Well, we all knew less evil wasn't an option
June 16, 2012 12:25 PM Subscribe
One VisaFacebookCard to rule them all: Forget selling ad space. Facebook should be selling credit, argues The Daily Beast's Steven Weiss.
That would take work, and make it harder for them to sell your information to other people.
True, but they are bajillionairs, it's not like they couldn't take this on if the thought it was worth it. And harder's not the same as impossible; I don't think they'd be completely cutting themselves off from ad revenue by taking this on.
The real question is, could they make more money by creaming 2% off of every online and offline transaction their customers make than by selling ad space? After, having a set of actual transactions in house would only enhance the value of their data overall for marketers and advertisers --- you buy a lot more stuff than you bother liking on Facebook.
Personally, I can't says that I've seen any sign that they plan to do this. But the big knock on them in the aftermath of the IPO was that they're not making enough on ads to justify their valuation and what they are making is headed in the wrong direction, plus there's the whole mobile problem. This struck me as interesting because it seems like something they clearly could do and which would give them an alternative income stream that makes them way, way less dependent on convincing humanity that it really does like clicking on banner ads.
Plus the idea of what else could they do to make money with their data set is just endlessly fascinating....
posted by Diablevert at 12:41 PM on June 16, 2012 [1 favorite]
True, but they are bajillionairs, it's not like they couldn't take this on if the thought it was worth it. And harder's not the same as impossible; I don't think they'd be completely cutting themselves off from ad revenue by taking this on.
The real question is, could they make more money by creaming 2% off of every online and offline transaction their customers make than by selling ad space? After, having a set of actual transactions in house would only enhance the value of their data overall for marketers and advertisers --- you buy a lot more stuff than you bother liking on Facebook.
Personally, I can't says that I've seen any sign that they plan to do this. But the big knock on them in the aftermath of the IPO was that they're not making enough on ads to justify their valuation and what they are making is headed in the wrong direction, plus there's the whole mobile problem. This struck me as interesting because it seems like something they clearly could do and which would give them an alternative income stream that makes them way, way less dependent on convincing humanity that it really does like clicking on banner ads.
Plus the idea of what else could they do to make money with their data set is just endlessly fascinating....
posted by Diablevert at 12:41 PM on June 16, 2012 [1 favorite]
Of course they can make money if they become a dominant transaction clearing system. How do you think Visa/Mastercard get paid? It's classic toll-booth economics (rent seeking)-- find an essential service in the economy and then dominate it.
We're all used to the fact that merchants pay credit card companies for the privilege of using their payment networks. Except for checks, which clear at your bank for free. Ever wonder about that? Back in the day, checks cleared manually, which meant they had to be shipped in bulk from bank to bank. Guess what paid for that network?
You did. The Federal Reserve provided the network for check clearing, so that depositing checks didn't cost the merchant anything. The technical term for this is "clearing at par."
Why was this done? To enhance intraregional trade within the United States. It worked.
But I can guarantee you that were "checks" invented today, there would be people trying to turn it into a revenue stream for themselves, just like credit cards.
What everyone has to understand is that rent seeking behavior is bad for the economy, because it takes resources away from productive work and put it into financial institutions, that do not deliver value to the economy. They don't make anything. Other than bullshit.
posted by wuwei at 12:48 PM on June 16, 2012 [20 favorites]
We're all used to the fact that merchants pay credit card companies for the privilege of using their payment networks. Except for checks, which clear at your bank for free. Ever wonder about that? Back in the day, checks cleared manually, which meant they had to be shipped in bulk from bank to bank. Guess what paid for that network?
You did. The Federal Reserve provided the network for check clearing, so that depositing checks didn't cost the merchant anything. The technical term for this is "clearing at par."
Why was this done? To enhance intraregional trade within the United States. It worked.
But I can guarantee you that were "checks" invented today, there would be people trying to turn it into a revenue stream for themselves, just like credit cards.
What everyone has to understand is that rent seeking behavior is bad for the economy, because it takes resources away from productive work and put it into financial institutions, that do not deliver value to the economy. They don't make anything. Other than bullshit.
posted by wuwei at 12:48 PM on June 16, 2012 [20 favorites]
Is this a good place to talk about the credit card that gives you Farmville credit instead of cash back as part of its reward system? Because that totally exists too.
posted by subdee at 1:42 PM on June 16, 2012
posted by subdee at 1:42 PM on June 16, 2012
Back before the credit collapse, a lot of the ads on Facebook were actually for credit cards. Imagine if they had gotten into that business then, or doing mortgages or something. Of course, they could simply have re-sold the credit to banks or something, but they would be on the hook for anything that was still in the pipeline when the collapse it. It would have destroyed their company.
