Facebook five years from now: king or has-been?

Summary:In 2017, will Zuckerberg and Company rule the social Web -- or be little more than another MySpace?

Emil Protalinski

Emil Protalinski

King

or

Has Been

Steven J. Vaughan-Nichols

Steven J. Vaughan-Nichols

Best Argument: King

The moderator has delivered a final verdict.

Opening Statements

Facebook is here to stay

Emil Protalinski:  Facebook won't be the king of the Internet in five years (that'll be Reddit, or Reddit's successor) but I do strongly believe it will remain the king of the social Web. That's because Facebook isn't just a social network; it's a platform.

Facebook may have started as a simple Web service, but it has very quickly expanded into many areas of the Web through various apps, plugins, and widgets. Even if you don't use it, or your friends don't, it's hard to navigate the Web without seeing a Facebook logo.

Comparing MySpace to Facebook is like comparing Lycos to Google. Lycos and Myspace are both known by most Internet users of their respective times, but they weren't here for long. Facebook and Google are.

Facebook has multiple fingers in many pies. Facebook is entrenched. Facebook is here to stay.

Facebook's future fiasco

Steven J. Vaughan-Nichols: In 2008, Facebook nearly had as many users as MySpace. 58.4 million unique visitors at year's end vs.  55.2 million to be exact.

The fastest growing sites were Twitter, Tagged, and Ning. A bit more than four years later, MySpace has been sold for peanuts  and does anyone use Tagged or Ning?

And you think just because Facebook is hot now that it's going to continue to hold its fans for five years? Ha!

Facebook's fiasco of an IPO  shows a company headed for business disaster. Users won't care. But, fed up with Facebook's endless interface and privacy changes, they will start abandoning ship.

Like AOL long before it, Facebook is wildly popular now, but that won't last any longer than AOL's dial-up modem empire. Anyone can create a social network today. Google+, Pinterest, Diaspora, some social network no one's ever heard of, the question isn't: “Will Facebook fall?”  It's when.
 

The Rebuttal

  • Great Debate Moderator

    Thank you Emil and Steven for a Great Debate!

    I look forward to seeing your closing arguments tomorrow. And I will deliver my final verdict on Thursday. Readers, you've got until 2pm Thursday as well to cast *your* votes.

    Posted by Lawrence Dignan

  • Great Debate Moderator

    One more: Can Facebook keep developers in the fold?

    What are the pros and cons of developing social applications?

    Posted by Lawrence Dignan

    Multi-platform.

    I think Facebook is just getting started when it comes to its developer story. Remember, the Facebook Platform is just a few years old. Facebook's strategy is to be on every platform possible, mobile and desktop. That's why the App Center has such great potential: http://www.zdnet.com/blog/facebook/why-the-facebook-app-center-is-a-brilliant-idea/12839 The pros and cons are obvious. Facebook integration goes viral and the ROI is excellent, or they don't and all the money goes down the drain. Facebook still needs to work on the middle ground: slow, steady, but successful marketing campaigns.

    Emil Protalinski

    I am for King

    I don't think so

    If you're a great developer today, you're interested in writing for mobile platforms. iOS, if you can deal with Apple being the gatekeeper and taking a lot of the gross income, and Android if you'd rather be open but have to mange with multiple versions and platforms. Facebook? Not so much. The social games, which Facebook and friends cashed out on in the early days, don't seem to be as popular as they were. I don't foresee other Facebook applications catching users' fancy.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    Let's squeeze in 1 maybe 2 more questions...

    How do you see Facebook's acquisition strategy emerging?

    Posted by Lawrence Dignan

    Same old.

    Facebook will keep acquiring small startups in Silicon Valley for the bright engineers. Hell, Menlo Park bought a company the day it went public (http://www.zdnet.com/blog/facebook/facebook-acquires-mobile-social-gifting-startup-karma/13405). Every once in a while, Facebook will buy an Instagram to block threats to its business and to expand its business (as I already said, like in China). EDIT: Per the Instagram point, http://www.zdnet.com/blog/facebook/why-facebook-acquired-instagram-for-1-billion/11562

    Emil Protalinski

    I am for King

    Foolishly

    Facebook seems to make smart smaller acquisitions and really dumb big ones. I'm still shaking my head over the purchase of Instagram for over a billion. I mean come on, it's just a popular pretty-picture Web site. And, he paid a billion bucks for it!? That was Zuckerberg's call all the way, and its decisions like that, which makes me want to steer well away from Facebook as an investment.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    What can we learn from Facebook's management style?

