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James Moore: Fickle friendships - the real value of Facebook is in users who refuse to pay

James Moore
Tuesday 15 May 2012 23:04 BST
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Outlook It is unlikely that many of the investors falling over each other to buy into Facebook's flotation are long-term users. If they were they mightn't be quite so keen on joining the gold rush because they'd know that quite a few of the dot.com darling's users often don't seem to like it very much.

Almost any move the company makes is greeted with suspicion at best, frothing outrage at worst. And the latter is the more common. Dark rumours about evil plots to steal data and violate privacy can go viral within minutes of the first users posting them to their "status updates".

Some of the sound and fury is doubtless generated by the internet's deep well of paranoia. But Facebook hasn't always helped itself on the issue of privacy.

What makes Facebook fascinating is that, in many ways, it epitomises a dilemma faced by a multitude of companies in the digital age.

It offers a service that its users value hugely. The more active of them use that service not just every day, but every hour, even every few minutes in the truly terminal cases.

Those users are also driven to fits of fury if the company tries to make even modest changes to what it offers. The redesign of home pages nearly caused a digital riot. Even the decision to dump the word "is" from those status updates – they used to say "Joe Bloggs is" XXXX, now Joe Bloggs has to put the "is" in himself if he wants it there – provoked debate. Despite this they flat refuse to pay anything for it. A digital cake to send as a present, even if it's only half an inch (or less) in diameter, those might go for a dollar. But the platform itself has to be free.

Which might explain why the attitude of Facebook's executives sometimes seems to approximate to: "Well, they don't pay us anything, so screw 'em." Particularly when presented with ideas to make money out of those users.

That attitude is highly dangerous for a business which could rapidly evaporate if enough of its users quit. But with the price range of Facebook's shares being hiked again – to between $34 and $38, which could value the social network at more than $100bn (£62bn) – it's going to become hard to resist when the newly quoted company is faced with investors and analysts demanding justification for its heady valuation every three months.

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