Facebook: social networking platform and digital communication

¶ … business model Facebook is using viable? Which type would you categorize it as being? Explain.

One of the most unique aspects of Facebook is that it is free: users can flock to Facebook, make use of the social networking site, and never pay for the privilege of borrowing time on this virtual platform to connect with friends or even to promote their enterprises. Facebook's ubiquity means that advertisers are willing to pay for access to its users. The Facebook business model is similar to that of the one used during the pre-cable age of television, when relatively few channels meant that certain programs were highly attractive to advertisers, given the wide audience they could reach. Advertisers were willing to pay large fees during 'prime time' for a captive audience.

On Facebook, advertising banners, announcements, and specific messages targeted to groups of interest to advertisers generate revenue for the website. By 2005, more than 80% of all undergraduates were registered to Facebook, and the number of non-college as well as college users has grown exponentially since that date, particularly amongst young adults and Baby Boomers seeking to connect with old classmates and friends (Harkey, 2006, p. 9).

However, as with any 'social' fad, Facebook's growth cannot continue indefinitely: eventually, some people will begin to ebb away, and the available market of users will shrink. Overall, the growth and the user traffic in the U.S. market appear to be lagging (Martinez-Cabrera 2010). Also, some individuals, concerned about the amount of time they devote online and the addictive potential of social networking, are choosing to voluntarily discontinue their Facebook accounts. This could cause advertisers to lose interest in Facebook, especially as its greater diversity and aging demographic might make it less attractive than in its earlier incarnation as a meeting place for the target group most responsive to advertising. Still, the ability to target advertising based upon user information makes Facebook valuable to many companies, even if the novelty has worn thin.

Q 2. How do the privacy policies of Facebook interplay with its growth?

One of the early attractions of Facebook was that in contrast to MySpace and Friendster, users had more control over who saw their profiles. Facebook's growth has made it less 'exclusive' in terms of user exposure although non-Facebook users still have less access to user information than Facebook 'friends.' But recent changes in Facebook privacy policies have generated privacy concerns. Facebook newsfeed, which notifies users of friend's activities, often allows them to see the actions of non-friends. Facebook's Beacon tracks activities of Facebook users on web sites, including shopping purchases and entertainment websites like Fandango. Beacon reports purchases and other activities automatically upon Facebook user's homepages. This means that a Facebook user's friend may have information about his or her financial status and activities (such as a spouse reading about an expensive purchase by his or her significant other) or an employer can read about an employee seeing a movie during work hours. (Perez 2007).

Facebook forces its users to specifically block or limit who and what is seen by general users. While it is true that privacy settings allow Facebook users to control who sees their content, the default setting of Facebook always facilitates more openness (Richmond 2010). It is in Facebook's interest to allow more content to be seen by advertisers, for financial reasons. The more open content available to search engines, the more people are drawn to the website even though it is not necessarily in user's own interests to be so open. This conflict of interest between Facebook and its users is not always immediately apparent.

Q3. What anecdotal experiences can you share about Facebook that aligns with the issues brought up in this case study? If you haven't any, find friends who use Facebook and have them offer their thoughts on it.

Probably the most innocent example of Facebook's privacy issues is when someone shares the fact that he or she is going out with friends, does not 'block' this status update from being shown to all readers, and then is confronted by an angry friend the next day -- who was excluded from the meeting. 'Friended' employers not blocked by the user on Facebook might find clues about what an employee was really doing on a 'sick' day. Prospective employers can discover mildly (or not-so-mildly) compromising photos of a job seeker on his or her public profile. But less sexy and even more damaging is evidence that someone may be experiencing financial difficulties, as manifest in anxious, generally shared status updates about mortgage or student loan payments, and this could also be unwittingly made public to 'friended' employers and even individuals with whom the user has a business as well as a social relationship.

Q 4. Where does the social aspect of an e-commerce enterprise fit in the priority of an e-commerce business model. How well and effectively does Facebook's social aspect fit in their e-commerce business model?

Although Facebook's purpose is specifically to facilitate social networking, almost all e-commerce enterprises involve some sort of online friendship. Many products, magazines, and online services (such as weight loss companies) have user forums where individuals can interact. This encourages consumer loyalty, generates interest and traffic about a commercial product or service, and often provides free marketing data for company moderators. Facebook makes social network the primary aspect of its business model, and advertising supports its existence as a portal. The Facebook site is partially entertainment, as the dramas of friends makes a user want to read and share -- and thus exposes the user to advertisements on Facebook.