Should Facebook and Twitter bother to make money? (Iqbal Gandham)

Another late night post after a evening kicking a ball around a five-a-side pitch :-)
Have been thinking for a while about Facebook, Twitter and the likes, i.e all the big networks which are trying to make money. Now we all know on the web there are only two ways of really making money

a) The user pays
b) Someone else does (i.e advertisers)

Lets look at ‘b’ since this is where most of the “large” dotcoms sit/used to sit. If you look at Google, it doesn’t really have a closed network as such, all it does is to take data from elsewhere, do some magic, and then return some results. These results we use, and someone else pays to be viewed alongside the results. Now in the case of Facebook, they use their OWN data, and not created by others, by their own, I mean created within their walled garden, same with Twitter, the data is created using the Twitter platform.

Both Facebook and Twitter differ from Google here, Google uses the roads that others built, and adds value to that, Facebook and Twitter are using their own roads, i.e they are trying to build the railroad, but also the services on top to monetise them.

Again and again we here of how Facebook and Twitterwill make money, I am unsure of whether this is a good idea, not the money making, but the how.Facebook and Twitter need to make the roads better and bigger, allowing people to do different things on them (call this opening the walled garden or whatever), the money will be made with the people who use these roads, Twitter and Facebookshould be partnering with these companies in a new type of funding scenario, i.e we will focus on the road building, you guys come up with ways to use it, and together we both make money. Google did this well, it used existing roads i.e websites that were built, and built a business on top…and now its stuck, because its own search engine is now becoming a road in itself, but they cant keep squeezing money out of it, what they need is to let others build on top of that.

I am sure lots of people are confused between the road analogies, but the way I look at it is , roads, railroads were built centuries ago, but the real money being made from them came much after, by the people using them, the same is true with Facebook, Twitter and even now Google, work out whether you are a layer using the roads, or the road themselves.

As a summary, Facebook and Twitter need to make there platforms better, and partner with companies who use their data in order to make money, for them and also for the partners, if they try to both together, i.e create the platform and enhance it, AND try to use the same platform to make money, I think they will hit a deadend, and user’s will move off. We want new things all the time…..

Iqbal Gandham (aka feelin_tired)

6 Responses to “Should Facebook and Twitter bother to make money? (Iqbal Gandham)”

  1. Sanjay Mehta says:

    Most discussions on the subject look at the current scenario and see the possibilities of monetizing the same. Yeah, the millions of users, the loyalists, the traction etc.

    But the moot question is, how critically relevant the services are for it’s users, that they will continue to use them as passionately, if the services were chargeable?

    And I am not necessarily referring to FB or Twitter itself, but even the add-ons, e.g. if Tweetdeck was chargeable, would there be large scale usage?

    If movies-on-demand (say on DTH) were free, it would have been a riot. Then we would be sitting and discussing its revenue opportunities.

    What services start off as paid, have a certain trajectory. And those which are free, provided of course that there is a value proposition even as free, have a different growth trajectory.

    All the money making options for FB or Twitter or scores of other services, have to focus clearly on ‘why will someone pay – whoever that entity is’. That should be compelling enough, there should be lots of money, or there should be lots of payers paying small money, say..

    Until that “why” is clearly figured out, we are trying to force a money mechanism on something that is not really ready to deliver money just yet..

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