The Facebook business model is the root cause of a lack of transparency

Mark Zuckerberg just announced that Facebook will revert back to the old terms of service as too many people complained about the new ones. I think it is a honorable that Facebook is retracting a pretty bad plan. It is also good to see that they are now engaging with their community about where to take this. In the post Mark states:

Going forward, we’ve decided to take a new approach towards developing our terms. We concluded that returning to our previous terms was the right thing for now. As I said yesterday, we think that a lot of the language in our terms is overly formal and protective so we don’t plan to leave it there for long.

More than 175 million people use Facebook. If it were a country, it would be the sixth most populated country in the world. Our terms aren’t just a document that protect our rights; it’s the governing document for how the service is used by everyone across the world. Given its importance, we need to make sure the terms reflect the principles and values of the people using the service.

Our next version will be a substantial revision from where we are now. It will reflect the principles I described yesterday around how people share and control their information, and it will be written clearly in language everyone can understand. Since this will be the governing document that we’ll all live by, Facebook users will have a lot of input in crafting these terms.

It’s a difficult thing to get right. Facebook has obligations to shareholders, advertisers, business partners, 3rd party application developers, the employees of the company, and yes, the user too. What makes the task even more daunting is that the Facebook business model (free, advertised based) forces them to leverage the size of the network, instead of monetizing on individual user value. It puts them in a balancing act where the advertisement capabilities need to outweigh the individual user rights in order to keep a decent revenue stream. In other words, the more freedom Faceook has to use the data coming from user profiles and interactions, the more capabilities they have to create revenues.

Why do people sign up for Facebook? I suspect in most cases to have a good time and connect with friends. They do not want or need advertisement. It’s a distraction from the core value they wish to receive from Facebook. At the same time, you can’t provide 175M people a free service without some way of creating revenues (although it remains to be seen if advertisement is going to create enough revenues). The problem is that most people are not aware of this and Facebook is not providing the transparency to make sure people are taking a conscious decision when they sign up for the service.

If anything, it is this lack of transparency that should be solved first. The TOS is only one aspect of that. When you sign up for Facebook it should be clear how the service is making money. It should be clear that when you start adding friends, interact, upload content, etc. that all these actions are monitored and stored. It should be clear that even when you are setting privacy controls to a high level it only affects other users, but that it doesn’t protect you or your interactions from Facebook. It should also be clear what Facebook does with 3rd party developers, advertisers and other companies that use the Facebook ecology to create businesses or revenues themselves. And when all of that is clear, then a user can take a conscious decision whether all of that is ok or not.

That is the dillema Mark faces. How are you going to educate 175M people about your business model and all its effects? A User-Centric or User Driven business model would force you to do the right thing for the user, and as a result of this you create revenues. Facebook is forced to do the right thing for the company in order to protect its revenue streams. And that is a big difference.

Mark Zuckerberg is answering the wrong question, and we fell for it again

There has been quite a bit of uproar about Facebook changing their Terms of Service. Unfortunately, no one is asking the right question, thus letting Mark get away with answering the wrong one. The section that created this uproar reads:

You hereby grant Facebook an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to (a) use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute (through multiple tiers), any User Content you (i) Post on or in connection with the Facebook Service or the promotion thereof subject only to your privacy settings or (ii) enable a user to Post, including by offering a Share Link on your website and (b) to use your name, likeness and image for any purpose, including commercial or advertising, each of (a) and (b) on or in connection with the Facebook Service or the promotion thereof. You represent and warrant that you have all rights and permissions to grant the foregoing licenses.

In other word. Anything you publish on Facebook can be used by Facebook. TechMeme sees a large number of replies to this change and this forces Mark Zuckerberg to write a post explaining Facebook’s motives. He writes:

Our philosophy is that people own their information and control who they share it with. When a person shares information on Facebook, they first need to grant Facebook a license to use that information so that we can show it to the other people they’ve asked us to share it with. Without this license, we couldn’t help people share that information.

