How Facebook can make more money

Rico Gagliano Feb 3, 2010
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How Facebook can make more money

Rico Gagliano Feb 3, 2010
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steve Chiotakis: Last December, nearly half a billion people people visited the social networking Web site Facebook. That’s according to online number-crunchers ComScore. So can Facebook actually turn all those users into big money? Marketplace’s Rico Gagliano reports.


Rico Gagliano: Facebook is a private company, so its ledgers are secret. But analysts estimate the company earned $500 million bucks last year. Not bad. Of course, with 175 million registered users checking the site every single day, not great either.

Still, Facebook says it has no intention to charge a fee to use the site. And experts believe it. Aaron Kessler is Senior Research analyst at Kaufman Brothers:

Aaron Kessler: Facebook’s really built on the community. So for Facebook to start charging — which would significantly decrease the size of their community — doesn’t make much sense. They’d essentially lose all of their value.

After all, users themselves provide most of Facebook’s content. But users also provide valuable eyeballs for advertisers. Which is why Kessler predicts ads will be a big part of Facebook’s business plan.

Kessler: They already do advertising today, and that’s their biggest source of revenues. In the future we think they’ll look to more targeted forms of advertising based on someone’s behavior online.

Facebookers are easy to target with ads, since they’re constantly volunteering all sorts of information about themselves. And then there is applications people use within Facebook, like role-playing games. Yahoo tech writer Chris Null says Facebook could start charging for ’em, or at least take a cut.

Chris Null: Well I think games are probably a next step in what they will charge for. That and other applications. I think Apple has kind of paved the way for showing that apps can be a very lucrative revenue stream.

And here’s a suggestion: I’d happily buy an app that’d keep guys who used to bully me in high school from trying to quote “friend” me.

In Los Angeles, I’m Rico Gagliano for Marketplace.

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