I was reading an article on the value of Facebook — $3.7 billion right now, which seems completely ridiculous, let alone past values as high as $15 billion in value. How is that possible? To me, it seems like the dollar value of a business should be somehow related to their profit. Facebook has a negative cash flow, and somehow manages to get a valuation that’s in the realm of $500 per user. Good luck banking that kind of money on a site that can’t generate a meaningful click-through rate (and really, no site that’s a valuable destination will ever manage a good click-through rate since the users come for what the site offers, not what their ads offer).
One of the things that I’m proud of on a business level from when I managed BME, is that BME scaled well as a business (ie. it was profitable as a small site, and profitable as a large site), and never operated with a negative cash flow due to its basic business model — ensuring that members paid their way, either by buying a membership, or by adding value to the site through contributions of content. I still think this is the best way to run a large website, and once a more effective and universal system for micropayments is unveiled, I think we’ll see Facebook-type sites move to such a model, and I think we’ll also see content become valuable again… Which is another problem I have with the “free” internet right now.*
On a completely different subject, I read about some new study to guess at how much intelligent life is in the universe, a la the Drake equation, which can produce such a wide range of answers dependent on the probabilities that you feed it that it might as well be useless. My personal take on the probabilities in the Drake equation make me think that intelligent life is rare to the point of uniqueness — all the more reason for us to spread across the galaxy. That said, I am still overcome with the beauty of the Voyager Golden Record, a collection of music that was attatched to the Voyager probes, along with “directions” (using distances from pulsars) back to Earth, in the hope that one day it would be found by another civilization. Carl Sagan, who headed the project, said, “the launching of this ‘bottle’ into the cosmic ‘ocean’ says something very hopeful about life on this planet.”
It includes some great pieces of music:
| Queen of the Night |
Dark was the Night |
| Jaat Kahan Ho |
Johnny B Goode |
Thus the old SNL skit where the first message from aliens is
“SEND MORE CHUCK BERRY”
An interesting sidenote — Sagan tried to get permission for “Here Comes the Sun” by the Beatles, but even though the Beatles wanted their music to head out into space, EMI blocked their music from being included. What, because they’re concerned that some civilization that collects this music a billion years from now (or at least 40,000 years, which is when it starts to reach other stars) doesn’t want to pay licensing fees on their copyright? Ludicrous. I really do find the whole concept indescribably beautiful though, and have spent too much of my time dreaming about both this message being discovered, and us discovering such a message ourselves… I mean, Blind Willie Johnson as our embassador to the stars…
I am working on prepping the last in the series of paintings for the Kubla Khan book, having finished off the rough of Prophecies of War this afternoon… Working on an interior scene of the Pleasure Dome right now, and when that’s all done, I tackle them all again and retouch them all and then start glazing them.
Well, I’m sure I’ve rambled long enough. Tomorrow is a school holiday so I get to sleep in, and then I’m taking Nefarious to the airport so she can visit her mother for the weekend.
* They used to say “content is king”, which is the other concept that I tried to maintain with BME (and with my other sites) — if you have good and abundant original content, your site has value as a destination of repeat visitors. However, creating this content takes time, effort, and expense, and these days, it’s often blogs and content aggregators rather than producers that generate higher profits. I think that the long-term result of this has been deeply damaging to content producers, many of whom are moving along on inertia as much as current profitability. A micropayment system that paid content producers and well as those who promote that content would do wonders for the Internet.
14 Comments
Facebook is weird. One thing that shocked me was when I saw you could actually buy silly little gifts to send to friends … I mean … come on! The trouble is, there’s most probably people out there that are stupid enough to buy them. A great get-rich-quick scheme though eh?
On a different note, have you seen the movie Contact with Jodi Foster? If not I think you’d really like it. It’s based on the SETI project and is one of my favourite movies.
Have a good day.
Facebook is weird. One thing that shocked me was when I saw you could actually buy silly little gifts to send to friends … I mean … come on! The trouble is, there’s most probably people out there that are stupid enough to buy them. A great get-rich-quick scheme though eh?
