"No man can become rich without himself enriching others"
Facebook stock dive revives business-model debate
The dizzying stock decline of Facebook, a wealthy company with nearly a seventh of the world's population as users, has revived a key debate of the Internet age: Can anyone get rich while giving their product away for free? Investors have cut Facebook’s value nearly in half since the May public offering. One of its first outside investors, Peter Thiel, sold 20 million shares last week, deepening questions about how such a high-flying technology icon could falter so quickly. Part of the answer, say analysts and academics, lies in Wall Street’s skepticism of a founding principle of Silicon Valley’s business culture — that the best way to build a company is to ignore profits in favor of growing a huge audience. Few companies have a larger or more loyal audience than Facebook, with more than 900 million users and reams of the personal information that marketers covet. Many analysts expect that Facebook will continue to find ways to make money from that vast global reach; it already brings in $3.7 billion a year. Yet Wall Street’s evident frustration with the stock price reflects growing concerns about the long-term prospects for companies that are popular but do not charge users for services. Another social-media company, meanwhile, the business-oriented LinkedIn, has seen its stock climb 65 percent this year as it relies on a mix of advertising dollars and fees for premium services. ... Continue to read.
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