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    Facebook’s Beacon and Valuing Social Networks

    Social Networks

    There has been a lot of talk lately about valuing social networks and Facebook's management knows that, which is why they try to track everyones' activities across the Internet with Facebook Beacon.

    There has been a lot of discussion
    if/how/when/who Facebook will acquire a social network company in China. As usual, I will jump out to offer my often contrarian views on social networking.

    Let me put it this way, I don’t think that there is a way to value social networks, even though this is what advertisers would very much like to see happen. And the reason that social networks cannot be valued in a top-down/corporate/advertising way is because they are entirely subjective and dynamic according to each individual at any given moment in time.

    That’s why it makes much more sense for each individual to assign a value for _access_ to his network, and anyone who wants to access it has to pay an access fee. If you don’t like the access fee, then don’t pay. If you like the fee, pay, and you will get access.

    It’s that simple. Nobody owns the network except me. Not Facebook, LinkedIn, Google or anyone else. I own my relationships, just as you own your relationships. They only exist on Facebook insomuch as I’m active on Facebook now, but that is no guarantee that I will be there tomorrow.

    That is why it doesn’t matter if Facebook owns all my data; if I no longer go there, it’s dead, out-of-date data. My data is only valuable as long as I’m active there.

    I talked about the idea before, let me fill it out some more.

    Here is my problem with Facebook’s Beacon:

    1. If Facebook wants to track my activities across the Internet, they should explicity ask me first, and give me an opt-out option.
    2. If I say “Yes”, they should ask me how much I want to be paid for access to my network activities on a 24-hour basis
    3. I go in and set my fee for 24 hour access beginning immediately and click submit.
    4. Facebook’s servers churn and return “yes” or “no”. If “yes”, they will be directed to my payment gateway. After confirmation, Facebook will say something like “Thank you for giving Facebook access to your network activities for 24 hours. After 24 hours, the cookie installed in your browser will automatically expire. (More blahblahblah from corporate and legal departments.)

    In this model, each user has control over his/her activities, and is paid for access to their data by each social network.

    Now wouldn’t this be a much better world than the current free-for-all where everybody is playing “Let’s screw the users and see how much we can get for free?” The current valuations on social networks are based on not paying users for access to their data.

    How would you value social networks if they had to pay users for access to their data?

    And since the Internet is all about pushing power to the edge, then why shouldn’t users have the power to earn money from having their activities and relationships tracked?

    It would be great to hear what Seth Godin, Dare Obasanjo, Dave Winer and Robert Scoble have to say about the idea.

    UPDATE: It’s been three hours since I posted this article, and I wanted to see if Facebook had imported this article into Facebook Notes so that I could tell my Facebook friends about it. (I have set Facebook to automatically import my posts here.)

    Guess what? Facebook has not imported this article. Now what have I done to get that kind of treatment? I seem to have some recollection about “empowering users” and all that stuff.

    Charming. Did their PR and marketing people go to the “Khmer Rouge Charm School of How to Win Friends and Influence People”. I guess I should be so grateful to Facebook and their management where they can watch all our moves and try to monetize it without passing anything down to us dumb users who haven’t figured out the shill yet.

    I’m a great believer that if you fail, you should fail fast. In this respect, Mark Zuckerberg and his flaks have done a great job in record time. Mark, what are your chances now that you will hit that 15B valuation?

    Scott Karp has written a great piece “Facebook’s Crisis Demonstrates That People Matter More Than Technology”. Be sure to read it.




    5 Responses to “Facebook’s Beacon and Valuing Social Networks”

    1. [...] Read the rest of this great post here [...]

    2. [...] China Vortex: Facebook’s Beacon and Valuing Social Networks Let me put it this way, I don’t think that there is a way to value social networks, even though this is what advertisers would very much like to see happen. And the reason that social networks cannot be valued in a top-down/corporate/advertising way is because they are entirely subjective and dynamic according to each individual at any given moment in time. [...]

    3. [...] China Vortex: Facebook’s Beacon and Valuing Social Networks Let me put it this way, I don’t think that there is a way to value social networks, even though this is what advertisers would very much like to see happen. And the reason that social networks cannot be valued in a top-down/corporate/advertising way is because they are entirely subjective and dynamic according to each individual at any given moment in time. [...]