Please Don’t Make me Read Crap

As I was reading HT Business today, I came across an article “The Facebook lesson: urgent need to re-examine the business model” on the front page, written by N Madhavan (Associate Editor). Not sure how many of you have read it but if you havn’t then you just saved 10 min of your precious time. The article is really not worth reading as the author showed his utter lack of knowledge when it came to a social networking site and the revenue model it was working on, more over the author tried to compare Facebook with a hotel… some serious loop holes in the analogy.

Just to make it clear, Facebook does not use a contextual ads on their website, that simply means that their ads are not content driven, they have a solid advertising model which is to let people display ads with graphics on the right sidebar on a pay per click (PPC) or pay per thousand views (CPM) basis.

There are so many mistakes in the article that I don’t even know what to contradict, the whole article seems like it was written in a hurry as they have to meet the 12 am print dead line. I have been doing business on the internet for 10 years now and have read many many article, this by far is the worst one.

Read the original article below. Taken from HT Business section and written by Tech-IT-Easy N Madhavan

The Facebook lesson: urgent need to re-examine the business model

Imagine you are a hotel owner and have guests who leave their things in their rooms. When they come back from an outing, you tell them that their stuff is all yours, because it is your hotel. Something similar nearly happened this month, but with a minor catch. The “hotel” in this case is “Facebook,” the social networking site on which people put up everything from family photos and event listings to notes and personal information. Facebook, unlike a hotel, does not charge money and thereby hangs the curious tale of how Internet’s new phase, Web 2.0, is going.

Ever since Google happened, companies have been trying to make money with advertisements centred around pictures, words and other content that people upload to share their ideas, views, photos and impressions. It works for Google, the search engine which basically focuses on advertisement revenues linked to keyword searches that throw up ads related to the searched words – with amazing relevance. But this gave rise to an over-optimism “user generated content” of the kind Facebook has been championing.

But if you take away search, and look at aspects like blogs or other content, the model is shaky Facebook is a rage. across the world, but is yet to find a clear way to make money Contextual ads based on content and personality profiles are seen as they way to go but this is far from mature. For entrepreneurs, asking people to share content and trying to ride piggyback on it seems an easy way out.

I call this “loser generated content” because most of the users are either used themselves without adequate compensation (Google has its Adsense programme that gives a share of revenue to bloggers and content providers, but I think the utility is rather limited). I think quality content deserves to be selected carefully and paid for adequately but it suits techies and some entrepreneurs to think good content is for free.

If you look back, Hotmail, founded by Sabeer Bhatia, was predicated on advertisements generated with e-mail views, but 12 years after it was founded, that is hardly a phenomenon. Hotmail is now almost an also-ran in the e-mail game.

The Internet goes through fancy ups and downs. The current Facebook controversy and the “user generated content” bit may also need to get a reality check.

Personally I would rather pay a fixed, amount of money say one US dollar a month, to use Facebook. Relying on advertisements seems an outdated way. Technology and content have their own utility to Net users. They do not necessarily need advertisement support, though other business models and revenue options need to be researched to make this happen.

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