Quote:
Originally Posted by SpartanGreen78
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.
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Actually, I disagree... to a point. You are right in that you can make money off of ad revenue. But in order to do actually make a significant ammount (enough to justify company worth of $1billion for example), you have to get a MASSIVE ammount of hits on your site, as well as a fairly large number of people that will actually click on the ads. Facebook as it exists today is more popular with many people because of its clean interface; that is to say, its interface that is free of massive banner ads, annoying sound/video ads and popups. For a quick test, go to
MySpace and
Facebook | Welcome to Facebook! and observe the differences in this respect. Facebook is stuck, in that if it changes its interface to include a large number of ads, it could turn off the very users it needs to survive. Also, do you know how much a company like Facebook gets for an unclicked banner ad on its site? Statistically zero.
Also, as Facebook has evolved to include more pictures and video, their infrastructure costs are increasing. I don't suppose you know anything about enterprise level hosting/data centers... it's not cheap.