FOMO (fear of missing out) is really strong with its users. Even after all the scandals, people are not leaving en masse. But there is a change in the West. FB use is in decline, and young people perceive the network as old-fashioned - the boring stuff their parents use.

There is also growing awareness - like you say too - that the impact of targeted campaigns is not of sufficient quality and my not be worth the money.

BTW Your first sentence is not entirely correct. FB growth is flattening, but they have both Instagram and Whatsapp, which are booming (well, WA is not yet generating much income, but it generates a lot of data). So FB may not be all that worried. They have monopoly position (were able to quickly fight off encumbing Snapchat, by just copying most cool features to Instagram and FB), and can just launch new products where they see emerging trends.

But worrying for FB may be that in Asia (particularly China) they could lose to fully integrated social media platforms offered by Tencent and Alibaba and the like. Things like WeChat may even become very popular in the West (I’ve seen discussions on LI where people were basically brimming with enthusiasm for these apps).

But FB is special in another way, in that it is not really about their products, but the underlying philosophies and long-term mission/vision that sets them apart. And this IMHO is most worrying.

Here is a long (column "The Long Read’) article that appeared in The Guardian last year, that describes this:


#3

Wonderful article from the Guardian, as always.

Would be great to hear feedback from some of us who have been, or still are, Facebook users (I’ve never been myself, so cannot really judge very objectively) on how they view the platform’s likely future.


#4

So true. Never been a FB user but I used Whatsapp. A lot. I am sure what I typed there over the years would make for several very thick books. I decided to ditch Whatsapp for Signal and told my friends. Some followed me, but most of course did not.

Now I am under constant pressure to re-install Whatsapp whenever the need arises, because EVERYBODY USES IT. What for? So that my entire contact list can be uploaded to FB’s servers again and God knows what else?

This is the real power. Offer attractive free services, build a critical mass over the years so that at that point no one dares to leave out of the FOMO, and then start the exploitation.

FB purchased Whatsapp for over USD20 billion, a free service with now supposedly end-to-end encryption. No ads, nothing paid by the users. Sorry, I don’t buy this.

I won’t budge or cede to pressure. You want to be in touch with me, download Signal. Otherwise, forget it, probably not worth it.

(By the way, Signal is funded through donations and grants)


#5

The Whatsapp founders have left the company, disagreeing with FB’s ad and data collection policies, their ethics in general (see: https://news.ycombinator.com/item?id=17238241 )

Before WA was encrypted they may have collected the actual contents of your chat. Now they collect metadata, but it is unclear how much that reveals. Certain actions leave more traces (like pasting in an URL for which a preview is generated).

I have Signal too, but not an active user. My cousing works for the government and is forbidden to use WA, and go for Signal instead. There is some criticism on Signal, as it is not fully open-source and not 100% sure it is not compromised by government agencies (but this applies to most software). It’s much better than WA anyway.


#6

Well that is pretty obvious. You’re male and your metadata reveals you text a certain female a lot. That’s it! That’s your important other. Other metadata reveal you’re texting only a few of other contacts a lot. That’s it! Your close friends. You’re Facebook and all set: your social graph now has weights on who is your girlfriend/wife and closest friends are. The rest is irrelevant.

From individual data on each user, FB can move on to study your meaningful other and closest friends, and nudge you in the direction of changing your attitude towards them. Freaking disgusting.


#7

Yes, that is true. But the rest is not irrelevant. They could be collecting much more in the app, and where the content is not yet encrypted. Any data point has value.


#8

Good exchange of thoughts. But I did not mean here to investigate the many issues with FB or WA. Rather, hear from past or present FB users on where they see the platform going.

People here may realize this is all a big scam, or they are not happy with publicizing their whole lives online, I don’t know. Just curious how everyone feels.


#9

Great point. I’ll bring this back on-topic by this HN discussion: Ask HN: Is 2018 the end of Facebook?


#10

Thanks for sharing. Seems like the jury is still out on HN, divided between those who think FB will be done with, others who think FB will have many chances to give it a new spin so it keeps thriving.


#11

I actually use Facebook ads for my small business as the targeting is just phenomenal for the money.
The thing that gets me is after all the controversy and the hearing, they haven’t changed a thing. They actually try and up sell me political targeted ads, which is completely irrelevant to my business so they must be doing it to most people.
It’s almost like they believe their untouchable.


#12

Good to hear it’s at least working for you. The targeting is indeed theoretically very precise. It may an odd experience that in my case, it really did not deliver. Must be the country where I operate.

That’s one account showing the model works for advertisers. How about users?


#13

This is what I wrote to @scottcapener in August, when we were talking about his app Parallel.

All of what I mentioned above applies to my presence on Facebook. Let me add these comments:

  1. I tried advertising for my small business and discovered it was a waste of money, time, and effort. It attracted people who didn’t want to be customers but who just wanted to comment on my effort–or, worse, discourage me.
  2. FB serves an important social purpose, giving people a sense of belonging, whether to a circle of friends or to a community. That is a super glue that gives FB staying power and reach.

When I created an account on MeWe.com, FB’s rival, I invited friends to follow me, but few did. They know about FB’s practices and yet they can’t leave it. I think this is sort of like belonging to a club with a few members you don’t like; because the club meets your primary needs and your friends are in it, you stay.

For most people, FB is an end, a destination, not a means or a tool.


Example of Humane Social Network: MeWe
#14

Right on target as always, @patm. If you don’t mind me asking, what happened with the friends you invited to join you on MeWe? How did you invite them, and why didn’t it click for them?

This is what makes Facebook the behemoth in the room. The term for this is network effects, and it means that unless someone comes up with an alternative that everyone you know can get excited about, there will be no mass migration. Said differently, people aren’t replacing Facebook en masse (re: @aschrijver’s comment above) because there is nothing suitable, as of now, to replace it with.

