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Facebook was founded by Mark Zuckerberg in 2004, since then Facebook hasnt stopped growing. Facebooks model relies on users personal information; what pages users shares and likes. Facebook believes that everything you upload become their property, like images, videos, posts, music and so on. When you use the Facebook page, then you already have agreed on their terms that says every content you publish they can use it, without paying you. So, everything you share that is public its free, but if you share the content only with your friends is not free. Facebook have also a very strict policy about the content you share with other users, if it has an abusive or bullying message, nudity and other disturbing content, then Facebook will remove it (Laverty).
Facebook is a free social platform and do not have a premium membership option. Ads are everywhere on the Facebook page. Some of the apps are sponsored and some of them are based on users clicks and geographic data. For example, if you do a search on Google for products, travel etc. then you will probably see the adds for similar product or travels on your Facebook home page. This happens because the browser saves your searches and shares it with other apps and shows you similar adds. In 2018 Facebooks revenue was about 25million dollar, and that is four million dollar every month in 2018. In 2012 Facebook earned around 84% of their revenue from adverts and selling virtual games like FarmVille and Candy Crush. Facebooks highest earned was from the virtual game named Zynga, which was a poker game. They were also the maker of FarmVille. In 2017 the numbers dropped down, because they were mostly relied on advertisement to make money. Over 98% of Facebook revenue comes from advertising (Rose, 2018).
Facebooks business models strategy is based on generating data, which means more people shares and click on Like button, the more people socialize and connect. We share pages we like, where we are in the world and so on. All these shares we do, will companies pay a lot of money for these data. Facebook is the biggest and most dominant social platform, and they know every move we make on the page. For instance, like they know our likes, political views, which food & cinema we like and our location. All these details are helpful for companies, because they know who they should target with them adds. Since our data is very valuable to companies, this is the reason why Facebook adds cost more than TV and radio advertisement (Rose, 2018).
Facebook is known for killing their competitions, with their money power they have ability to acquire any platform. They tried to buy Snapchat, but they failed, then Facebook added Snapchats feature Stories to all their platforms. For example, they added Stories feature on Facebook and Instagram, so people dont use another social media platform (Rose, 2018).
Facebook has $50 million annual revenue and it grows about 50% every year. Facebooks motto is always been build a community and bring the world closer together. So how build a service that connects people without people paying? Thats why they use adds to support Facebooks business model. According to a survey done by record.net around 40% said thats they will not pay more than five dollars, and that is way lower than YouTube and Netflix subscription fee. (Rose, 2018).
Facebook business model is about sharing users information. All data that we publish every day and shares on Facebook like political views, pictures etc. will be used as long Facebook can make money on the information you publish (Marketwatch, 2018).
Resources
- MarketWatch. (2018). Opinion: Facebook has to change its business model because its using us as unpaid laborers. From:
- https://www.marketwatch.com/story/facebook-has-to-change-its-business-model-because-its-using-us-as-unpaid-laborers-2018-04-12 (08.02.19)
- Rose, Arrista. (2018). Facebook Business Model Analysis How does Facebook Work & Make Money?
- https://www.ncrypted.net/blog/facebook-business-model-how-does-facebook-work-make-money/
- Laverty, Shea (2019). Do You Need Someones Permission to Take Their Pictures from Facebook? From: https://smallbusiness.chron.com/need-someones-permission-pictures-facebook-66026.html (08.02.19)
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