"Why Facebook Can't Succeed" is Missing the Point

Edmund Lee recently wrote a post on The Big Money entitled "Why Facebook Can't Succeed: Letting readers call all the shots is great for community but bad for business" in which he supposes that Facebook's lack of revenue is somehow tied to their "habit" of bending to the will of their users, to quote:

Facebook, the world's largest social network, suffered under the tyranny of its own users in early February after the company rewrote its long-standing terms of service. Many members interpreted the revised rules to mean that the company would own every bit of uploaded ephemera, resulting in closed accounts and a rash of anti-Facebook groups—on Facebook. Founder and CEO Mark Zuckerberg clarified the company's position, but users wouldn't budge, many commenting with the same four words: "Delete my account, please." After three days, Facebook reinstated the original terms.

What does this signify other than the usual digital shriek so often found on Web sites everywhere? Just this: Social networks are doomed to fail. At least Facebook is, so long as it continues on its current path. By heeding to the objections of its grumbling users, Facebook has essentially painted itself into a revenue corner.

Dear Mr. Lee, I respectfully disagree.

First, we need to forget “social networks”....Facebook is a DATABASE. Pure and simple. Facebook Connect? Merely an attempt (none too disguised) to remix their database data into a revenue stream (hence, my speculation about a FBC ad network). Secondly, I continue to be appalled at journalist’s inability to know the difference between, and the significance of, Facebook’s perpetual LICENSE to do WHATEVER they want with user data vs. ownership of said data (OWNERSHIP IS A RED HERRING).

So, “why Facebook can’t succeed”? Well, it has little to do with advertising....if they don’t succeed it will be because they fail to 1) admit to themselves (which I know they have) and publicly that they are in fact a database (they use lots of fancy rhetoric around bridging consumers and marketers and really, they are selling “data” but through the interstitial layer of advertising) and 2) monetize like a database...ie: sell data.

He also makes the claim that Facebook won’t succeed due to bending to the will of Facebook users. Not so. Again, they really didn’t change ANYTHING about the TOS after the outcry. They simply were effective at misdirection. They made the issue about OWNERSHIP (which its not) and therefore they still retain that all-encompassing license! And everyone thinks its all fixed. ALSO...people hate the new redesign. Zuck’s response? “Get over it.” Not exactly bending to the will of the masses. Facebook has never actually bent to their community’s will....they simply have been very good at making it seem as if they have. And what else would you expect from a company’s who’s board members are ex-DARPA directors? :)