Anyway, why credit? Facebook does actually have a payment system, but it's meant for stuff like farmville. Google is trying to get into payments as well. But lending money to random people is risky, and it's likely to enrage people who deal with it. In order to be successful, people have to like using facebook. Imagine if people had the antagonistic relationship with FB that they did with their credit card companies?
People would leave. They don't want their bank handling their personal lives. It would be idiotic.
If facebook can figure out something to do with money that ties into their social relationships: Maybe something to allow you to lend money to your FB friends, or raise money through your social connections, it might work. But simply trying to become capital one might destroy them.
posted by delmoi at 2:22 PM on June 16, 2012
Anyway, why credit? Facebook does actually have a payment system, but it's meant for stuff like farmville. Google is trying to get into payments as well. But lending money to random people is risky, and it's likely to enrage people who deal with it. In order to be successful, people have to like using facebook. Imagine if people had the antagonistic relationship with FB that they did with their credit card companies?
People would leave. They don't want their bank handling their personal lives. It would be idiotic.
If facebook can figure out something to do with money that ties into their social relationships: Maybe something to allow you to lend money to your FB friends, or raise money through your social connections, it might work. But simply trying to become capital one might destroy them.
posted by delmoi at 2:22 PM on June 16, 2012
Anyway, this daily beast article is actually a pretty good example of the philosophy that seems more prevalent now of treating people as a resource to be mined, regardless of how they feel about it. Rather then as someone you're trying to provide some benefit too.
Why would people even want a universal ID provided by facebook?
The thing is: Your mobile phone is already an ID. You don't need facebook in addition to that.
Besides, who wants FB tracking you everywhere you go? That's the problem with a lot of this "users as resource" thinking, it doesn't consider whether or not people even want the service or care enough to give up even more data. People are already uncomfortable with the amount of information FB already has and they're not really going to want to hand over even more.
posted by delmoi at 2:52 PM on June 16, 2012 [3 favorites]
Why would people even want a universal ID provided by facebook?
Imagine the retail experience: when you enter a store with your smartphone, Facebook's servers check you in. You gather the few items you need and, instead of putting them down to take out a credit card, you walk over to an employee at a monitor, state your name, and he or she selects your face and name from a list of those logged in to the store. Your account gets charged just as with a regular credit card, except you don't have to carry that card around with you anymore, bother swiping or reswiping it, or worry about it getting lost.Square already provides a service that used to be called cardcase and is now apparently called "Pay with square".
The thing is: Your mobile phone is already an ID. You don't need facebook in addition to that.
Besides, who wants FB tracking you everywhere you go? That's the problem with a lot of this "users as resource" thinking, it doesn't consider whether or not people even want the service or care enough to give up even more data. People are already uncomfortable with the amount of information FB already has and they're not really going to want to hand over even more.
posted by delmoi at 2:52 PM on June 16, 2012 [3 favorites]
I think this article is probably spot on. Sure people are concerned about privacy, loss of control of their information, being tracked by Facebook, but a lot more people just want things to be easy and not obviously expensive. A system where the merchant pays the transaction fees and the college student can buy what they want with less hassle than today, even if it is just a tiny bit less hassle, has potential to be really big.
I'm hugely dubious about even the current value of Facebook stock, but if they announced an initiative to do this in a big way I'd take another look.
posted by meinvt at 3:55 PM on June 16, 2012
I'm hugely dubious about even the current value of Facebook stock, but if they announced an initiative to do this in a big way I'd take another look.
posted by meinvt at 3:55 PM on June 16, 2012
All this talk of ads. I never see any. Sometimes for the sake of a lack of blank screen on Hulu, I'll turn adblock off (and forget it's off after I'm done with Hulu) and the internet is like a different world. It's crazy. It's 90% ads and 10% content, if that even. I don't know why people suffer to view the net that way. Even on my mobile devices, I have Dolphin browser with adblock.
posted by Malice at 4:47 PM on June 16, 2012 [1 favorite]
posted by Malice at 4:47 PM on June 16, 2012 [1 favorite]
A system where the merchant pays the transaction fees and the college student can buy what they want with less hassle than today, even if it is just a tiny bit less hassle, has potential to be really big.The biggest problem college students, recent graduates and people in those demographics have with money these days is acquiring it in the first place, not difficulty in spending it.
Sometimes for the sake of a lack of blank screen on HuluHuh. When I go to hulu I get a screen saying they can't show me any ads, and I have to wait 30 or 60 seconds. Lately they've been adding a request to add an adblock exception. I might consider it if they were auto muted, but ads with sound are by far the most annoying.
posted by delmoi at 5:04 PM on June 16, 2012
Subdee-- link?
