Quotulatiousness

November 14, 2012

Enter the real Facebook business model

Filed under: Business, Technology — Tags: , , — Nicholas @ 10:13

Facebook is changing, and lots of folks have ideas about what it is changing into. Here’s Dalton Caldwell‘s interpretation of the new business model:

Several prominent people are up in arms about Facebook charging for access to users who have already Liked their page.

I believe this debate is missing the big picture, and what we are in fact witnessing is the unfurling of the full-fledged Facebook business model. Facebook is showing us how they will cross the chasm from low-CTR low-CPM ad-units into what investors have been waiting for since the beginning: a Facebook analogue to Google Adwords.

[. . .]

From a Facebook user perspective, we don’t really know how the algorithm works, and are already trained to understand that some things magically show up our newsfeed and some things don’t. If a normal user sees that one of their friends bought a LivingSocial deal at the top of their feed, they may/may not click on it, but they certainly won’t question how it got there.

Facebook newsfeed is an embodiment of our war on noise. We depend on the newsfeed optimizer to protect our limited attention span, and as a consequence, Facebook gets to choose what stories we do and don’t see, just as Google chooses which search results we do and don’t see. Conceptually, this seems very lucrative: Facebook is auctioning off our limited attention span to the highest bidder, as long as the bidder has a candidate newsstory to promote.

This is what Like-gate is about.

Welcome to the attention economy.

H/T to Tim O’Reilly for the link.

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