Quote:
Originally Posted by AdmiralAkbar
Facebook needs to be able to turn their hits into actual revenue, which is quite the daunting task. Aside from idiots willing to buy Facebook Virtual Gifts, they are running a FREE service. You cannot make money from a FREE service. Ask Skype about that. Increasing volume doesn't matter because 1 million x $0 = $0. Unless they plan on increasing their ad revenue by about 1000%, they are going to have to come up with something else.
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You can make tons of money from a free service--ad revenue. There's a non-financial cost to users, which is diverting a small amount of attention to the advertising. And as anyone who knows anything about advertising will attest---ad revenue is based on impressions---how many people will see your ad. In terms of Facebook, a LOT of people at least see those ads. Are they making direct revenue from users, of course not, it's minimal and negligible--but it also doesn't matter.
Considering the only real costs of Facebook is the infrastructure--I'm guessing the marginal cost of adding additional users is pretty close to nil. Most of the data that appears in facebook is 3rd party--what they're really spending money on is data mining, which is obviously being paid for by their revenue.