The Beginning or End of Facebook?

Feb 09, 2012


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Laid end to end, 5 billion one dollar bills would reach to the moon and back.

The recent Facebook IPO filing for $5 billion is not the largest or the most sensational public offering, but it is the most interesting in the last few years for several reasons. With 845 million members and over half of those visiting daily, Facebook.com is one of the most popular portals for sharing and consuming content. While we won't get in to the details of whether or not you should invest in Facebook (that's better left to the money managers and magic eight balls) this filing has revealed massive amounts of information and clues about this global technology giant. How will this transition effect the company, its users and most importantly the content creators? Is this the beginning of an incredible technology platform or the beginning of the end for another social network? In this episode of Content Throwdown we will put the risks and rewards of Facebook to the test.

Tale of the Tape

One of the nice things about an IPO is all the juicy data that is released as part of the filing. If you have the time, you may read all 180+ pages of it here, but for the purpose of this throwdown I have extracted some of the more relevant information. As content creators we like to share information where people can access it, and Facebook's numbers paint an impressive picture of its information marketplace. With 2.7 billion likes and comments per day, 250 million photos uploaded every day and over 100 billion friendships, it's easy to see why they are number one in social networking. If you want your message to reach the largest audience, Facebook's numbers appear to offer a massive global reach.

One of the other interesting pieces of data comes not from a graph but in a personal letter from CEO Mark Zuckerberg: "...a more open world will also encourage businesses to engage with their customers directly and authentically. More than four million businesses have Pages on Facebook that they use to have a dialogue with their customers. We expect this trend to grow as well," writes Zuckerberg. While business is using these pages to communicate content, Facebook is also generating 83% (Q4 2011) of its revenue through selling ads to those same businesses.

After looking at all this information what now are the risks and rewards for pushing content through Facebook?

Risks

The first paragraph after the summary in this IPO is clearly labeled "Risk Factors," and a quick look through the list will give you a few reasons to have second thoughts about putting all of your content eggs into this basket. "If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed." Basically the success of the company is based upon eyeballs and their interaction. MySpace, Friendster, and Bebo are just a few of the social platforms that suffered from losing users. One of the big risks with Facebook is that new, faster and better networks will spring up to take its place. Think about the recent surges of companies like Instagram, Pinterest, or Path and it's not too hard to imagine a mass migration of eyeballs to greener pastures.

Another risk for content creators and sharers is the way Facebook handles the content itself. According to the Facebook terms of service, "...you grant us a non-exclusive, transferable, sub-liscensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (IP License)." Basically you or your company may own your content but sharing it with Facebook means they now own it as well. For some companies this may violate existing terms for sharing company information and content online. The lure of access to millions of consumers is definitely enough to justify the risk of content ownership for some entities. Just be sure you fully understand the risks before you build your next Facebook campaign.

Rewards

The upside to the risk of losing users is the possibility that you will not only keep them but grow their numbers and engagement level. Facebook has shown an incredible knack for offering fresh new tools and ways to share and interact with content on their platform. Looking at the numbers alone is proof that they are doing something right. More people, more engagement, more time on the site all lead to better results for content creators. Some of the specific rewards content creators can see are access to easy ad campaign management tools, and lots of analytical information on your Insights. The instant gratification of sharing a piece of content and watching the green numbers go through the roof can be an encouragement to those who have a message to spread.

Some of the other rewards come in the form of partnerships and the developer network tied into Facebook. Chances are you have used an App on the Facebook platform and have seen how powerful these tools are. Whether you are building your own tool to work within their network or using a third party app to help communicate, Facebook understands the power of these relationships and will continue to grow them.

Winner

So is this the end of an era or just the beginning for the young, but powerful, Facebook? Only time will ultimately decide whether this tech giant remains a winner but as curators of content there is a definite answer. That's where our audience is and that is where we will tell our stories. The undeniable evidence is only further supported by the information in the IPO filing, Facebook is a winner, right now. Stay tuned in 2012 and we will see if they can hold onto the championship title.