Tuesday, February 4, 2014

Facebook: Finding Ways to Monetize

Facebook Paper is a new app for iOS that came out this week. It was advertised as shiny and new and had an oh-so-hipster commercial.

So I gave it a download. It was shiny and new, just as advertised. It lets you browse your Facebook news feed, has slick animations, a "flat" design (which is all the rage these days, I'm told). It's also a news reader and allows you to add different categories of things you might be interested in such as technology, pop culture, etc. I like the app as an app, but there's one key feature missing from the news reader: You can't pick the news sources that make up those categories.

Let's take a step back for a second. Facebook isn't evil or the antichrist, but they are trying to make money. They were soaring high for quite a while when desktop browsing was the most common, but shortly after they had their IPO they crashed pretty hard. You can find a bunch of different reasons for the crash, but the fact that their desktop usage dropped off while their mobile usage surged was a huge part of that. Facebook had no ads in their mobile apps, and thus no way to make money off of them.

It's not hard to connect the dots that Mark Zuckerberg connected: Facebook needs a way to make money off of it's mobile apps if it wants to survive.

Their first step was Facebook Home.

Still no ads here, and no way to make money, but they're learning. At first Home got terrible reviews, but Facebook learned and improved upon it, working towards an app people would actually use. To me Paper looks like a next iteration of that. It's a similar strategy to how Facebook got so popular in the first place: get something cool that people want to use, then advertise to them when you have a ton of users.

Which brings us all the way back around to Facebook Paper and the fact that Facebook chooses what news articles you see in a category. Their end goal is to sell advertising and make money. To do that they want all of the information they can get about your online activity, in this case the articles you read.

So why did it make me pause? Two things.

  1. If you use Facebook Paper as your only news source your news consumption is selected by Facebook, and potentially the company willing to pay them money.
  2. If Paper becomes popular Facebook has an incredible gold mine of data about you and what you read online.
Facebook isn't evil, but they are trying to make money. It may not be happening yet, but there's a good chance they will start to advertise to you using the extra data they're able to gather, or sell your data quietly in the background. Before you become invested in Paper, think about if you're comfortable with Facebook having that kind of data about you.