While the mainstream media is seizing on Facebook’s privacy controls and the opening of the walled garden, I believe there is another story behind that story: Facebook is running out of room to grow.
Think of Facebook like a franchise restaurant, or a Starbucks. When Starbucks is young and hot, all they have to do to grow is open new Starbucks. One day we all wake up and there’s a Starbucks on every corner and that growth plan doesn’t work anymore. Then it shifts to making more money in each individual Starbucks.
Why the privacy moves by Facebook? Because Facebook’s growth in terms of members, especially members in the US, is flattening and unsustainable, and as such, they need to start growing their average revenue per user (ARPU) on their existing base rather than growing their base.
I am pretty sure I am right based on two unscientific principles.
First, take a look at the right side of your Facebook screen: Count how many links there are which encourage you to either add more members to Facebook or encourage less active people to be more active. I count 5 calls to action to activate members. For something that is supposed to grow like a weed, that’s a lot of concentrated, top down effort to mobilize users.
Second, see all your friend suggestions (made by Facebook). I just did, and it took me over 50 “suggestions” before I found anyone I actually knew. I guess all my friends are already on Facebook and I am already connected with them. Adding friends is not infinitely scalable as it is on a low fidelity social graph environment like a Myspace. As soon as even half the people in the friends suggestion are people you don’t know, it means you’ve been tapped out.
I like my privacy and I do think there’s a story there, however simplified it has been made by mainstream media. But I also think there’s a deeper story behind the story. How does Facebook show growth when we are all already on and connected on Facebook? Well it all starts with unlocking all that personal information on Facebook.
Dan Porter is CEO of games site OMGPOP. He is also an investor in songkick, producteev, linguabyte and socialflow. You can follow him on twitter at @tfadp and find him at www.danporter.org
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