[stuff deleted...]

Still, the interesting thing about this change in our terms is that it highlights the importance of these issues and their complexity. People want full ownership and control of their information so they can turn off access to it at any time. At the same time, people also want to be able to bring the information others have shared with them—like email addresses, phone numbers, photos and so on—to other services and grant those services access to those people’s information. These two positions are at odds with each other. There is no system today that enables me to share my email address with you and then simultaneously lets me control who you share it with and also lets you control what services you share it with.

Mark tries to explain the complexity that arises when users start sharing information. He explains that this TOS change is needed to allow users to have access to shared information , even when the original sender/sharer has deleted his or her account. In other words, if I share a photo with you, and I decide to delete my account, should you then not have access to that photo anymore?

While Mark does a good job explaining this process and it’s complexities I cannot help but feel that the blogging community has let Mark get away with answering the wrong question. He has done a perfect job in avoiding a much more important privacy issue than the issue that arises when two people share information via Facebook.

The questions Mark should have answered are the following:

What exactly does Facebook do with all the user data has been collected on Facebook, and how exactly does it monetize that, even after a user has deleted his or her account?

I could care less about the information I share with others via Facebook. That sharing process is a conscious act. I know that if I share that whatever gets shared is out of my control.  What I do not know is what Facebook does with that information. Why do they tap into all of my interactions and my data? What do they store, and how do they monetize that exactly? If I set my privacy settings as strict as possible do they still see everything? How is that data being used outside of Facebook? Do 3rd parties get access to that information as well, even if I do not want them too?

The problem at hand isn’t users sharing things on Facebook. It isn’t even controlling privacy on Facebook. The problem is that I do not have a clue or option to protect myself from Facebook. Any service that monetizes user data and interactions indirectly using a free but advertisement business model puts the value of the network in front of the value of the individual user. You get a free service, but you do not know exactly what you are giving up for that. And that is what Mark should be explaining. The rest is just a decoy so that the really difficult questions do not need to be answered.

I might not even mind that Facebook monetizes my user data, my friends, and my interactions. But right now, I don’t know how Facebook uses that data.We might think that our online lives are not connected to our real lives. We might even think that privacy is dead. But the problem is not that privacy is dead, but that it is distributed unevenly. In other words, the user is forced into total transparency when signing up for services like Facebook. But the service itself lacks transparency. There is no way we are going to find out what Facebook does with us. And it is this unbalanced relationship that we should be worried about. Mark Zukcerberg does a great job answering the wrong question, and we all fell for it again.

With great power comes great responsibility

I read about the fuzz generated around an interview Sara Lacy held with pop star Mark Zuckerberg. Sara was slaughtered on-line with several blog posts and numerous tweets that called her all sorts of things. Michael Arrington called it right when he spoke of a witch hunt, blaming a few in the crowd making some noise and the “press” picking up on it.

Brian Solis wrote a nice blog post on what really happened and talked with Sara on her own experiences. Several bloggers spent time on the issue, including Robert Scoble, putting the blame on a few Twittering assholes, and Steve Hodson who makes a right point in saying:

It doesn’t matter that Robert Scoble suggests that the SXSW audience is unlike any other. That still doesn’t excuse lack of respect and believing that one’s own overblown ego gives you the right to be insulting and intentionally hurtful to anyone let alone some-one who was just trying to do a job that they had been hired to do and requested by the person who was being interviewed. I will say that Robert’s title for his post today on the matter is an equally perfect way to end a post – Audience of Twittering Assholes. You would have thought your parents would have taught you all better manners than what you showed to the world yesterday.

I remember reading about a similar incident here in the Netherlands where Joseph Pine was giving a presentation. The organizers had opened a twittering back channel where people could react to the presentation. It turned out the channel was mostly used for making jokes, not even at the expense of Joseph Pine. Unfortunately he couldn’t see the back channel screen himself and was faced with a crowd laughing about things unrelated to his presentation.