However, remember that Facebook’s lifeblood is not data – it is attention. And from that perspective, it has already been largely replaced by other services, such as their other properties (Instagram, WhatsApp) and the raging success of Chinese apps (WeChat, Douyin/TikTok, etc).

Victory here does not mean providing some people with a reasonable alternative to Facebook. Whatever comes next must have universal appeal, a service compelling enough to draw network effects on its own. Banding together over dissatisfaction with our current generation of social platforms is a great start, but in the long run I fear it is not enough. Victory here means finding a better way to connect people, driven by things that make us happy, support our interests, and actually make our lives better.

Here’s to everyone working to making that world become a reality. :clinking_glasses:


#15

Thanks for responding, @scottcapener. Always good to see you on the forum and read your thoughtful words.

My relationship with FB is an on-again/off-again thing. In fact, I went through the cycle more than once. Most recently, I decided to get off because I felt I was being hypocritical: being on the forum while staying on FB. Before I got off, I posted two or three times that I was leaving, and I invited friends to join me on MeWe. I think three of maybe ten close friends joined me on MeWe, but only one stayed and became active.

I told the head of my office that I was off FB and therefore could no longer administer the office’s FB group. He told me that we had to keep the group and that I had to run it. I therefore decided to get back on but under a different name (a deceased relative’s), and being lonely, I reclaimed one former friend. So there I am with one friend and administering my office’s page. It is like being a lighthouse keeper.

I just read a major article in Wired about the Chinese apps and was shaken by the implications. The article made it sound as if China’s technology will identify everyone in the country through facial recognition and data gathering–and will control society that way. The idea that this technology of which humans are justly proud will be used by an institution to control us in rigid ways is very scary. The article took Thomas Paine’s give-me-liberty statement and turned it into this: “Give me liberty or give me wealth.” In other words, you can take my freedom away as long as you make me materially comfortable.


#16

That’s a very relevant point. When I decided to ditch Whatsapp and told my friends they could from now on contact me on Signal, many did not install the app. I am very determined to not use WA again, but I can feel the pressure whenever I need to contact any of my many friends who are not on Signal. So how much more difficult it would be for someone, who has a more neutral attitude towards privacy issues, to switch platforms and not go back?

I am not against Facebook as a concept, just never used it for lack of interest. Therefore I would not try to convince my friends to ditch it. It’s just a strange thing however that recent scandals haven’t had a more profound impact. I guess accepting all sorts of abuse is the price many are ready to pay for convenience and free services.


#17

Yep, exactly. This is called “switching costs,” and it is another dramatic hurdle for any would-be alternative. The ability to easily transfer your data from one platform to another would certainly help lower the “cost” of switching, but at the end of the day, people will go where their friends are.

@patm Thanks for the info, I appreciate you sharing your story! Best wishes for your lighthouse keeping. :wink:


#18

I never joined Facebook. It never made sense to me. Why should I give my data so others can make money? Shouldn’t users get a percentage of such profits? Also – I’m easily spooked and am wary of Lord of the Flies group-think. Given the undeniable impact FB had on recent elections… time to say bye bye.
It is interesting that with the internet we, as a species, have manifested Carl Jung’s “collective unconcious.” The problems is, if one is unaware, the unconscious is a danger zone.


#19

I’m still on Facebook, because my wife insists on it, so she can tag me in photos and check-in posts. I’ve been inactive since February. There are also only 2 groups that I’m a tiny bit active in. One in particular I have to be there, because they have decided it’s the only way to communicate to the members of a Taiko drumming group I belong to and they post training videos there.

I came off Instagram and WhatsApp shortly afterwards, i.e. deleted my account. I log-in to Facebook every two weeks to remove any changed advertising data. Especially where Facebook’s advertisers have added my email to their custom audiences feature. This really annoys me!

It has been super interesting to see my connections on LinkedIn using my email address and adding it to custom audiences inside FB. I’ve even called them out about it on LinkedIn, but they’ve been very silent in responding.

Yeah people have been really surprised me coming off WhatsApp and communication from them has seized. I’m quite pleased that I don’t see any of their posts though, it was getting bit crazy. I crewed at an event earlier in the year and they asked us to download ‘Telegram’. I know it has a poor reputation in terms of allegedly ‘terrorists’ using it, because of it’s built-in security. I’m using that to message some folks, but nowhere near as bad as WhatsApp.

So my opinion about FB is that they won’t be going anywhere soon. Years ago, when I first joined FB, I was an advocate. It was so new and so great that we could chat with each other without having to send group email etc. I predicted at the time that FB would have it’s own internet eco-system. I was indeed correct. Facebook is in the same group as Amazon, Apple, Google. The big 4 that ruling the tech eco-system.

Advertisers won’t be leaving FB any time soon either. As long as Instagram and WhatsApp continue their meteoric growth, advertisers will be told that the amount of active users across all of FB’s real estate is so big that it’s really the only place to be. Where else would they go? Google? Google is only useful for search, except for YouTube of course and there Google are definitely upping the advertising activity. Adverts now happen throughout videos, without the ability to skip. Unless of course you pay to not have any adverts.

Didn’t mean to write such a long response, FB will remain the ‘Pied Piper’ of the Social Networks.


#20

I think I’m lucky it works as well as it does for me, it’s mostly due to the nature of the product we’re selling I think.
It’s a lot more expensive than a lot of advertisers realise to actually get a sale. Maybe you get a 1000 impressions for $10, but to get 1 customer all the way to the end of the funnel and convert is more like $20,30,40 or more.

I agree, I don’t think it’s good for users and I don’t use a personal account.