Dalton Caldwell, the Founder and CEO of App.net recently called out Mark Zuckerberg, the king pin of Facebook for how he runs the company, and how the company runs as a whole. Now most people would see this are career suicide, as Mark probably has a significant amount of power to make sure that someone does not make it in Silicon Valley. Check out the post here.
The thing is though, is that we can’t just sit around and let the behemoths of business tell us what to do, how to run our companies, and what we should stand for when operating our companies. The Facebook revenue system runs almost completely off of ad revenue. What this means is that although their main customers would appear to be the 900 million users that are on the site, they are not. Their real customers are all the advertisers that pay for the ads on their site. Which means that when they are operating their business for profit efficiency, they are going to do everything that they can to make the advertisers happy to get more money. Often times this means completely disregarding what the customers want and deserve.
Now, Dalton Caldwell brought up an interesting thought, if you charge the customers it means that your main source of revenue is based on getting more happy customers. Happy is the key in that sentence, if your customers / users are not happy then you do not get paid, you don’t make a profit, and your business goes bankrupt. In our time of social change, this is something that is needed. Granted, I do accept that not all users would use specific platforms like Facebook or Twitter if it were a charged service.
That is where I think a “freemium” architecture comes into play. With that system you give the users who do not want to pay the option of still using your site, but with less features. This is similar to what Linkedin has done. If you take a look at what Linkedin has done in terms of profitability you will see that half of their revenue comes from their hiring solutions, whereas the advertising on the site is only a small portion. This allows for them to make sure that their users are well taken care of and the effectiveness remains valuable, and profit sucking is not the main objective.
What this means for services like http://www.FuzeUs.com, in the realm of social change, and corporations with a social cause at their core, is that they must make sure that their product or service is serving their users to the best of their ability. Thinking about that, the companies that are after social responsibility have to start looking to new ways of generating revenue, because let’s be serious, if a company isn’t making significant profit they will not last very long in the corporate world. The “freemium” aspect does work well for these types of companies. It allows to get the users who are just looking for a little bit, but it also makes the people who are looking for every ounce of benefit they can get out of it to get that. Yes, they do have to pay more for it, but it means that they are the bottom line. As they say, the customer is always right, so if you make your customers, the right customers, then if they are happy you are happy, and your bottom line is happy.
This does not mean that the ad space is over though, it just means that it has to change. What we do at FuzeUs is hold all the corporations accountable for how they advertise. This does not mean “buy buy buy”. We do not want N Sync here. What we do is hold them accountable for making sure that they do cause marketing, saying why their product or service is better, and why it is better for the environment or community that they serve. What this does is make the ads more relevant to users, and makes sure that the main focus is not just to increase ad revenue, but to make sure that the ads that are being encountered are actually relevant to the users, not the 50 gallon drums of lube for the typical Facebook user.
We feel that there is a lot that is about to change in the Web 2.0 world, and a lot of corporations are going to have to restructure their infrastructure, or die in the process. As is the nature of the beast, you must be the predator and not the prey, which means opening up this new era of social change through the social media that we have become so accustomed to. Welcome to Web 3.0.