The thing that interests me about it is the way technology sometimes enables the darker side of human nature without a penalty. Current web advocates always talk about the greater good that web 2.0 is bringing us in terms of interaction. Instead of a one way communication stream, the technology allows everyone to to interact by open up 2-way communication channels. It also allows every person to have a voice and be heard. We can all have blogs, join on-line conversations like Twitter, be journalists, write books. Any kind of professional, wheter it is a journalist, book writer, blogger or CEO for that matter are all feeling the pressure of the voice of millions of people joining the conversations in their domain. While setting the conversation free is a good thing it also provides us with several side effects that show the worst in human nature.

1. Sensational journalism. You know what I’m talking about.  Right now there is a storm blowing through the Netherlands. The last time it happened, the national weather center issued warnings about dangers. As a result every news reporter went out to different locations within the Netherlands to report live from the scene. We heard interviews all day about possible dangers, what if scenario’s, possible casualties, damage etc. Nothing happened! Sure there was wind, rain and even some damage to a few buildings here and there. But the media hype was way over the top making everyone look ridiculous (which was of course covered in lengthy “lucky nothing happened” reports on TV.
2. If there isn’t news, we simply create it. Just look at the way we get reported on the US presidential elections. Zephoria wrote a nice post about that called “Enough already”. In this post she describes how the media, when one candidate seems to pull ahead of another, the media immediately start creating stories from nothing. Just for the sake of keeping the competition going, or getting people to tune into their “sensational” stories.
3. The person is more important than his actions. The world has become a public media place allowing no one to have some privacy. As soon as someone draws attention through his actions, the first thing that happens is that we start to focus on the person itself, instead of the things he is doing. Just look a the way the blogosphere reports about Mark Zuckerberg. He is the CEO of Facebook, and yes, people do discuss the work he is doing over there. But how many posts were about his looks, his slippers, his geekyness, and all other kinds of personal traits? Another example in general would be the reporting on the Eliot Spitzer case. Although ZDnet has some interesting angle on it here, in general the reporting was more a tabloid type “ooh we caught a public person in an embarrassing situation”.
4. The breaking news factor. With everyone being a “professional” journalist these days we can only drive traffic by providing a possible audience with “Breaking News”. Even if there isn’t any. Or if at least a 1000 other people have reported on the breaking news too. Just look at TechMeme on any particular day and you will see what I mean. Especially the biggest blog sites like TechCrunch, GigaOM, etc.  use that technique. I haven’t actually counted the number of times “Breaking News” was in a blog post title. But I do know that I rarely visit those sites first. Everyone copies each others stories, often without factual checking, but who cares. There is no penalty on it. Personally I don’t care much about the breaking news, I’m way more interested in the analysis afterwards. Of course, for a good analysis you need smart people. So at that point I find myself  reverting to the experts, instead of the eager beaver traffic driving personalities.
5. The “I can shout things out and that makes me important” factor. This is what happened during the Sara Lacy interview with Mark Zuckerberg and the example I provided with the Joseph Pine presentation. There are always jerks around. Before Twitter, back channels, blog sites,  these people only had close proximity tools to show off that they are jerks indeed (i.e. direct conversation or afterward complaining). But the current technologies allows us all to join in on the conversation, by writing blogs, twittering, shouting out in back channels. It provides everyone a voice, including people that aren’t really there to join the conversation and add to it. The thing about it is that it really doesn’t matter if anyone is listening to them. It is the power of being able to shout that makes people focus on their own importance, instead of on the contribution to the discussion they want to make. They really don’t care if anyone is actually listening. They simply do it because now they can.

