Thursday, April 2, 2009

Why Social Networks Are Bad Businesses

Investors assumed that any medium with such a large number of users has to become a huge business. Millions and millions of users must be worth something. They can't be worth nothing. That couldn't be possible. Because Facebook and MySpace are so pervasive and such a significant part of online culture, the press is endlessly fascinated by what goes on at the companies. Word got out that Facebook was raising money. Then it fired its chief financial officer. Analysts started to speculate that the company was low on cash. Facebook, of course, said that no such thing was true. (Read "25 Things I Didn't Want to Know About You.")

What is true is that social network sites have had trouble making money.

Marketers don't want want a collection of people with no common purpose other than to share with one another.

No comments: