Financial Viability of Social Networks

This site deals with the ability of current Internet social networks to proliferate. I selected this article because it focuses on the financial viability of social networking sites, and more importantly, their prospects of surviving years down the road. I found it interesting how it illustrates how there is not necessarily any correlation between the number of site users and the amount of revenue generated. The article also alludes to the current situation with regard to Internet companies, and how it resembles the circumstances prior to the first Internet bubble burst. Despite Facebook's estimated value of $15 billion, it is estimated that it will lose $150 million this year.

I also found it interesting how advertising agency reps are discouraging organizations to advertise on sites such as Facebook and Myspace, stating "It's a really bad place to advertise." The article goes on to discuss how social network users are only interested in socializing, so they have very little interest in selecting advertising pop-ups. Attention, privacy, and content are three mains concerns the article highlights as for possible reasons of why social networking sites can not meet revenue expectations. To remedy the financial uncertainties surrounding social networking sites, the articles recommends that companies try to get "between" users with regard to advertising, but even this tactic appears to have its skeptics.

In my opinion, based on the findings of the article, it appears that social networking sites may always exist, but the ability of current popular sites to operate viably in the distant future looks as if to be somewhat of a fallacy. Social networking sites seem to me to be tantamount to the fads of the past such as pogo sticks and bell-bottoms.

http://www.technologyreview.com/business/20978/page1/