How Facebook Can Still Earn Money in the Future

Today a lifestyle medium in the North, tomorrow already societal power in the South: U.S. President Obama places responsibility on social networks, when it comes to the fight against authoritarian regimes. In the long term, however, Facebook has another problem. In the future, growth will no longer take place in traditional advertising markets.

If the social network Facebook has reached the first limits of its growth, that is at first an annoyance for the firm. Shortly before its stock market release, such news can depress value. In the long term, however, Facebook must have other concerns, because growth will no longer take place in traditional advertising markets. With the increasingly global distribution, the social network will change from a lifestyle medium in the North to a societal power in the South and therefore need to redefine its role.

One could observe the first signs of this during the unrest of the Arab Spring, in the controversial Internet campaign against the Ugandan warlord Joseph Kony and in the speeches of Alec Ross, adviser to U.S. Secretary of State Hillary Clinton, who is responsible for the new field of digital diplomacy.

During the Arab Spring it became apparent that online social networks are as effective for the mobilization and coordination of popular movements as no other medium before. The “Kony2012 Campaign” proved what political power the so-called zealot can develop on the Internet.

Alec Ross, however, is currently traveling around the world to make the digital industry understand that the United States, representing the West, has quite clear interests when it comes to integrating emerging and developing nations into the global communication network. The U.S. would undertake everything to make freedom of opinion — thus democracy — possible worldwide.

The digital fight for democracy is an honorable cause. For a digital firm that must come to terms with national governments, that is not always an advantage. If online services need to take care that the standards of authoritarian rulers are adhered to, it collides from time to time with Western values.

Contrary Interests in Economy in Politics

If one now considers the most recent studies and appraisals for the development of digital media, one can already anticipate the approximate scope of the growth. By the year 2016, three billion people will have a connection to the Internet, according to a study of the advisory group Boston Consulting. Cautious estimations presume moreover, that in the next 20 years another three billion people will be online. The largest potential for growth thereby is in emerging and developing nations.

Social networks are now already the most important function of the Internet; 82 percent of all global users today are members of a social network. Of these, 55 percent are members of Facebook. With such penetration of the market, the limits of growth in the existing network have been achieved. Internally, firms like Facebook and Google have already had long-term strategies for this development. That is already apparent in word choice: In Silicon Valley, Africa is not a developing region, but rather the area of the world with the greatest chances of growth.

The conflict now looming has been smoldering since the beginning of globalization. In almost all debates, whether about the power of the Internet or about economic and financial crises, it resonates that politics and economy are wrestling for supremacy. The interests of both are often contrary.

President Obama has just taken a firm stand. With two regulations, he resolved sanctions against anyone who provides authoritarian regimes, such as Iran or Syria, with technology that makes oppression possible. That is a first step to hold social networks responsible. When the next phase of growth begins for Facebook, it will not only be about advertising revenues.