Interesting people have raised a number of points that I need to think about:
1. Now that Facebook has 600 million members, and has an ARPU (Average revenue per user) of $3.00 I suppose that majority of future revenue growth won't be centered on new member acquisition, but on ARPU. Shifting their emphasis to establishing a platform has energized a development ecosystem of tens of thousands. Inevitably, they will have to declare which applications (e.g. payments) will be subsumed into the platform. I would not be surprised if they want to grow ARPU by 5x over the next three years.
2. Vendors in the online commerce arena are innovating at a tremendous pace. The LA Times utilizes Groupon to power their platform, the NY Times is working on their own group buying product, and local papers, such as the Bergen Record have entered the market too . To top it off, MSFT has partnered with The Dealmap, which aggregates group deals by city. Moreover, Paypal is now offering 'exclusive' sales to customers via Ruelala Customers, (e.g. SMB's) now have a raft of choice and group buying margins surely will compress....no doubt more innovation is on the near term horizon
3. With the FTC about to open hearings on privacy, many behavioral advertising companies, which rely on cookies, will be under pressure as sites cleanly give viewers the opportunity to opt out of being tracked. At the same time, many sites are investing greatly in adding engagement tools, which enable far greater on-site profiling. It just may be this is the best thing that happened to many of the now protesting vendors.
4. Isn't it fascinating that people often choose less quality and greater price? For example, streaming video offers less quality than DVD's, MP3 is has lower fidelity than analog systems, and digital cameras have less resolution than analog. Luke Williams of Frog Design, has a number of provoking thoughts about innovation and the way that changing behavior is paramount to success by new vendors. He says that companies that concentrate on incremental change are eventually doomed (I felt he was talking about MSFT).
