Good point... except that the number of eyeballs on Earth is limited, so the total amount of profit to be made in the market is presumably also approaching zero.
Or so it would be if "approaching zero" was not just a glib metaphor.
Because people don't go to those sites looking for stuff. They go to hang out. Google ads work so well because people go there searching for something.
Its time to go back to the business-model drawing board. Get rid of the ads and start charging for the service? It would be interesting to see how many social networks could justify their existence based on utility alone.
If the charge was _minimal_, I'd be willing to pay a few bucks a year for Facebook.
If you use it properly (read: non-obsessively), it's a great way to keep connected with people you've known in the past several years. Without Facebook, I would have lost touch with a lot of people, whom I could now communicate with easily when I need to. I gave up the day-to-day "social" aspect of it a while ago, but for keeping connections with past high-school and college friends, there isn't a better way to keep the doors open.
That being said, if I was paying for the service, I'd hope they would open up their data (for export) and give a few more bells and whistles for the money.
They could do a flickr-type model and charge only heavy users (say, more than 1000 friends) or charge for premium services (high-res photos or similar features).
EDIT: Even if social ads don't work out, I think Facebook will probably find a way to make lots of money. Although, maybe not enough money to justify the highest valuations we've heard.
That's a very interesting point. How much would people be willing to pay for social networks.
It seems that people would stick with one general site(Facebook) and potentially a few more specialized ones.
Unfortunately, if the price ends up being too high for most people, they will leave and go on to somewhere else, thus making it less worth it for you to have it so you'll end up leaving too.
If a major social network did start charging, a lot of people would probably move to a competitor unless the offering was too good to leave..
Most of the applications are so clustered with ads, so that everbody is probably ignoring them.
I do however sometimes find the facebook ads (the main site) highligy targeted (I even clicked twice on those). I bet they charge more than a few cents per 1000 impressions.
