Good theory, and a solid basis in the different approaches Facebook and MySpace take to outside development. Facebook is now an OS for social activity, whereas MySpace is a scary gamble and a world that really doesn't want you there.
As an amateur web historian, I wish the author wrote more about why Prodigy is a particularly good comparison.
I think it's probably more right to say that Myspace let the widget market play out organically, and Facebook is copying the best parts to make a "real" model. Myspace has already shown they know there's power in widgets; they just bought into Photobucket and will probably pick up other, smaller companies too. I'm not sure acquisition is in the plans for Facebook at all (making it less attractive to develop for, all other things equal).
Also, while we decry Myspace and claim its downfall, a quick check on the traffic numbers makes it clear that Facebook is still a pretender to the social networking throne.
Mark Zuckerberg stated at his press conference that he's always felt the company should stay independent (maybe the ridiculous $2B price he reportedly asked for from Yahoo was meant to scare them off) and that F8 confirms this.
Facebook pulls in a profit. The site can demand a higher CPM than Myspace (thanks to the higher quality of its pageviews and its more attractive demographics); the company employs only 85 developers; the user base constantly replenishes itself as new students join pre-existing networks; older users are increasingly comfortable connecting through the site as an alternative to LinkedIn; the international markets leave room for growth. I expect Facebook to go public.
I think Facebook wants to go public. I'm not convinced it'll be good for them. Until they figure out the social networking business model, they're going to be a lot safer being acquired. Too bad their price is too high for anyone but the big boys to consider.
The international markets Facebook isn't in are already being won by other sites. See Bebo in the UK and Orkut in Brazil and India, to start. If anything, their lack of expansion should be a con, not a pro.
Older users still understand that Facebook is for fun, and LinkedIn might actually be useful in getting jobs and making business connections. Anyone dumb enough to mix business and pleasure is bound to regret it later.
The user base is growing fast, I'll grant you that. I mean, still not as fast as Myspace, but that's beside the point. The real question is, is their revenue growing that fast? And can they sustain those growth rates as they reach saturation in the college market? It's pretty much their only demographic. I'll admit, though, I haven't seen the numbers re: the falloff after graduation.
The company is hiring like crazy, as far as I can tell. I personally think 85 developers is a lot. I'm not really sure why the dev count matters, though.
I can't really comment on CPM numbers, but it's clear to me that Facebook could be making a ton more money, given the value and size of their audience, as everyone claims it. They've claimed page views on the order of Google (alexa says Google's only twice as big). But their profits are 100 times smaller, by most estimates.
I also think the $2 bill ask was real, and that the independence line is totally new. Why didn't we hear it last year?
We did hear it last year; I reported it several times at Valleywag.
Facebook has smaller profits, but the point of the small staff is that their personnel costs are also 100 times smaller than Google's. And yes, they could be making more money, great!
I haven't seen the falloff numbers either, so we both concede that point. Is MySpace's user base actually growing more than Facebook's? Anyway, like you said, Facebook's revenue could grow without growing the userbase.
Facebook is for fun, but more and more it's social in a useful way. That's why my 37-year-old media-minimogul boss is hooking up with VCs, bankers, and other rather influential people (ones not connected to Web 2.0!) on the site.
Side note: Facebook encourages users to track the activities through which they mediate relationships. They can share photos of their real-life interactions, join groups, etc; LinkedIn only has a limited version of this. So I can learn a lot more about my contact's connection to someone I want to meet through Facebook than through LinkedIn. "Anyone dumb enough to mix business with pleasure" is a lot of people. Hell, even Congress works that way, sadly.
I'm confident Facebook can compete in those other countries the way it does in the US: by being more "legit" and "safe" than Bebo, a MySpace-like group with little basis in real-world groups, and Orkut, heavily criticized in Brazil as a pedophile's haven thanks to Google's protection of "user privacy."
Safer being acquired? Ha, yeah, I'd feel safe with Yahoo's execs overseeing me, what with CEO Terry Semel barely keeping his job and two of the top three positions vacant. Facebook doesn't want to commit itself to Yahoo's disappointing ad system (the new Panama wasn't up to snuff); if he joined them it'd be after the company got over its midlife crisis.
It's in Facebook's best interests to mature on its own and partner with the big boys. The company's on a healthier trajectory than Yahoo and Microsoft (and Amazon and eBay, for what that counts), so it should stay under its own roof and play off their strengths without taking on their burdens.
As an amateur web historian, I wish the author wrote more about why Prodigy is a particularly good comparison.
By the way, "the power...is powerful"?