Social networking websites now affect billions of people throughout the world. It seems like it would be impossible to stay in touch with everyone in our lives without such websites. These websites provide free access to any of our friends or acquaintances at a given second. The thing that makes these websites so popular is that they are free, and with ever expanding competition this no cost way of communicating may be in jeopardy.
Facebook, arguably the most popular social networking website, has recently decided to change to publicly traded stock http://www.keloland.com/News/NewsDetail6376.cfm?Id=127182. This means that their profits will increase, and it will be capable for anyone to purchase shares in the company. This also poses many threats to the current free status, and in the future users may have to pay for their ability to use Facebook. With competition increasing, there is a need to make the website better and create new ideas in order to expand business and keep users on Facebook. By going public their revenues will increase, and they will have more spending power to innovate and create the best possible website. Although their intentions have not been made public, there is a great potential that users could potentially be paying for access in the future.
Another large issue will be the potential business they may lose if they charge clients. Personally as a Facebook user myself, I would not pay to use their services. Although the website is very convenient, it is not important enough to lose my hard earned money over. From a business stand point, their revenues may not change from losing all of the users who decide not to pay. There will be many current users who still desire to use their services regardless of price. Currently Facebook acquires revenue from advertising, and the lack of users will greatly affect the advertising aspect. Businesses will not pay to advertise somewhere where not as many people will see their product.
The ultimate question to ask is if it is necessary to go public in order to stay at the top of the social networking chain. Personally, I feel this may be a good idea for them at the moment. Twitter is becoming more popular everyday, and innovation is necessary to stay as the industry benchmark. I end this blog entry with the question, is it ethical to change your business principles if it means potentially losing customers, in order to stay ahead of your competitors?
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