After IPO, new challenges for Facebook

Paul Papadimitriou
Facebook now has to prove sustainability beyond its foundations. The paved binary walls on which we all often wander will have to generate revenues.

Paul PapadimitriouIn her 1999 seminal book “No Logo: Taking Aim at the Brand Bullies,” Naomi Klein was haunted by what she saw as an absence of metaphorical space, a space of “release, escape, of open-ended freedom.”

In 2012, we’re 901 million individuals on a virtual space, Facebook.

The social network was able to unearth our common need to belong and to participate in a web of relationships, despite our different cultures and backgrounds. We’re not only sharing the Levi’s and the Nikes that Klein pointed at more than ten years ago, but our entire lives, digitally.

On Friday, May 18, the company will — somewhat reluctantly — go public. Not public as in “the public sphere” which it embraces already, but that other public space, the financial market.

It’s a new conundrum for Facebook, one that will impact the entire industry.

Facebook will not only face the current scrutiny over what constitutes an online identity and its related privacy issues, but will also now be judged for its business model.

In Ancient Greece, the agora was the place where people came to exchange ideas. In a sense, Facebook became that forum, partially by design, only replacing lines of cobblestones with lines of codes.

Beyond the IPO

But unlike its predecessor, it will now have to prove sustainability beyond its foundations. The paved binary walls on which we all often wander will have to generate revenues.

Facebook has already proven it can be a funnel for our aspirations, our revolts, our love, our friendships. It will now have to prove that commerce has also its place.

If Ancient Greece is any indicator, commerce has its place in traditional human relationships; the agora was not only reserved for words, it was also a place to trade goods.

Facebook has already facilitated this human behavior by authorizing advertisement, by opening part of its data to third-parties, and by giving a dedicated place to businesses.

With the inherent focus on relationships, the ad model has proven much less successful than, say, Google —the revenues per page view are actually lower by a factor of a hundred. We look at people, we don’t look at ads.

In an ever-growing mobile Web environment, where our sense of intimacy is arguably stronger — those messages sent late at night from random places— the total absence of advertising has investors itching with anxiety and an entire industry on the lookout for a proper business model.

Branded walls

In the short term, sponsored updates seem unavoidable. The walls will be branded. The agora will be branded.

By nature, we’re all much more transient on a virtual space than our ancestors were on the public square.

Facebook is thus becoming the test bed of the future of online branding, as no network effect could resist any distasteful Obsessive Branding Disorder, as Lucas Conley calls it. We don’t want people constantly loudly shouting around us when we discuss on a public square.

The nascent success of Path, a social network that follows Robin Dunbar’s theory that we can actually only maintain stable relationships with a small number of acquaintances —here 150— glaringly shows that Facebook has to be careful as to the road it will choose going forward.

There’s a sense of joy when interacting on Path, similar to the one we feel when we’re invited to a close friend’s birthday party. The aforementioned sense of intimacy — there’s a corollary ray of privacy— is ever present. A reassuring place we all look for. A space defined by choice.

But for all comfortable private spaces are, we shouldn’t forego public spaces. They are key to our personal enrichment and to the world’s development. We need to meet people we don’t know. We need to confront our views, our hopes, our fears with the Other.

“Throughout our society, we are losing the places and institutions that used to bring people together from different walks of life,” reads Thomas L. Friedman’s recent column in the New York Times.

And if only for that, we should all hope that both the Web at large and Facebook in particular will be able to strike the right balance between the exchange of goods and ideas. To bring us back to the agora. –

(The author seeks to understand how digital is impacting businesses, cultures and individuals and how societies fit in that feedback loop. As  VP and Principal Analyst for Constellation Research, Paul specializes in future trend forecasting and consumer behavior forensics. Check his blog and follow him on Twitter)

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