    Is it possible to keep that culture now that the company is public?

    Posted by Lawrence Dignan

    It's very straightforward.

    No company can keep the same culture it has as a private company when it goes public. That being said, Zuckerberg owns Facebook. He controls over 50 percent of the company (http://www.zdnet.com/blog/facebook/mark-zuckerberg-bought-facebook-shareholders-votes-for-100/8953). As for the employees, they are now divided in two. Those who were there and made millions on the IPO, and those who were hired later and didn't make a killing. This will be a huge problem for the company as many leave for greener/other pastures.

    Emil Protalinski

    I am for King

    Sure

    Zuckerberg already came out and said that he was still going to run it as his company, his way--and that's one reason why stock buyers started to flee. He has absolute control of the company. Facebook is not, as he would agree, a public company. Facebook is a public company in that you can buy stock in it--and line Zuckerberg's pocket with money--but the shareholders get _no_ say in what Zukerberg will do with Facebook. That said, Empro is right. A lot of the early people will now leave. They've got their millions and billions. Why stick around?

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    Monetizing user data

    Can Facebook monetize its treasure trove of consumer data? Should it?

    Posted by Lawrence Dignan

    Yes and no.

    It can but it shouldn't.

    Emil Protalinski

    I am for King

    Of course

    That's exactly what they'll do. They have no choice. Zuckerberg will be happy do it. The real question is "Can they do it and still keep their users happy?" I doubt it.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    Two-part question on growth

    Where will future growth for Facebook come from? And, do you believe that Facebook has to go to China?

    Posted by Lawrence Dignan

    The East.

    Where will future growth for Facebook come from? Brazil and India. Brazil is already taking off: http://www.zdnet.com/blog/facebook/brazil-passes-india-to-become-facebooks-second-biggest-country/12645 India is the long-term problem: http://www.zdnet.com/blog/btl/facebooks-business-model-puzzle-how-do-you-monetize-india/77554 Do you believe that Facebook has to go to China? Yes, but I doubt Facebook will enter China by itself anytime soon. Instead, Menlo Park will likely partner with a local Chinese company, or just pull an Instagram. Actually, I can picture both.

    Emil Protalinski

    I am for King

    Good question

    Facebook now has about 900-million users. That's amazing. That's remarkable. So, how many Internet users can there be left that Facebook can turn into good little buyers of services and products offered by their advertisers? I doubt there are that many left. Yes, there's still sheer numbers to be found in Brazil, India, and somewhere down the road China. But, will these users be of much use to Facebook's ad-based business plans? I really, really wonder about that. And, then, of course, there are bots. We could have Lots of bots! http://www.itworld.com/it-managementstrategy/278005/faking-it-facebook-profile-bot-network

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    Lock-in?

    Do you believe there is ecosystem lock-in for Facebook?

    Posted by Lawrence Dignan

    Of course.

    Yes, there really isn't a question here. Facebook knows this and is doing everything it can (http://www.zdnet.com/blog/facebook/facebook-export-your-friends-email-addresses-if-they-let-you/2593) to protect its social graph. This has been a huge battle with Google (http://www.zdnet.com/blog/facebook/google-facebook-and-apple-threaten-internet-freedom/11805). Hell, this even came up today again: http://www.cbsnews.com/8301-505263_162-57438923/google-ceo-facebook-a-possible-search-engine-rival/

    Emil Protalinski

    I am for King

    Ever try getting your data out of Facebook?

    It looks easy: https://www.facebook.com/help/?page=116481065103985 It's not. Facebook doesn't want you, or your data, going anywhere. And, heck, you don't even need to be on Facebook for Facebook to know all about you as some researchers from the University of Heidelberg just discovered: http://spectrum.ieee.org/podcast/computing/networks/facebook-knows-your-friendseven-if-theyre-not-on-facebook Facebook wants to be the end-all and be-all of your Internet experience. I, for one, don't trust them anywhere near enough to want to give them that much power.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    Display advertising?

    What will be the role of display advertising on Facebook in five years?