On a different note, have you seen the movie Contact with Jodi Foster? If not I think you’d really like it. It’s based on the SETI project and is one of my favourite movies.
Have a good day.
Really interesting to hear what you have to say about online business models. My ex-bosses got me to look into this a lot in the hope of making lots of money. Completely deaf to the idea of “good content” but then again, that summed up their whole attitude. :)
I think the point you make about the internet being ultimately corrosive to content producers is valid… and well-acknowledged. It’s going to result in the collapse of the print media (sad) and the record companies too (perhaps not so sad).
The one thing I would point out is that your comment “no site that’s a valuable destination will ever manage a good click-through rate since the users come for what the site offers, not what their ads offer” is not always correct. The obvious counter-example is Google, where users come specifically to be redirected to other sites. I suspect that aggregators and sites that act as “redirectors” in some way can get away with ads / affiliate marketing (price comparison sites are another example). Whereas sites that rely on their content or community need a model more like the one that you established for BME.
Google isn’t really a valuable “destination” site though, at least not the part that generates high ad click-throughs. As you said, users come specifically to be redirected, so ads are a perfect match.
Despite the fact that the particular Mozart aria on that record is among the most difficult and beautiful operatic pieces ever, I’m not sure if an aria sung by a mother who tells her daughter to kill someone else lest the daughter be disowned is the kind of thing that I want an alien culture to judge us on.
Good Morning.
Hard for me but I’ll try to hold a focus given the interesting posts to shannon’s content should be king theme.
As I put my new web/w2iki/blog multiuser animal farm together I am aware with hard numbers of some of the websites or blogs that have been put up in a few months (the last few months) with a team of programmers
by bouncing off the social networks etc those sites are generating $25,000 net profit
the content is in the main $25.00/article graduate student rewrites of the real papers – and if you challenge one of the builders of these sorts of sites who is down here and speaks at the programmer meetings and fills young people’s heads with the idea that they too can be rick and by now the speaker is many millions over and his engine and his team of programmer is still chewing up the opportunity and of course he knows this stuff is difficult enough to actually do – I mean remember – shannon handed off a working site beyond critical mass and if you take a look at the self same reporting tools you can use that this guy uses to quickly build no new content websites – suffice to say – so this does not end on armwaving -
take a look at
https://www.mashable.com
that is an honest site that does it right not that there afre not a dozen ways to do it right and all too many ways to do it wrong
if some of you are thinking of building one of those money engines without content – don’t – shannon’s right – blog or web about something you love – the money might follw -
or not – it does not matter when it is your love
Just out of interest, when you ran BME could IAM memberships be extended by things other than entries to BME hard/extreme?
Facebook only holds value in the realm of those that find value in that realm. For example, the value of information. Take for example the amount of RAW data collected on ONE single user..Phone, Address, Name, Birthday, Valid Email Address, Company Name, Wife’s Name, so on and so forth….Shannon you and I both know all to well that that information becomes ALL to valuable to those listers/spammers out there…food for thought
Ever listen to Willaiam S. Burroughs?
#7 – Writing an experience that was featured was (is?) another way to extend iam membership. I’m sure there were a few other ways…
They might have changed it after the takeover, but you can get a membership for any (accepted) submission be it experience or photo.
My misunderstanding – a “destination” is a “content” site, not a “redirector”. Agreed, then, that ads aren’t a good fit.
Agreed (from the outset) that Facebook is overvalued – much as Skype was – because it’s a popular website. The assumption is that there is inevitably a way to monetise that popularity (without destroying whatever made the site popular in the first place) despite the lack of any business model. Exactly the thinking that caused the dot-com bubble.
I also agree with Starbadger that you should do what you love, both online and off, and try if you can to make a living out of it. I don’t think anyone that comes here to read Shannon’s posts would disagree with that!
#10 & #11, aye, I submitted pictures of custom plugs about a month ago, and to my dismay realised that this wasn’t ‘enough’ for me to extend my already existing IAM account with, although I could create a new one. Just seemed odd.
the only true value of anything; regardless of p&l, margins etc etc is what someone is willing to pay for it :)
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