Blogger buys Facebook users' data for $5

Facebook is probably freaking out not because some website sold their users' private data, but because they realized how bad their business model sucks.  They were probably like, "Five dollars, that's all he paid for more than one million FB entries was five dollars!  We were gonna sell it for waaaay more than that!"  

Seriously though, I wouldn't worry.  Zuckerberg seems like a pretty stand-up guy who has your best interests at heart.  He was like, you know, the good guy in that one movie.  You should totally trust him.  There is no black market for FB data, I repeat: no black market.  Your privacy is secure.  

Facebook Tries To Silence Blogger To Cover Up User Data Scandal [Updated]

By Dave Copeland 

October 26, 2012 | readwrite

URL: http://readwrite.com/2012/10/26/facebook-asked-blogger-who-purchased-user-data-to-keep-quiet

Facebook 'Zucking us up as a species'

Opinion: Facebook threatens to 'Zuck up' the human race

By Andrew Keen

May 30, 2012 | CNN

The news last week was all about Facebook's dodgy IPO.  Investors are filing suit against Facebook about withholding "negative" assessment on its business prospects. This IPO not only "Zucked up" Silicon Valley's supposed tech bubble, but it has created the suspicion that Facebook willfully exploited the innocence of the small investor.

But something even dodgier than a potential stock market fraud is going on. The social network is taking something much more important than money from its nearly one billion members. By sabotaging what it really means to be human, Facebook is stealing the innocence of our inner lives.

It may even be Zucking us up as a species.

Sherry Turkle, Professor of the Social Studies of Science and Technology at the Massachusetts Institute of Technology, tells us there's a "shift" from an analog world in which our identities are generated from within, to a digital world in which our sense of self is intimately tied to our social media presence.

But this shift to a Facebook world of incessant "friending," Professor Turkle correctly warns us, is a "seductive fantasy" which is weakening us both as individuals and as a society. The problem, she explains, is that a "capacity for solitude is what nurtures great relationships." But in today's always-on social media world, our solitude has been replaced by incessant online updates, which both weaken our sense of self and our ability to create genuine friendships.

I call this shift from the private to the public self "digital narcissism." Behind the communitarian veil of social media, we have fallen in love with ourselves. But this is a super sad love story. Because the more we self-broadcast, the emptier we become; and the emptier we become, the more we need to self-broadcast.

Facebook isn't alone, of course, in offering this seductive fantasy of a radically transparent digital society in which our self esteem is determined by our updates, tweets and check-ins. And yet with its almost billion members and nearly $100 billion public market valuation, Facebook is shaping the digital narcissism of early 21st century culture more than any other social media company.

Most of all, Facebook is destroying our privacy as discrete individuals. And it's not just our kids who are revealing everything about themselves to their thousands of "friends" on Facebook. As Aisha Sultan and Jon Miller note in a chilling piece, "Facebook parenting" -- our obsession with posting data about our kids - is "destroying our children's privacy."

Sultan, a parenting columnist at the St Louis Post-Dispatch, and Miller, a researcher at the University of Michigan, whose article was based on interviews with 4,000 children, argue that we've created what they call a sense of "normality" about a world where "what's private is public." Kids are growing up, they explain, assuming that it's perfectly normal to reveal everything about ourselves online.

"And our children will never have known a world without this sort of exposure. What does a worldview lacking an expectation of privacy mean for the rest of society?" Sultan and Miller conclude with the eeriest of questions.

What it means, of course, is that we are creating a world in which our sense of identity, of who we actually are, is defined by what others think of us.  Social media's ubiquity means that we are losing that most precious of human things -- our sense of self . Our devices are always on; our "Timeline" (Facebook's product which greedily attempts to capture our entire life narrative) is there for everyone to see; we are living in public on a radically transparent global network that, by 2020, will be fed by 50 billion intelligent devices carried by the majority of people on the planet.

But the situation is actually more dismal than even Sultan and Miller acknowledge. The distinguished psychologists Philip Zimbardo and Nikita Duncan have written about an entire generation of young men who, they say, have been "desensitized to reality" by online gaming and pornography. But what Zimbardo and Duncan forget to add is that much social media is no less addictive that gaming or porn.

Yes, digital narcissism is a narcotic.  But unlike online gaming or pornography, it is desensitizing all of us -- young and old, men and women alike -- to reality.  Imprisoned in our delusional social media bubbles, our Facebook saturated world has become a self-referential stream of real-time updates about what we just ate for breakfast.

Don't worry about whether the Facebook IPO is creating an economic bubble. The real bubble are the billions of delusional social media bubbles which are distorting our real sense of self and weakening genuine social interaction.

So what to do?

The less we publicly announce about ourselves, the more mysterious and thus the more interesting our private selves become. 