I'm not Subdee, but here's the Zynga Serve Rewards card:
posted by A Thousand Baited Hooks at 5:15 PM on June 16, 2012
I'm not Subdee, but here's the Zynga Serve Rewards card:
"FarmVille players now have the ability to plant an interactive Serve Money Tree in their Farms which will give them the ability to level up in game and earn Zynga Farm Cash for virtual awards redemption."More information (including pictures of the cards).
posted by A Thousand Baited Hooks at 5:15 PM on June 16, 2012
Facebook is already doing this on the prepaid model through Credits, its payments subsidiary has been registering as a money sending business (MSB) in various states.
posted by snuffleupagus at 6:02 PM on June 16, 2012
posted by snuffleupagus at 6:02 PM on June 16, 2012
And as elaborated in a 2011 complaint to the FTC, Facebook has forced adoption of Credits within its own ecology.
posted by snuffleupagus at 6:06 PM on June 16, 2012
posted by snuffleupagus at 6:06 PM on June 16, 2012
Credits are meant for buying digital goods, though. They charge something like 30% (But they also let Zynga, alone, get away with using other systems), you couldn't use them for buying real goods, unless they had an enormous markup.
What Facebook really needs is it's own phone. Actually, if I were in Zuckerburg's position I would buy my own Carrier. Think about it.
Google and Apple own the handset. They can put whatever they want on there. But the carriers, in turn, have them by the balls. Then, you try to get companies to use a facebook as a way to register/configure devices. FB Could be another competitor to Apple, Microsoft and Amazon as a fully integrated content delivery platform. Except, if they owned a carrier, they would have a huge advantage over them.
FB is a tech company, so it makes sense for them to compete with other tech companies, rather then payment processing companies. The also, somewhat by accident ended up with a major game 'platform'. Playing off that strength to get into the living room might be a good idea as well. Nintendo-style "play together" gaming might also be a good way to play off their strengths.
posted by delmoi at 10:16 PM on June 16, 2012
What Facebook really needs is it's own phone. Actually, if I were in Zuckerburg's position I would buy my own Carrier. Think about it.
Google and Apple own the handset. They can put whatever they want on there. But the carriers, in turn, have them by the balls. Then, you try to get companies to use a facebook as a way to register/configure devices. FB Could be another competitor to Apple, Microsoft and Amazon as a fully integrated content delivery platform. Except, if they owned a carrier, they would have a huge advantage over them.
FB is a tech company, so it makes sense for them to compete with other tech companies, rather then payment processing companies. The also, somewhat by accident ended up with a major game 'platform'. Playing off that strength to get into the living room might be a good idea as well. Nintendo-style "play together" gaming might also be a good way to play off their strengths.
posted by delmoi at 10:16 PM on June 16, 2012
If I have to have a FB account to buy things, I'm off to the black market. I wish FB would just go...away.
posted by InsertNiftyNameHere at 10:43 PM on June 16, 2012 [1 favorite]
posted by InsertNiftyNameHere at 10:43 PM on June 16, 2012 [1 favorite]
I wish FB would just go...away.
It has its uses. I found friends I thought I'd lost forever. I can talk to family without actually picking up a phone (I HATE talking on the phone) and see pictures of things going on in their lives.
I really don't care whether it's Facebook or G+ or whatever that provides this experience, as long as I can have it.
And the best thing about Facebook, some would argue, is that you aren't required to make an account. So for you, yes, in fact it can just 'go away'. But don't wish it would go away for people who actually enjoy it.
posted by Malice at 11:00 AM on June 17, 2012
It has its uses. I found friends I thought I'd lost forever. I can talk to family without actually picking up a phone (I HATE talking on the phone) and see pictures of things going on in their lives.
I really don't care whether it's Facebook or G+ or whatever that provides this experience, as long as I can have it.
And the best thing about Facebook, some would argue, is that you aren't required to make an account. So for you, yes, in fact it can just 'go away'. But don't wish it would go away for people who actually enjoy it.
posted by Malice at 11:00 AM on June 17, 2012
Only vaguely related :
Data Mining Exec Pays For Burgers In Cash To Keep His Insurance Company From Knowing His Bad Diet Habits
posted by jeffburdges at 4:39 AM on June 22, 2012
Data Mining Exec Pays For Burgers In Cash To Keep His Insurance Company From Knowing His Bad Diet Habits
posted by jeffburdges at 4:39 AM on June 22, 2012
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That would take work, and make it harder for them to sell your information to other people.
posted by eriko at 12:29 PM on June 16, 2012 [3 favorites]