    Posted by Lawrence Dignan

    Minor.

    The latest data shows that Facebook was the top dog in the display advertising market for 2011 (http://www.zdnet.com/blog/facebook/display-advertising-facebook-first-but-google-gaining/9408), but Google is gaining. I expect Facebook will be first or second in five years. That being said, display advertising will become less and less important for the company.

    Emil Protalinski

    I am for King

    Same old, same old

    It will still be there. I see more video coming, but then, I see more video coming everywhere.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    Business model

    Five years from now, what does Facebook's business model look like?

    Posted by Lawrence Dignan

    Diversified.

    Unlike Google, I think Facebook's business model will be much more diversified. Ads will still be the primary source, but the company has the potential to make a lot of money from different places. Take a look at these charts: http://www.zdnet.com/blog/facebook/facebook-where-does-the-money-come-from/8654 I'm honestly very interested to see how this develops in 2012 and going forward. Facebook is run by some very smart people (http://www.zdnet.com/blog/facebook/facebook-is-stealing-employees-from-everyone-infographic/4199) and there's no telling what they're going to come up with soon.

    Emil Protalinski

    I am for King

    Facebook's Business Model in 5 Years

    I think it will be pretty much the same. On its own pages, you'll be buried in ads. When you're not on Facebook, though, you'll still be buried in Facebook-related ads. For example, you go to an entertainment Web site and on the right there will be links to stories or products already liked by your Facebook friends. In short, it will be more of what they do now only more so. The real question is: ???Will Facebook still have enough users to make this viable???? I suspect it might not.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    So, following up on that...

    Does the IPO portend the jump-the-shark moment for Facebook?

    Posted by Lawrence Dignan

    No, definitely not.

    Don't get me wrong, Facebook could indeed end up declining, but the IPO is not what would signal that. As I've already said, Zuckerberg is very focused on the long term social strategy. It's difficult to say now how that will pan out. Remember: for Facebook, the IPO was a success. The company raised as much money as it possibly could at the time, for both itself and its investors. How the stock performs is not a major concern right now, and won't be for a good while.

    Emil Protalinski

    I am for King

    The shark was jumped the moment the stock went public

    You know what really caused NASDAQ to have fits with the Facebook IPO on Friday? Yes, it was a technical problem combined with the speed of high-frequency trading, but the market force driving that was people, and their programs wanting to cancel their buy orders. No one dreamed that the first thing that would happen with this, any, IPO would be people trying to get the heck away from it, but that's just what happened. It seems all the stock-buying public had to do was get their first taste of the stock, realize how bad it really was... and then try to spit it out as fast as possible!

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    How should we value a Facebook user?

    What are the returns on their participation for Facebook?

    Posted by Lawrence Dignan

    It's not easy.

    I think this is something that marketers have struggled with since day one, and will continue to struggle with. That's because there are normal Facebook users, Facebook users who click on ads, Facebook users who Like tons of Facebook Pages, Facebook users who actually interact with Facebook Pages, Facebook users who also use mobile, Facebook users who only use mobile, and so on. In other words, Facebook users are hard to gauge because they all use the service very differently and have different expectations from it. The trick is to build a social campaign that gets as many of them to engage as possible. Some have been very successful while others have not. stupid: http://www.zdnet.com/blog/facebook/facebooks-worst-idea-yet-paid-post-promotion/12925 better: http://www.zdnet.com/blog/facebook/facebook-launches-offers-coupons-in-your-news-feed/11819 Oh, but if you want a rough estimate for fun, there's always this: http://www.zdnet.com/blog/facebook/how-much-is-your-data-worth-to-facebook/13133

    Emil Protalinski

    I am for King

    Turning users into money is a trick Facebook hasn't gotten down pat yet.

    The people I know who love Facebook like it because it makes it easy for them to keep in touch with friends. You know the drill. It's a way to keep in touch with high-school buddies, the guy you went to basic training with when you were in the army, your aunt Matilda, etc., etc. But, they don't like that Facebook is always changing the interface. I know lots of people who really don't like Timeline. Leaving that aside, even people who could care less about security and privacy are getting sick and tired of Facebook malware and the endless song and dance routine that is Facebook's privacy policies. In short, while 900-million people use Facebook today, I can see many of them leaving tomorrow. And, if Facebook tries to aggressively monetize them even more than they are now I can see them leaving in a great hurry. Facebook has yet to show that they can build a social campaign that can really engage most of their user-base without alienating them along the way.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    OK, gentlemen, then let's start with the IPO..