It's time to wake up to the truth about social media. Networks like Facebook have turned us into products in which their only economic value is our personal data. Like any other addiction, we need recognize its destructive reality.  Facebook is free because it sells our most intimate data to advertisers.  Forget about last week's dodgy IPO. The fraud is on anyone who has ever used Facebook.

Last year, I quit Facebook. It's a growing movement. I hope you'll consider joining me as a Facebook resistor.  [I quit too! - J]

But the solution goes beyond leaving Facebook. Our addiction to digital narcissism can only be broken by a new regime of strict self-censorship. For many of us, perpetually high on the narcotic of self-broadcast, this won't be any easier than quitting smoking or kicking that online porn or gaming habit. But remember, the less we publicly announce about ourselves, the more mysterious and thus the more interesting our private selves become.

There are political solutions too. We need to support governments in both the E.U. and the U.S. to protect online privacy through "do not track" legislation; force companies like Google to be more transparent with their use of our data and even enshrine, as the EU Justice Commissioner Viviane Reding is bravely championing, a "law of forgetting" on the Internet.

The market can also play a role. Let's embrace new technology which allows data to degenerate over time so our online data, like real world trash, eventually decomposes.

Let's support Internet start-ups like the strictly private social network EveryMe and the defiantly private search engine DuckDuckGo. And let's recognize, once and for all, that "free" is never really free and that we are much better off paying for apps and services that absolutely guarantee the protection of our private personal data.

At the dawn of our brave new networked 21st century world, we are faced with two options. Either, we succumb to the narcotic of digital narcissism, turn ourselves inside out and let our kids inherit a world in which the quiet mystery of the disciplined private self becomes a historical artifact.  Or we fight our growing addiction to social media so that we are no longer enslaved to the personal update, the tweet or the check-in.

Privacy or publicness? It's not a hard choice. Zuck-up or save the species. I trust you'll know which one to make.

Facebook, other social media, won't replace real industries

I've never regretted deleting my FB account.  And I admit I do not wish Zuckerberg or Facebook any commercial success for basically spying on people (albeit with users' permission, but increasingly less so), although, I suppose to his credit, Zuck has created something that millions of people "can't live without"... as long as it's free.  

As you recall, I pointed out that FB's annual revenue per unique user is about $4, pretty much the average for purely social media companies.  Whereas FB's annual profit per unique user in 2011 was only $1.20.

The Facebook Illusion

By Ross Douthat

May 26, 2012 | New York Times

THERE were two grand illusions about the American economy in the first decade of the 21st century. One was the idea that housing prices were no longer tethered to normal economic trends, and instead would just keep going up and up. The second was the idea that in the age of Web 2.0, we were well on our way to figuring out how to make lots and lots of money on the Internet.

The first idea collapsed along with housing prices and the stock market in 2007 and 2008. But the Web 2.0 illusion survived long enough to cost credulous investors a small fortune last week, in Facebook's disaster of an initial public offering.

I will confess to taking a certain amount of dyspeptic pleasure from Facebook's hard landing, which had Bloomberg Businessweek declaring the I.P.O. "the biggest flop of the decade" after five days of trading. Of all the major hubs of Internet-era excitement, Mark Zuckerberg's social networking site has always struck me as one of the most noxious, dependent for its success on the darker aspects of online life: the zeal for constant self-fashioning and self-promotion, the pursuit of virtual forms of "community" and "friendship" that bear only a passing resemblance to the genuine article, and the relentless diminution of the private sphere in the quest for advertising dollars.

But even readers who love Facebook, or at least cannot imagine life without it, should see its stock market failure as a sign of the commercial limits of the Internet. As The New Yorker's John Cassidy pointed out in one of the more perceptive prelaunch pieces, the problem is not that Facebook doesn't make money. It's that it doesn't make that much money, and doesn't have an obvious way to make that much more of it, because (like so many online concerns) it hasn't figured out how to effectively monetize its million upon millions of users. The result is a company that's successful, certainly, but whose balance sheet is much less impressive than its ubiquitous online presence would suggest.

This "huge reach, limited profitability" problem is characteristic of the digital economy as a whole. As the George Mason University economist Tyler Cowen wrote in his 2011 e-book, "The Great Stagnation," the Internet is a wonder when it comes to generating "cheap fun." But because "so many of its products are free," and because so much of a typical Web company's work is "performed more or less automatically by the software and the servers," the online world is rather less impressive when it comes to generating job growth.

It's telling, in this regard, that the companies most often cited as digital-era successes, Apple and Amazon, both have business models that are firmly rooted in the production and delivery of nonvirtual goods. Apple's core competency is building better and more beautiful appliances; Amazon's is delivering everything from appliances to DVDs to diapers more swiftly and cheaply to your door.

