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Did Facebook just set the stage for sharing revenue with consumers?

In case there was any doubt before, the backlash against Facebook's change in policy to take more control of consumer-created data and content shows that consumers will militantly protect what they create. Will users next demand a cut of any revenue that Facebook derives from their work?

The various takes on this story hit on many angles, but miss what is potentially the most important implication: yet another barrier to a solid business model for online media.

  • Ad Age focuses on what happens when companies post things without thinking them through. Old story that we've heard a million times and more interestingly from examples like Motrin Moms.

  • Consumerist -- who kicked off this flurry -- gets into the weeds of intellectual property ownership. There are some interesting issues here -- if you are an IP lawyer.

  • Paul Gillin notes this is the second time Facebook has had to reverse a policy related to consumer data usage and hopes that the company will listen to its Bill of Rights and Responsibilities Group. Will Facebook take some of their own medicine and involve their members in creating a solution?

  • Ben McConnell at SWOM cites how the incident shows how important Facebook has become and doubts that a traditional advertising model will fit with the "social utility" of the site. An ongoing debate but the need to find a revenue model is increasingly urgent.

    No, I think the real message here is that online will not obey even the most basic principles of the offline media model. Traditional media relied on the implicit deal that the reader gets free content, but in exchange they have to be exposed to ads. Even this basic assumption of the media model doesn't seem to translate online.

    Consumers have total ownership of what they create despite the fact that they do not pay for the service to upload, store, and display it online. Facebook can't rely on an implicit quid-pro-quo to provide this raft of services in exchange for the right to use some of that content in ways that help them pay for all those servers, bandwidth, etc.

    No, a consumer can take their content away at any time. So if Facebook comes up with any revenue-generating model that the user doesn't like, the user can take their content away, no penalty, no problem.

    The next small step is that the consumer can then take their content away if they don't get a piece of the revenue pie.

    I can't wait to see the group "I want my 15% commission of the revenue on my Facebook page". Hey, maybe I'll start that group!

Posted by Cymfony on February 18, 2009 at 04:36 PM | Email this post Permalink
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Comments

Jim,

Nice to see the feather-ruffling. This post pretty much kicks ass. I wonder if Facebook will respond to your "I want my 15%" plea with an offer that you repay them 15% of their operating losses. That'd be a fun back-and-forth to witness.

I dig your comment, "Even this basic [content is free but you watch ads] assumption of the media model doesn't seem to translate online ... Consumers have total ownership of what they create despite the fact that they do not pay for the service to upload, store, and display it online."

I imagine what we are seeing is a generational shift. I believe those 25 and younger skillfully avoided signing the content-for-ads pact, and as a result we're all trying to figure out (or watch others struggle to figure out) how to get them to agree to something, anything, that we can build a business model around.

As for me and Facebook ... if they want pictures of my dog, my boss drinking The Green Fairy in Vegas (not a euphamism) or whatever other nonsense I post on there, all the power to 'em.

JoeC


Posted by: JoeC | Feb 18, 2009 4:54:26 PM

Great summary of the paradigm shift Facebook is struggling with.

Perhaps what Facebook should do is sell things. Become like Amazon, or merge with it, since Amazon is trying to do what Facebook already does well.

Posted by: Ben McConnell | Feb 18, 2009 5:56:24 PM

In February of 2006 I wrote a column (http://www.clickz.com/3581581) for ClickZ talking about the trade-off between for-pay ($10/month for commercial free "Daily Shows') versus for-attention (I'll watch the ads in exchange for free content) models. I advanced the argument that we could reasonably trade-off the direct costs of content with the embedded cost of advertising, and more or come out even or a bit ahead at the household level.

While written only half seriously, that argument does suggest an approach to monetization a social platform: Ask users to pay for it. Directly. That way, it's clear who owns what, and revenue sharing agreements arising out of "my content = her attention = compensation back to me for ads sold against it" not only does not threaten the underlying business, it actually enhances it. Imagine if all social networks (or any other free content/activity platform) said "Use our tools, for a known monthly fee, to build your audience and then share in anything we earn over and above that as a result of your participation." That's a radically different model than what we have now, and one that would likely be acceptable to a generation that not only creates compelling content of its own, but very likely has never experienced anything other than free content.

Posted by: Dave Evans | Feb 18, 2009 6:37:22 PM

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