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People on Facebook act more like they have the world wired and can afford anything, and that life is wonderful rather than a challenge (Boyt, 2011). As a result if someone does criticize another's work they are openly criticized or ostracized -- clearly not the behavior that leads to sales being made rapidly (Boyt, 2011). Facebook is actually a pecking order of sorts, kind of like a virtual high school where those who can tell the best stories and work to attain popularity get the most followers or "friends." It is easy to inflate friend figures on Facebook, further accelerating the peak of inflated expectations as well. With a valuation of $50B whetting the appetite of thousands of companies on how to translate the popularity of the site into revenue (O'Leary, 2011).
Why Not in Other Areas of the Hype Cycle
Facebook does not belong in any other area of the Hype Cycle because it is beyond the Technology Trigger role and has not yet passed into the trough of disillusionment. In reality Facebook is a marketing information systems business model cleverly disguised as an egalitarian social network. The majority of Facebook revenues today are not from advertising, it is from the sales of data about its...
The more a subscriber shares the most they give Facebook the chance to earn more money selling that data to advertisers. It is an ingenious business model that over time will slide into the trough of disillusionment. Once there expectations will be more in line with what Facebook really is as a business, and the company will move to the slope of enlightenment.
Conclusion
The bubble that is Facebook today will eventually turn out to be more of a forecast than actual revenue generated. A $50B valuation is sign enough of this being in the peak of inflated expectations, yet over time the realization will set in that this business model is more about collecting user data and selling it and less about enabling sales of 3rd party products and services.
References
Bernoff, J., & Li, C.. (2008). Harnessing the Power of the Oh-So-Social Web. MIT Sloan Management Review, 49(3), 36-42.
Susie Boyt. (2011, January). Facebook's unfriendly face. FT.com FT Online
O'Leary, N.. (2011, January). First on Facebook. Adweek, 52(2), 9.
Chris Nuttall. (2009, April 13). Real-time updates open a fresh frontier for social network sites. Financial Times,13.
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