Are Twitter and Facebook the next Geocities?
Are Twitter and Facebook the next Geocities?
So when I logged in this morning, I was greeted with this great recap of the path that Twitter has taken over the last two years: Twitter Trips on Its Rapid Growth.
Then a little later on this morning, I see this on my Facebook status updates:
RT @rscheuer: RT @mshraybman: It’s official: Facebook raises $200M from Russian investor . The deal values FB at $10B.
This really got me thinking about monetization of a web property. When a site like Twitter or Facebook get so large, so fast without a true business model in place, what is the long term viability of those services, or any website for that matter. The bigger question is this (imo): Services like (Twitter and Facebook) are conditioning the general web population and everyone as a whole on the web to expect the BMW M3 for free essentially.
Free features rock – but with a COST
Look at all the awesome features that sites like Twitter and Facebook have for anyone to use (photo uploads, video uploads, etc. the list goes on and on) – I know because I use them in my everyday life, many times each day. BUT. Here’s the catch: they are conditioning us to expect FREE services.
Tell me how you can value a company at $10B as this Russian Group pumps in $200 into Facebook to get their paper value that high when we know that if revenues come in at $400M that puts a 25x multiple on them. That’s not a terribly high multiple per se, but the bigger question is the complete monetization strategy for future revenues.
By giving away the farm for free essentially, they are making all us conditioned that we shouldn’t have to pay for anything.
So will Facebook and Twitter become the next Geocities? You tell me… I’d love to hear your thoughts. All I know is that giving away something for free forever is a difficult business model to follow. Just ask Geocities. I’m sure they’ll agree with you.
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