Open source is a great way to drive adoption of one's software, but is a generally poor way to monetize that software. The more open one's code, after all, the less compelling the need to pay for it. Unfortunately for Twitter, Facebook, and other new-age, web service developers this same principle holds true for their open APIs …
Call me simplistic.
But if Facebook's not making money then how come Zuckerberg is a millionaire?
I thought the whole point of an .com business was to raise the share price until you chicken out, then sell to a bigger fish and move on to pastures new? There's nothing about .com companies that says they have to be long-term profitable -- everything is in the exit strategy.
Not even millionaire
Billionaire apparently. But only in share terms.That's not to say he couldn't flog his shares and cash in his billions, but not sure who would shell out that kind of hard-earned when monetizing the product/service seems less than straight-forward.
Re: Call me simplistic
A millionaire 6 times over if you believe the hype.
For an entity having issues monetising it's customer base Zuckerberg has managed to find vast sums of money *somewhere*
How come Zuckerberg is a millionaire?
Microsoft gave him $280 million dollars: if Microsoft gave me $280 million dollars *I'd* be a millionaire.
As to the article, I fail to see, how a service like Facebook - which, undeniably, loses money, simply by existing - is any sort of illustration of how anything that it does is inherently an unprofitable thing to do, since everything that it currently does is unprofitable, to start with. You could just as easily argue that because Facebook uses F5 hosting, then hosting things on F5 must be an inherently unprofitable activity.
Why not look to someone who IS making money, and offers Open Source APIs to see if it is a worthwhile approach... Someone like Amazon, say?
And what would happen to the share price if he started to sell any significant portion of his holdings?
API's are not for making money
API's are for allowing things to communicate easily.
Money is for slowing this process down and shrinking the information economy.
Zuckeburg makes money out of attracting 500million users to his site. He could charge for people to use that - and everyone would move somewhere else.
No one would be stupid enough to invoice you for every nut and bolt a car was made from but for some reason they think the internet should work that way. Cant make my mind up whether is greed, criminal stupidity or the desperation of ignorance.
.. tell Apple that then
I suspect the reason Apple and Facebook still have not come to a deal after 18 months of negotiation (over the Farcebook API usage by Apple's Ping service) is that they are arguing over cost of access to these APIs and Apple is notoriously bullish about profit sharing and Facebook is asking for too much.
Nobody ever wrote open source software to get rich
However, there does seem to be a bunch of companies open-sourcing things for hard to understand reasons.
Most companies I've seen open source their products are attempting to follow the redhat model: give the software away and charge for support.
Still too much technobabble
API this and mindshare that and cloud leveraged synergies the other.
Look at your bank balance. If the number is black and getting bigger, then you're making money. Otherwise you're losing money.
It really is that simple, and if you don't get it, don't worry: sooner or later, your bank manager will sit you down and explain it to you.
I suppose there would be no Facebook without open source, so perhaps Facebook should move from Linux to Microsoft and try that approach in order to make some money.
Where's the joined up thinking?
"The trend toward creating and using APIs is driven by the economics of the long tail" - I know this a quote in the page but hasn't the long tail shit been debunked by über-geek Anderson himself?
Facebook has not only the volume but also some kind of value proposition to users, and, therefore, to companies wanting to use their platform and indeed the API may be key in this. Don't the games and shit (Farmville, Mafia Wars are names I've heard) encourage people to say on the platform and earn their developers money? You might get some advertising in at that level of engagement that you don't have with teenies working out what to do tonight. This is probably why Apple wants to pick the users up on the device and cut out the web altogether.
Twitter doesn't have a value proposition (SMS that you don't pay for) so it's fucked if no new money is forthcoming and my guess is that LBS poster children like Foursquare and Gowalla (what do they smoke to get these names?) are looking more attractive to investors who understand the AIDA principle: "crap, crap, crap crap ... ooh in the shop to your left we've got a special 2 for 1 offer for you blah blah blah trivia blah ..."
URL shortening for FFS. Make the damn things go away! Which is probably exactly what Apple is currently working on.
Not from my clients' sites.
All those are blocked because you have no idea if you're going to end up on a malware page or not.
Back in the good ol' days, open source was written by the end-users. Need a print system? Use open source and modify it if required. Need a shell, or OS or drivers? ditto.
This works well for large organisations who would otherwise run up large licensing costs or need custom functionality but don't want to write the whole thing from scratch. It also works well for small organisations/people who happen to have the skills.
The idea is that you put in the effort for what is profitable for yourself and leaverage off what others do for themselves. The model just doesn't work as well when you don't need the functionality for yourself at all. It isn't impossible to do, but it is much harder.
Open to create abundance
So, you close to reduce the inherent complexity of the abundance and then reduction falls in scarcity.
I don't see the difference with the old buisness which already made scarcity upon abundance, like shortening the product-life for example.
what does an api have to do with profit making? are you encouraging closed source api's?
im not sure what that would solve.
If you recall facebook originally didn't want the un-washed masses on it's social network and found itself opening up to the world since that decision obviously wasn't growing the service.
I don't use facebook since I am one of those un-washed masses and now that it's ok for me to join they can kiss my rearend.
If it's anything like myspace they have advertising programs built in. All an API is suppose to do is bring the people to you, it's not to do anything else.
I think that all the hype about social networks doesn't mean payola and that's the moral of the story. If you took a cross section of people from these sites (we've already seen how myspace failed) you would probably be surprised how useless the service is.
Facebook never was a win, facebook will never be a win. They had their plan when the service started that the educated masses would lead to more profit for them and that logic died on the table. Now perhaps eddie the farmers facebook will bring in the $.
Nothing against people with real jobs, facebook sucks.
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