The problem for Facebook is that while an American user is worth $34.55 to Facebook each year in advertising revenue and other payments and a European user is worth $10.68, a user in Asia Pacific is worth only $3.24.
Facebook just reported its results to the market, and they were really good.
It made a $6 billon profit for the last three months alone, plus it had growth in daily users, rising revenue per user, and record revenue of $17 billion.
Yes, Facebook. That horrible blue website. Most people I know are moving away from it. How on earth are they still growing?
Facebook’s stock leapt 4.5 per cent on the good results. But it has problems. So many problems.
A $100 million fine from the US government, a £500,000 fine from the UK Government, and oh yeah, another $5 billion fine from the US government over privacy.
It’s also deeply embroiled in the upcoming US election, where it could get in a lot of trouble over spreading “fake news”.
But let’s focus on what matters: the core product. Facebook has always been about seeing what your friends are doing.
It shows you all that stuff in the news feed, and the news feed is getting worse, not better.
The news feed decay is caused by two things:
1. People quitting Facebook. Many of my closest friends and family have not made a Facebook post in years.
2. Friend relevance decay. I friended these people years ago, and let’s face it, I don’t actually know all of them very well any more. The more time passes, the less this feels like a gathering of friends, and the more like a school reunion. This matters to Facebook for two reasons. First, I care less about seeing what they are doing. But second, I feel weird about sharing my private stuff with these people. So I post less and less. They see occasional inoffensive holiday pictures and not much else.