One of many clichés in debates over Facebook (see any post with the phrase, "...is the future of"), is that their profit model was shaky at best, and implausible at worst. Today, that debate may have been laid to rest, as Mark Zuckerberg surprised many observers by announcing that Facebook had started to rake in money, beating expectations that it wouldn't be "cash flow positive" until 2010.
Of course, they're keeping the hard numbers close to the vest, and by some measures the company has been "profitable" for several quarters. But at least one former skeptic has already started beating his breast in penance. Andrew Keen at the Telegraph writes:
Okay, I admit it. I was wrong. Wrong about Facebook, even wrong about Mark Zuckerberg.
For the last couple of years, I've been imagining Facebook as the next dotcom Titanic, the classically over-hyped Silicon Valley start-up, all youthful bluster, but neither a business model nor any meaningful revenue...Facebook, therefore, is not the next big thing; it is the current big thing
Who else might be eating a little humble pie if Facebook roars ahead to profitability?
- Josh Catone, who in a September 12 post on Mashable made an elaborate argument suggesting that Facebook might be on "Yahoo's path" in losing its business edge to leaner, quicker rival, the (still unprofitable) Twitter
- The blogger on "Useful Crap" who argued on August 13 that "Facebook will never turn a profit"
- Simon Dumenco, who argued on May 4 in Ad Age that "Facebook will never really be able to meaningfully monetize those eyeballs"
- Chadwick Matlin, who wrote on April 27 in the Big Money we should "kiss any hope of a sustainable Facebook business model goodbye"
But it may be too soon to say Facebook's solved all its business problems. Some writers have pointed out that Facebook is only making enough to cover capital expenses while others maintain that in the long run, advertisers simply don't like the Facebook environment. Douglas A. McIntyre at 24/7 Wall St. explains:
Facebook is still up against a problem that it has not solved and may be insoluble. A collection of millions of people joined only by loose common interests are hard for marketers to target. At sites like Yahoo! and AOL, advertisers can run their messages in the sports or finance sections, assuming a commonality of interests between the visitor and the marketers. Facebook can make no such claims....Facebook may be big, but there is a real chance it will not be successful.
This article is from the archive of our partner The Wire.