The other day I stated on my Facebook page that, given Mark Zuckerberg’s professed love for minimalism, his sweeping, seemingly convoluted changes to the site were ironic. I especially harped on the lengths to which one must now go to opt-out of email notifications. I went as far as to call the dozens of additional steps “local yokel web design.”
Then, it dawned on me. The changes were in fact ingenious web design: They force users to remain engaged with the site for as long as possible.
Maximum engagement is precisely what is going to make Facebook a $100 billion company when it launches its IPO next year. Engagement to the point where being logged into Facebook is the best way of connecting to, and interacting with, the modern world. I say this without hyperbole. In little time, much of the world will use Facebook as its primary means to shop online, exchange media, read books and newspapers, play video games, listen to music, watch television and movies, listen to radio, and even do office work and search for employment. Facebook will do something that not even Google could manage to do: become a dashboard for an entire virtual world.
Facebook is creating a massive virtual world where you experience life through a “heads-up-display” that provides real-time data regarding your friends’ experiences with whatever you experience. For example, say that, in this virtual world, you want to check out some new music. You use one of the streaming services partnered with Facebook to listen to some new songs from your favorite genre. You like one song from a particular band, but, as you had never heard that band before, you’re unsure if you would purchase an entire album. Then, you see that several of your friends “like” the band. In fact, some like the band so much they’ve posted comments. You read the comments and become intrigued. You see that one of your friends is logged in and is listening to one of the band’s songs. You IM him and ask if he would recommend buying an entire album. He says “yes” and sends you a link to his playlist. You see that your friend’s playlist contains the band’s entire catalog. You listen to several songs from several of the band’s albums. You finally decide to buy two of the band’s albums and download them.
You had no intention of spending money on an entire album, much less two. But, based on real-time data from your friends, you made an impulse purchase. Multiply that experience hundreds of millions of times daily. That’s some serious engagement.
But Facebook isn’t going to make its money from users’ purchases. The real money will still come from advertisers. Facebook’s virtual world will allow advertisers to track people’s every move, from the moment they wake up to the moment they go to bed. They will know every product you buy, every food you prefer, even stats on your office productivity. Like a personal assistant, they will follow you around and take notes and occasionally offer you “advice” in the form of highly-targeted advertising. And, despite public concerns regarding privacy, the majority of web users will gladly concede their lives to Facebook’s Brave New World.
Facebook recently agreed to exclusive social media partnerships with just about every major media provider, app creator, online store, and home office software company you can imagine. Facebook’s partnerships now include Amazon (NASDAQ:AMZN), Spotify, Hulu, Rhapsody, Pandora (NYSE:P), Netflix (NASDAQ:NFLX), News Corp. (NASDAQ:NWS), The Washington Post Co. (WPO), Microsoft (NASDAQ:MSFT), Adobe (NASDAQ:ADBE), Apple (NASDAQ:AAPL), and dozens of others. Through Facebook, the average person will be able to do nearly everything he normally does with his computer, television, radio, telephone, video game system, and DVD player. For free. Just socially and with advertisers following around.
And Facebook is unlikely to have to worry about anti-trust suits. Because messing with Facebook will be messing with hundreds of millions of peoples’ whole worlds. Besides, as a $100 billion company, Facebook is going to have incredible lobbying power.
Facebook is following Google’s (NASDAQ:GOOG) revenue model, but it's doing it better than Google. Instead of attempting to create features internally, Facebook is focusing on its core competencies and allowing the best-of-breed 3rd party developers to provide the infrastructure and content. Buyers of Google’s IPO at $85 made a substantial amount of money. Even with an IPO at $100, Facebook is positioned to make some people extremely wealthy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.