Juicing the Orange
04 Dec 2012Facebook stock ($FB) took a little jump up over the past month, and while I may not be using it as regularly as many I have a few thoughts on their current strategy. Many have said that Facebook is AOL 2.0and collated some interestingthoughts.
Jason Kottke on Facebook in 2007:
Think of it this way. Facebook is an intranet for you and your friends that just happens to be accessible without a VPN. If you’re not a Facebook user, you can’t do anything with the site…nearly everything published by their users is private.
Intranet a.k.a.walled garden.
Bob Pittman, former COO of AOL via TheSharpener:
When you had that walled garden, it was wonderful how this area was perpetuated, said Bob Pittman at the Milken Institute Conference in Beverly Hills.
AOL, which was the largest Internet access provider, began to tear down its walls in 2004 and accelerated in 2006 when they offered free email accounts at AOL.com.
Pittman said AOLs decision to abandon its walled garden is what caused the current problems, but said it is unlikely that Facebook make the same mistake.
Facebook is the next walled garden. It is second only to AOL. They are really clever and will not let anyone convince them to leave the walled garden, he said.
The former COO of AOL states that Facebook is the new walled garden, and I cannot help but agree. Facebook has a dual layer of walls, they first have your friends and family, and second they have your attention (time) and perception that Facebook is the Internet. I’ve especially observed the perception phenomenon in the areas of the developing world where I have lived. I frequently walk down the streets of Cebu where computers are set up like video arcade machines you drop coins in for minutes on the PC. The majority of users on these PC arcades are browsing Facebook. I’ve talked with many of them, and their understanding of the Internet is similar to a typical AOL user’s understanding when AOL was in its prime there is nothing outside thewalled garden.
Of course Facebook “will not let anyone convince them to leave the walled garden”, but that doesn’t mean that users will not peek out and decide to leave on their own. The walled garden strategy will not work forever, users will get out. AOL adapted their strategy and so will Facebook. In the meantime they appear to be juicing the dickens out of the orange that is their advertising revenue.