I believe that setting the conversation free is a great thing in itself. It is important that everyone has a voice. It is also great that the technology not only enables us to speak out loud, get into the conversation, but that it also helps us to find an audience, to get into interaction. I’m thankful for it. It allows me to blog even though I’m just an amateur. I’m surprised and thankful for the number of people that are willing to take the time to read my writings, even if they are often quite lengthy

But this freedom also unleashes some of the worst in us, sometimes making ourselves more important than the other. There is no way around that. It’s called human nature. But we don’t have to accept it just because it happens. The same power that is granted to those that shout out to (intentionally) hurt others is in our hands to call them to order. Instead of blindly copying their behavior, or ignoring it, we should be addressing it directly. In a democracy we need to feel responsible and take care of those who are weakest or most vulnerable at any time.

Wasn’t it Ben Parker in the Spiderman movie  that said “With great power comes great responsibility”?

Facebook is fighting a lost cause, they just don’t know it yet

I’m not sure what to think about the different blog posts covering the interview Mark Zuckerberg has given recently. The tech community seems to be giving Mark a pop star status,leading to witch burning scenario’s, well described by Michael Arrington here. I guess techies are just like other people in need of icons.

Mark and his team do need to get credit for the way they have grown Facebook in a few years. Starting from scratch it is now on of the top communication platforms worldwide. There aren’t many examples of entrepreneurs being so successful in such short time. But now that the time has come to leverage that success, in other words, monetize the platform, I’m not much of a fan of Mark or the Facebook platform.

When it comes to monetising Facebook is constantly trying to balance on a thin line between the interests of the user versus the need for Facebook to generate revenue streams. The most obvious example is the release and backlash of their Beacon project. The main reason for their incredible growth but also this balancing act is that Facebook fell for the $16 Bln advertisement trap, just like many other web 2.0 companies did. In an interview with Marshall Kirkpatrick we can clearly see this balancing act. He says:

Zuckerberg told me today that he believes data portability is an important direction the web is moving in, that fundamental openness between sites is inevitable – but that Facebook is focusing on questions of privacy and user control as its contribution to that movement. That may be a fair, if frustrating, position for Facebook to take. It may also leave them on the sidelines of larger conversations.

Let’s translate this. I hear Mark is saying that data portability is great but that user privacy and the control of it comes first. While I couldn’t agree more, I have serious doubts Mark is there to protect the privacy of his users. Launching SocialAds and Beacon proves that Facebook isn’t there to protect privacy. That doesn’t generate revenues. Facebook’s sole purpose is to monetize the social network with advertisement. Which is fine, but hardly the “user” perspective. Facebook logs everything we do on the platform. We do not have the option to turn this data hogging off. It is the price we pay for getting the service for free. So let’s get one thing out of the way, Facebook isn’t there to protect our privacy. It is there to protect the Facebook network so that it can execute it’s business model without leaking value away outside the network. The biggest problem I have with this is that most Facebook users are completely naive to the working of this business model. They do not have a clue that Facebook collects their data, their interactions for monetizing purposes. It is the “below the radar” data hogging that creates the tension with user controlled privacy. Not the openness of the Facebook platform. Facebook is one big walled garden, and Mark isn’t going to open up that garden for data portability. He needs people to remain within that garden to make money. It is as simple as that.

On data portability he says:

“If you export your friends list, does their contact information come with that? What if they change their privacy settings later? Right now if you take an action that gets published to your friends’ news feeds, but then if you change your privacy settings later to be more restrictive – then those events disappear from the news feeds. If that data is published off-site, then there’s no longer any control over the data for users.

While this sounds like a real privacy issue which Facebook solves for its users, it really isn’t. Facebook isn’t actually deleting information or protecting the user when he changes settings. Facebook has your data, always, and never deletes it. The real issue is that the data isn’t owned by the user. He doesn’t have any real controls over it. Sure, he can ask Facebook not to display certain aspects of it in a newsfeed, but the data is still there, owned by Facebook. The Facebook user gets a false illusion of privacy and security, but in fact he doesn’t have the control. Always look who is in control, who owns, and you will know who is controlling privacy.

