How exactly is Facebook making money? | Hacker News Reader

How exactly is Facebook making money?

guardian.co.uk

28 pointsnreece20 comments

nobody ever thought ringtones could be so profitable.

Of course it's profitable. It's fraudulent. Telecoms deliberately crippled technology and deceived consumers into thinking that downloading and uploading ringtones to your phone wasn't trivially easy.

You have an odd definition of fraudulent.

* Some people don't know how to put ringtones on their phone. Maybe their phone can only accept over the air ringtones unless they buy a special cable.

* Companies provide a service to send people ringtones.

* Both parties are happy

The (some might say) fraudulent bit is companies that get users to sign up to an automated subscription payment to get ringtones - eg "Get a free ringtone when you sign up" (Small print: subscription costs £3/month and allows you up to 5 ringtones per month).

I think he means that most cell phone providers have disabled or crippled interfaces that you can use to install ring tones without having to download them over the cell network.

It may not exactly be fraudulent, but it certainly isn't very ethical business practice.

That being said, I do think it's borderline fraud to bind the phone to the service provider as is common in the North America. Could you imagine if this was done for landlines? I suppose if they continue to subsidise the phone they can get away with it, but again, not ethical practice IMO.

>> most cell phone providers have disabled or crippled interfaces that you can use to install ring tones without having to download them over the cell network.

I'd say that's likely incompetence rather than malice.

It's not incompetence when done deliberately.

Ringtones are also notoriously the subject of rebilling scams. Download ringtones for $.99! Get charged $20 per month automatically for the rest of you life or until you notice and cancel.

To make the point in just a few sentences, the word 'fraudulent' best captures how I view the origin of the ringtone market.

Consumers were deliberately misled about the value of the product being offered. They were just charging for the service, they were lying that the service was even necessary. Sure it's not black and white, but Verizon etc. erred on the side of anti-consumer behavior in the case of ringtones and got away with it.

The reason people didn't know how to upload things to their phones is because the phone companies made it really hard. Since we're talking about facebook, it would be like facebook making it difficult to include links to external sites and charging for the priviledge.

A "facebook gift" picture of a flower has value because it's a facebook gift. A verizon-provided ringtone has the same value as an identical recording of the same ringtone you uploaded yourself.

The billing methods used by many ringtone providers have also caused lawsuits. They offer a deal -- "10 FREE Ringtones!" -- with subscription details about how you're going to get billed every month hidden in the fine print.

I don't have much respect for the author since he gets in a tizzy about the phrase "free cash flow positive" and seems confused about what it means.

Indeed. This article is a like someone looking at the housing crisis who doesn't understand what an adjustable rate mortgage is.

I think it won't be long before Facebook enables people sell stuff from their facebook page. Like posting custom design t-shirt designs etc.

this is already possible via shopit and other similar gadgets

Yes, but the point is that it would be done on Facebook, whose user base is much larger and more connected.

Facebook already has a marketplace.

I'm curious... apps on facebook make money, right? slide, playfish, zygna, etc. So what happens if an app maker hits jackpot, while facebook itself can't find a good revenue stream? Is facebook going to start a facebook tax?

Facebook is profitable.

There are no question, it is so obvious - they make money by selling user's data to advertisers. What exactly they are doing - extracting a keywords form profiles, creating tag clouds from conversations or perform a statistical analysis - it doesn't matter. Data = money.

Is this a bad thing? I'd love adverts that were actually relevant to what I want. Why do I care if an advertiser knows I like cheese because I posted I like cheese on my profile once?

"Selling user data" is pretty simplistic and puts a negative spin on it. They're not selling your credit card details or your contact details so 3rd parties can spam you. They're trying to give you relevant adverts based on your likes and dislikes.

Somebody else commented a week ago saying that they thought it would be brilliant for Facebook to lease their ads the way Google does adsense. I know that I've clicked more Facebook ads than I've clicked any other advertisements I've seen.

CIA Facebook collects more intelligence than all agencies combined!

They give access of their databases to CIA and make a killing!

Sound business plan!

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