Forbes Magazine has published its 2010 list of the 400 richest Americans. Mark Zuckerberg, co-founder and CEO of Facebook, more than tripled his wealth from US$ two billion in 2009 to US$ 6.9 billion in 2010 and jumped from rank 158 to number 35. Two other Facebook co-founders have entered the Forbes list: Dustin Moskovitz is ranked at position 290 with US$ 1.4 billion, Eduardo Saverin is at rank 356 with US$ 1.15 billion. Moskovitz is with 26 years the youngest American billionaire.
These data are not only indicative of the fact that Facebook is a very profitable business, which in 2010 will probably have revenues of more than US$ 1 billion, but also shows that Facebook has a specific kind of business model.
It is of course amazing that in times of economic crisis, where many people lose their jobs and suffer from economic precariousness, there are billionaires who triple their income. The ten richest Americans increased their wealth in the past year by US$ 24.9 billion. Facebook’s growth is amazing, it now enters the economic size of companies like Adobe (2009 revenues: US$ 2.95 billion, Forbes 2000 list for 2010). The difference between the companies is that Adobe sells software products and has almost 9000 paid employees, whereas Facebook has only 1400 paid employees and is financed by selling targeted advertisements. Facebook has a relatively small paid workforce, which is due to the fact that only the platform software needs to be prepared and maintained, whereas the multimedia-, data-, and interaction content that is crucial for achieving profit is generated by the users. Without user-generated content and Facebook communication profit on Facebook would not be possible. This shows that Facebook’s business model allows keeping the paid workforce low by exploiting unpaid user labour. Facebook’s business model is based on selling the users/prosumers as a commodity to advertising clients. In comparison to traditional software companies, we can speak of an outsourcing of labour to users. I have described the typical web 2.0 business model here.
The large increase of the wealth of the Facebook founders is mainly due to the infinite exploitation of Internet prosumer labour.
More and more people are coming to grips with the reality of this kind of exploitation, even if they lack a more systemic view of things: http://globalguerrillas.typepad.com/globalguerrillas/2010/09/cognitive-slaves.htm