The answer to this privacy issue is really simple. Let the user own and control his data. Only then privacy responsibility is put where it should be, at the user. That doesn’t mean privacy is secure, users make mistakes or do not take their responsibility. It just means that the responsibilities lies there where it really belongs. I’m not sure if the user is ready for it yet, but it is the right thing to do. Check Dick Hardt’s work on identity 2.0 out. He knows what he is talking about and works on ways to solve this issue.

On Beacon Mark says:

On Beacon, Zuckerberg said: “There were sites that people wanted to share from, like Yelp, where you’re already making public comment. For shopping, maybe in a couple of years people will want to share that.” He said that it “was probably a mistake” to roll out Beacon in the context of user commercial activity. He emphasizes that Beacon is a part of the Facebook Platform more than it is an advertising effort.

I think Marshall gets it right when he says:

Zuckerberg’s assertion that people may be more excited about exposing their shopping activities in a few years may be correct, but it might also be the delusion of a man trying to monetize the tricky market of social networking.

I remember the speech Mark Zuckerberg gave when project Beacon was launched. He wasn’t talking to the users. He wasn’t addressing user issues or user value. He was giving his speech to top executives in the advertisement business. He was explaining to them that the world of advertisement was fundamentally changing due to Facbeook and Beacon. So let’s drop the “users want to share” part of this message and recall that the business model of Facebook isn’t about leveraging user value. It is about leveraging network value. Facebook is getting the Turkey ready for serving, the question is, who is the Turkey?

More on data portability:

I asked Zuckerberg if he was taken to the edge of a cliff and had to implement either OpenID, oAuth or APML immediately – which would he chose? He said he enjoyed the question, that OpenID was the one of the three protocols that had been most discussed internally, but that the bulk of actual developer demand seems to him to be focused on the Facebook Platform.

And finally Mark says:

“We are philosophically aligned [with the data portability movement],” Zuckerberg said. “We are pushing in our own way to make the world a more open place. It’s going to be good when it happens.”

I like the “philosophical alignment” part of it. Yeah we are committed to data portability (on a philosophical kind of way), but for now we will focus on the platform itself. Well, he couldn’t have said it any clearer than this. Facebook is holding on tightly to their walled garden. But it is a fight they will not be able to win. Human nature will not let them,. It is in our nature to look for freedom, not to be bound by some network value leveraging business model.

Every generation needs a new revolution

Facebook and Google are getting a lot of attention these days. Everyone, including myself, seems to have a take on it and the urge to write about it. It is time to step back, observe and try to understand what is causing this.

The CEO’s of rivalling companies are falling over each other, often like little children. Personally I like Steve Ballmer best (seriously), he is such an incredible promoter. Just look at his great response to John Battelle’s question on search here, or his quote on Android being a paper tiger for now. Business week summarises a few here (including one of my comments ). Or how about Mark Zuckerberg, the man that seems to have gained a pop star status with his incredible success in growing Facebook to 50Mln users. On top of his success he seems to have stated that the user really has no choice when it comes to SocialAds.

If the Internet has brought us one thing it is the ability to start a hailstorm as a counter-force  to the scooping blogging community reporting on the successful initiatives or people.  The first hacks on OpenSocial have already been reported, as well as a recipe to block SocialAds. 100 Year old laws have been dusted off to explain that Facebook SocialAds are illegal. And some even started a countdown for the downfall of Facebook .

Web 2.0 brought us an explosion of innovations in social networking services. The biggest contest ever for the attention of the user. Web 2.0 companies create phenomenal free services and show unprecedented user base growth. It is all about eyeballs, who has the most users, the largest network. The waves of success were driven by free services. The question how create revenues being the last to answer. But with the success of all these services, monetization becomes an issue. Pressure is now on all the successful CEO’s, how to make revenues that live up to the incredible valuations being drawn up? The way out is provided by the advertisement business, nearly $ 42 Bln is predicted to be available in 2011 in the US only. It is this pile of money available that provides everyone a way out. It is the golden pot at the end of the rainbow that can be used to pay for the costs of free services and to justify incredible $15 Bln valuations of successful web 2.0 companies.

So why the emotional responses, why the polarising blog posts on these matters? Is it jealousy, because some are more successful than others? Maybe, but I am inclined to think it is something else.

I think it is because we are finally starting to realise that everything comes at a price. There is no such thing as a free lunch. Your “free” Facebook account is payed by SocialAds. Your perceived secure privacy on social networks isn’t as secure as you might have thought. The service you thought was build for your needs is now turning into an ad machine. One that takes your personal information and relationships and uses these to provide you with ads that, luckily won’t feel like ads according to Mark Zuckerberg (phew, a relieve here).

These services need your attention, draw you in because it is free, but won’t let you out once joined.  Try taking your personal belongings, your messages, your friends, your emotions with you from one service to the next. It can’t be done. It is the Catch 22 for web 2.0.

I think it is precisely this trap we have fallen into that is now delivering all these emotional responses on the web. We are finally beginning to realise that web 2.0 didn’t give us freedom at all. It provided a well disguised containment, a trap that lured us in. Beautiful sirens singing to us, backed up by bloggers, newspapers and magazines telling us it is all about you. And now with our  saviour Mark Zuckerberg telling us that there is  no way out. But Mark is getting a bit nervous with rivals like Google who, in perception at least, do offer a way out with OpenSocial and  Android.

It is becoming clear to me now that the current web 2.0 generation needs a revolution. If we want to get out if this trap then there is, as always, only one way to do this. We have got to take control of our lives on-line. Don’t let anyone tell you different. Your data is yours! It isn’t Google’s, Facebook’s, or Microsoft’s. We need to start making so much noise about this that these guys will be forced to open it all up. And you have the power to do so. You can use the strength of the network that you have created yourself to protest and oppose this confinement. I can’t wait for the first protest groups on SocialAds to appear on Facebook. Let’s see how many supporters will join that. And don’t get me wrong. I am not against ads, but I do oppose to the idea that we currently have no freedom because of ads!

And in revolution, there are always new thinkers and leaders that can  show us the way. My vote is with people like Doc Searl, David Recordon, Tim O’Reilly, Dick Hardt, Dave Winer and Rolf Skyberg. People that not just complain about this trap, but thoroughly understand it and provide possibilities to get out of it. There are $16 Bln reasons to get out if this web 2.0 advertisement trap and move into a new era of user centric thinking, of true interaction!

It is like President Jefferson already said so long ago: “Every generation needs a new revolution”.

The myth of SocialAds, Beacon and Insights: it ain’t gonna work!

The countdown continues. After I decided to write a post on the downfall of Facebook as their stealth ad system is being revealed, we are now on another day after. The day after Mark Zuckerberg announced his 3 way ad system for Facebook. For me the counter is starting to tick a little faster now, I’ll explain in a moment why.

As always I am looking around for analysis on this. In general people seem to be either positive about the move with a warning that it is a “dangerous way to go”. Or they are negative and warning about the user that won’t like to be hassled by his friends with commercial messages.

There are a few posts that drew my attention.

Nicolas Carr really hits Facebook hard with his post called ‘the social graft’. He says:

“It’s a nifty system: First you get your users to entrust their personal data to you, and then you not only sell that data to advertisers but you get the users to be the vector for the ads. And what do the users get in return? An animated Sprite Sips character to interact with.”

Mathew Ingram describes a mental picture of some guy barging into a party at my house and yelling about free pizza or T-shirts or something, and handing out coupons to all my friends while dressed up like a giant Coke can.

He would punch the guy entering his house in that way. I would probably too.

John Battelle wrote a small entry in which he adds to a quote from a CNET article from a Facebook executive:

“The company that can process the most data will win.” I’d modify that – the company that can process the most data intelligently and in context, wins”

I think John is right and wrong. Right, because the company that can process data intelligently and in context wins. Wrong, because Facebook isn’t the right context! That is why Google wins, the not only score better on clever and massive amounts of data processing, but they use it most intelligent in a context where a user is actually begging for advertisement attention (during a search).

