Facebook could make billions of dollars – so why doesn’t it?
Facebook is one of the most popular sites on the Internet, and has an active audience of 225 million and counting just waiting to be exploited for profit. And if one board member is to be believed, the monetary rewards for the company from having this number of users is vast.
There comes a stage in every company’s life where the need to make money becomes the priority. Most have a period of building where other factors come into play, but the ultimate desire has to be to zoom past breaking even and start to operate in the black rather than the red.
This rule applies to Web technology companies as much as any, with social networks in the mix. Twitter famously makes no money, at least not yet, despite other companies making plenty of money off the back of the micro-blogging service. MySpace trended the other way, putting money at the top of the agenda and suffering as a result. Not surprising when it’s part of Rupert Murdoch’s News Corporation conglomerate.
Then there’s Facebook, which has tended to take the middle ground up to now. There are multiple moneymaking methods employed on the site, from display ads, engagement ads, and alternative methods such as the ‘Credits’ system. But Facebook founder Mark Zuckerberg has consistently stated revenue is something that will come in time, with the first priority being building a traffic base.
However, it’s not as though Facebook isn’t making any money already, with Silicon Valley entrepreneur and Facebook board member, Mark Andreessen, revealing the figure to Reuters. He also suggested these numbers are nothing compared to what could be to come in the next few years.
He said:
This calendar year they’ll do over $500 million. If they pushed the throttle forward on monetization they would be doing more than a billion this year.
There’s every reason to expect in my view that the thing can be doing billions in revenue five years from now. Generally speaking, people who are selling their stock in Facebook now are making a mistake.
Andreessen clearly knows his stuff and being on the Facebook board means his figures are probably correct. However, it also means he’s not exactly an unbiased source. If he is telling the truth then Facebook’s current path to profitability is showing an incredible amount of self-control. The obvious desire would be to do a MySpace and go all out on monetization. Not that that policy has proved entirely successful.
Instead, it would seem Zuckerberg and co. are focusing on getting the user experience right before truly taking advantage of the millions of Facebook users who access the site on a daily basis. Although I’m guessing the minority of people who are vocal about the constant changes to the site would disagree.
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