    Facebook's IPO went over with a bit of a thud. Does this portend the future for Facebook?

    Posted by Lawrence Dignan

    Yes it does.

    Facebook co-founder and CEO Mark Zuckerberg has said many times he doesn't want to take his company public and he isn't interested in revenue and profits. Right before he rang the Nasdaq bell remotely, he said "Our mission isn't to be a public company". To further this point, here's an excerpt from his IPO letter: "Simply put: we don't build services to make money; we make money to build better services. And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits. By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term and this in turn will enable us to keep attracting the best people and building more great services. We don't wake up in the morning with the primary goal of making money, but we understand that the best way to achieve our mission is to build a strong and valuable company." I think that summarizes his stance quite clearly. Zuckerberg is focused on the long term. Wall Street is focused on the short term. This is going to be an ongoing conflict.

    Emil Protalinski

    I am for King

    Yep it does and means bad news for investors.

    I think the Facebook IPO flop proved that you can't fool all the people all the time. Besides all the reasons I gave in my earlier columns--how can Facebook grow when it's already saturated the market, Zuckerberg is in charge of everything and there's no sign that he knows how to be a CEO--here's a simple fact. Facebook's P/E at the IPO price was on the order of 90. A good P/E is around 20. Here's a scary thought for you. Facebook's P/E is still way high. It could drop below $20 before it reaches a semi-reasonable number.

    Steven J. Vaughan-Nichols

    I am for Has Been

  • Great Debate Moderator

    Mic check...

    Are my debaters all present and accounted for?

    Posted by Lawrence Dignan

    Yep.

    Here.

    Emil Protalinski

    I am for King

    ping

    ping

    Steven J. Vaughan-Nichols

    I am for Has Been

Closing Statements

Here's what matters

Emil Protalinski

While some geeks and nerds may have left Facebook or stopped using it, this doesn't mean that the social network is starting to decline. There is no viable alternative to Facebook and there won't be for a long while. If you really want to switch, there are options out there, but there's nothing for the larger Internet population to use.

Facebook's stock is not doing so well. Facebook has not figured out how to monetize mobile. Facebook has ongoing privacy concerns.

All of that doesn't matter. Facebook is here to stay. What does matter is that Facebook is approaching 1 billion active users. What does matter is Facebook is hiring every smart engineer who wants to work in social. What does matter is that Facebook has more money in the bank than all other social companies combined.

Whether you like it or not, Facebook is in it for the long run.

Facebook's fate is sealed

Steven J. Vaughan-Nichols

When all is said and done, here are the facts. Facebook, the business, will go nowhere. Zuckerberg has got his and we already know he has no interest in the welfare of saps that bought the stock after the IPO.  I really wonder how much of anything Zuckerberg will do with the business now. I can see him -- and I'm serious about this -- just playing with it like a toy or eventually walking away from it.

As for Facebook, the social network, it's grown as much as it can. The only place it can go from here is down. Sure, its numbers may yet increase, but will those new members be valuable, would-be customers for Facebook's advertisers? I don't see how they can be.

What I see happening is that Facebook, like MySpace before it, will lose its popularity. It's constant changes of interface and privacy policies are already ticking users off. Eventually, they'll go somewhere else.

I don't know where they'll go, I just know that there are already a lot of other social networks out there -- Google+, Pinterest, Twitter -- and there are more every day. Heck, even Microsoft has just launched one of its own - so.cl . Sooner, rather than later, someone is going to come up with one that captures people's imagination and that has an interface and rules that don't change at Zuckerberg's whim.

When that day comes, I see Facebook losing its popularity as fast as it gained it. Facebook may still be around in 2017, but just like AOL, Yahoo, and MySpace before it, it will be an Internet has-been rather than an Internet power.

The social graph is real

Lawrence Dignan

Although Steven made valid points and the crowd clearly sided with him, I have to go with Emil for making a better case. Facebook isn't likely to print money like Google does, but it has a lot going for it. Facebook in the next five years will hit rough spots, but the social graph is real and the company will find a way to capitalize on it. 

Topics: Great Debate

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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