Business Week takes the angle of the marketeer and advertiser who is excited about the new initiative in their post called Marketeers are your ‘friends’. They quote Mark Zuckerberg saying:

“The next 100 years is going to be different for advertising, and it starts today,” Zuckerberg told the crowd of 250 or so enthusiastic marketers and advertising executives who had gathered at a midtown loft for soft drinks, hors d’oeuvres, and a demonstration of Facebook’s new ad system. “Pushing your message out to people is no longer good enough—you have to get into the conversation.”

But who wants marketers in their conversation? If not enough do, the new news-feed ads will be bad news for Facebook.

But Mark, you aren’t getting into the conversation, you are really only trespassing. And btw, the example you provide where 2mln Facebook users join a suport breastcancer cause,  is actually a very bad example. People joined to support the good cause, not to support some brand.

Dave Winer, although he is positive on the move made by Facebook, ends his article with an excellent observation:

Long-term, however they both have problems because advertising is on its way to being obsolete. Facebook is just another step along the path. Advertising will get more and more targeted until it disappears, because perfectly targeted advertising is just information. And that’s good!

I think SocialAds are a bad idea. Actually I think the current web 2.0 free (ad-based) business model is a bad idea. There are 16Bln reasons to get out of that advertisement trap. And now Facebook is doing the wrong thing for the obvious reasons. Mark Zuckerberg couldn’t have said it any better than in this quote, taken from the press conference:

People will not be able to opt out of these social ads or turn them off, at least for now, unless they stop revealing information about themselves on Facebook. Says Zuckerberg: “It is an ad-supported service. It is a free service.”

You couldn’t be more right Mark! This is the Catch 22 of web 2.0. Facebook creates a service, drawing users to it by providing it for free, provide the user with the false illusion that his privacy is safe and then leverages the user profiles and the Social Graph network Facebook ‘owns’ and protects but didn’t create himself (the users did) by monetizing with ads. I said before it isn’t going to hold, as this business model is fueled form the wrong side. But I would go a step further and argue that SocialAds are based upon an entirely wrong assumption of friendship in the wrong context!

The power, according to Facebook lies in the user becoming a brand ambassador towards his friends. The best advice you can get is that from a friend. We all know this phenomenon. You are sitting with a friend and he tells you enthusiastically about a movie he has been too. Makes you want to go yourself, right? Why does that work? Because a lot of things happen at the same time. In the physical world there are many different stimuli that affect your behavior. Things like speech, sight, hearing, touch, feeling, movement, trust, relationships, common experiences or taste, context (like the fact that you are hanging out at your home together), all come together in your brain providing you with a feeling of value to your friends story. It also provides you the opportunity to DISAGREE with your friend.

But in the on-line world you lose most of these stimuli. In Facebook you get flattened stimuli from the newsfeed: “Alex went to this movie and he liked it”, or personalised ads using the profile information. But there is no “hanging out together, no voice, taste, touch or other stimuli, no way of agreeing or disagreeing with your friend. And worse, the stimuli aren’t in the right context. I’m not looking for advertisement there. And if I get these stimuli from my friends in my personal space, what will that do to the trust I have in them? At best I’ll try to ignore it, at worse I get fed up with my friend and disconnect him. Facebook will be left with the bargain hunters (get a free coke if you…), ad blind people (ignoring any brand or ad message), brand bashers (have you seen these morons trying to sell me….) and finally nothing as users will start to see through the advertisement trap they are in and move to another place where services provide real value instead of “an animated Sprite bottle to interact with”.

The very best one being from Doc Searl here. In his post called New World Disorder he quotes The Guardian with an article by Jeff Jarvis, Chaos theory: advertising cash will soon decrease,

Advertising is no one’s first choice as the basis of a relationship. For marketers, it’s expensive and inefficient. For customers, it’s invasive and annoying. And targeted advertising is only slightly more efficient and slightly less annoying. Clearly, the direct relationship between a customer and a company is preferable. But that direct connection cuts out the middlemen – that is the media.