By contrast, the more purely digital a company's product, the fewer jobs it tends to create and the fewer dollars it can earn per user — a reality that journalists have become all too familiar with these last 10 years, and that Facebook's investors collided with last week. There are exceptions to this rule, but not all that many: even pornography, long one of the Internet's biggest moneymakers, has become steadily less profitable as amateur sites and videos have proliferated and the "professionals" have lost their monopoly on smut.

The German philosopher Josef Pieper wrote a book in 1952 entitled "Leisure: The Basis of Culture." Pieper would no doubt be underwhelmed by the kind of culture that flourishes online, but leisure is clearly the basis of the Internet. From the lowbrow to the highbrow, LOLcats to Wikipedia, vast amounts of Internet content are created by people with no expectation of remuneration. The "new economy," in this sense, isn't always even a commercial economy at all. Instead, as Slate's Matthew Yglesias has suggested, it's a kind of hobbyist's paradise, one that's subsidized by surpluses from the old economy it was supposed to gradually replace.

A glance at the Bureau of Labor Statistics' most recent unemployment numbers bears this reality out. Despite nearly two decades of dot-com enthusiasm, the information sector is still quite small relative to other sectors of the economy; it currently has one of the nation's higher unemployment rates; and it's one of the few sectors where unemployment has actually risen over the last year.

None of this makes the Internet any less revolutionary. But it's created a cultural revolution more than an economic one. Twitter is not the Ford Motor Company; Google is not General Electric. And except when he sells our eyeballs to advertisers for a pittance, we won't all be working for Mark Zuckerberg someday.

Facebook's IPO, income, and users' privacy

Although Facebook founder and CEO Mark Zuckerberg said two years ago that privacy is obsolete among the younger generations, in fact, more and more Facebook users are opting to share less and less of their personal info. Reported HuffPost:

"Researchers at Polytechnic Institute of New York University tracked the privacy settings of 1.4 million Facebook profiles belonging to New Yorkers over a 15-month period between March 2010 and June 2011. They found a 'dramatic decrease in the amount of information Facebook users reveal about themselves to the general public' and the authors concluded that the users became 'dramatically more private' during the period, according to their report.

"Over the same period, users stepped up the frequency with which they hid personal details in their public profiles, which are visible to anyone on Facebook, a friend or otherwise. To measure this, the researchers tracked nine characteristics often included on public profiles -- 'friend lists, age, high-school name and graduation year, network, relationship, gender, interested in, hometown and current city' -- and monitored whether members shared fewer details over time."

Maybe younger folks are starting to catch on -- like their bosses and potential bosses already have -- that making your life an open book on the internet may not be such a swell idea.

Meanwhile, saying that "we must reject the conclusion that privacy is an outmoded value," and that privacy has been "at the heart of our democracy from its inception," President Obama released a "Consumer Privacy Bill of Rights" for the new global digital economy.

Gee, let's cross our fingers and really hope FB users' privacy issues and Obama's new regulations won't hurt Facebook's IPO, heh-heh-heh.

BTW, if you accept Facebook's figures, then in 2011 they earned about $4.40 in revenue per user. For comparison, let's look at Tristan Louis's figures for other internet/social networking companies:

*Average revenue per user:

Pandora: $ 0.54

LinkedIn: $ 1.79

GroupOn: $ 8.60

Living Social: $ 9.41

Zynga: $ 2.57

Facebook: $4.39

*Granted, since these firms have different business models, a better measure would be net profit per user -- see below. Notwithstanding, Louis's figures from 5 top social networking firms indicate that $4 average revenue per user is a good expectation, and that is supported by other analyses.

Per-user valuation at IPO:

Pandora: $ 50.98

LinkedIn: $ 86.67

GroupOn: $ 271.08

Living Social: ?

Zynga: $ 75.43

*Facebook: $11.83

*Assuming FB can raise $10 billion in an IPO; they said they hope to raise at least $5 billion.

For the above firms, I compiled these annual profit figures for 2011:

Net profit per user:

*Pandora: $ 5.10

**LinkedIn: $ 0.68

***GroupOn: -$ 1.29

****Living Social: ?

*****Zynga: -$ 1.68

Facebook: $ 1.20

*Pandora has had only 1 reported public quarter since its IPO. This is based on Q4 2011.

** LinkedIn reports only its annual EBITDA, not net profit.

***GroupOn has had only 1 reported public quarter since its IPO.

****Living Social is privately held and has delayed its IPO, but is expected to go public eventually.

*****Zynga went public in Dec. 2011; its annual net profit and latest user figures were used here.

Pretty slim pickin's in the brave new world of internet social networks. It's a definitely a volume game.

Here you can see another analysis of revenue per unique user among internet firms: