Facebook Opens Its Pages As a Way to Fuel Growth
Facebook Inc. has bucked the Silicon Valley acquisition trend, remaining independent of larger technology companies. Now the social-networking start-up is seeking ways to reach the big leagues on its own.
Context & Ripple Effects
As of May 2007, the live question around Facebook is not what it will build but who will buy it: TechCrunch is running 'Who Will Buy Facebook?' while CNET relays a rumor that Yahoo wants Bebo — evidence that acquirers hungry for social networks are working through the alternatives. Against that backdrop, the company's decision to open Pages to brands and public figures reads as a deliberate answer: growth through product expansion rather than a sale.
First-order effects
- Brands, artists, and organizations gain a native presence inside Facebook without needing to be individual 'friends,' giving the company new reasons for users to visit and new inventory to eventually monetize.
- Acquisition speculation gets a counter-signal: with the WSJ reporting Facebook intends to reach the big leagues independently, would-be buyers must weigh whether the asset will ever come to market at all.
Second-order effects
- Suitors shut out of a Facebook deal keep shopping downstream — the Yahoo-Bebo chatter shows mid-tier social networks absorbing the demand that a stubbornly independent Facebook refuses to satisfy.
- Rival networks face pressure to match the openness play, because if Facebook becomes the default home for brand pages, advertisers' budgets follow the audience rather than the incumbent media relationship.
Third-order effects
- If opening the platform sustains growth, the 2006–07 wave of social-network consolidation gives way to a different structure: a few large independent platforms that let third parties build on them, instead of every promising start-up rolling into a portal.
- Pages point toward advertising becoming the core business model of social networking — turning user attention, rather than subscription or transaction revenue, into the commodity that platforms compete to aggregate.
The trend: Consumer web companies are shifting from exit-by-acquisition to exit-by-platform, opening their products to brands and developers as the way to scale into independence.