So true. As said before. The web 2.0 bubble is building up way too much pressure, who has a needle?

Mark Zuckerberg: When in doubt, follow the money

It is the day after the OpenSocial announcements Google has made. I like it already. The scooping part of such events isn’t nearly as interesting as the period afterwards when everyone starts analysing and speculating. It is from these brainwaves that new insights and ideas erupt. It makes you (Re-) discover things on the web. Forget about the scoops, they are just the dying out echos of eager beaver blogging sites bringing the “exclusive breaking news”.

Yesterday I wrote in a first analysis that the user is finally back into the equation. My main point was that now things might be broken open, we shouldn’t forget about the user and his needs. Reading through a lot of the posts today I feel that a lot of articles focus (again) on the wrong side of this equation. For example, TechCrunch suggests Facebook should join the OpenSocial movement because it might just let them become the advertisement network of choice in the social network Walhalla. Robert Scoble wonders whether or not Facebook is scared and advises them to join the party.

If I were Mark Zuckerberg, or any other Social Networking guru I wouldn’t worry a day about OpenSocial. Stop messing about and join the party and break down current walled gardens. It is what users want, and you can’t ignore that. Bad for (advertisement) business? Sorry guys, can we please stop this advertisement business model thinking and come up with something better?

In a previous post I discussed why there is an advertisement trap and possibilities to get out of it. Reading Mathew Ingram not being impressed by Orkut triggered me to think back about some things I wrote earlier. He said:

By contrast, Google doesn’t really have a horse in this particular race — unless you include Orkut, which I don’t — in the same sense that Microsoft didn’t make hardware.

I don’t agree with you Mathew. Orkut might not be the biggest social network in the US, it is very strong in Asia. Asia is the fastest growing mobile market in the world!

Toni Ahonen publishes good examples of successful mobile (Internet) cases on a regular basis, some of them mentioned here. The mobile device will be the most dominant Internet terminal in the world. Already there are more mobile phones than computers available, and the mobile user is definitely finding his way into the Internet. The iPhone has just been called the ‘Invention of the year’ by Time Magazine.

But there are 2 aspects to a mobile phone that are of huge importance when thinking about next generation web services:

1. The mobile phone platform has billing capabilities
2. The mobile phone user pays to interact with others

Think of the US on-line advertisement spent 2006 ($16 Bln) as a small hill,

think of the worldwide spent on SMS as the Mount Everest (btoh images taken from Wikipedia). It is estimated that the SMS market alone will be $ 67Bln in 2012 (or 3.7 trillion messages a year!) .That is excluding Mobile Internet services. In Japan alone more than $ 1 Bln revenues are generated from mobile data services. So stop thinking ads and start thinking payed services.

Let us not forget about China and India where the mobile phone is building a user base very fast. So Google has Orkut, only the biggest social network in Asia and a major traffic driver for them. And, didn’t Google just buy Jaiku, thus adding mobile presence and mobile feeds into the social networking scene? And they are working on the GPhone trying to become a dominant mobile platform as well.

In order to get out of the free (ad-based) web 2.0 thinking that leads to walled gardens and network value instead of user value we need new business models. Business models that create revenues because they are based upon user value. In my opinion there is a whole lot to be learned fro the mobile market. People pay to interact, and they interact like crazy.

All we need now is entrepreneurs and investors that are willing to support developments that connect mobile to Internet and vice versa. Business in which the user doesn’t get it all for free (no such thing as a free lunch). Instead he will be willing to pay for interaction, because that is what brings him the most value. And he will pay more than ANY social networking advertisement model will ever generate in revenues. Google understands that. That is why they are opening up social networks. Unlike Facebook, they don’t need to create advertisement revenues in such small walled gardens. They will make these revenues elsewhere. Their garden is the entire Internet.

So Mark, when in doubt what to do next? My humble advise to you, just follow the money!