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Facebook : A Social Network Service

Decent Essays

INTRODUCTION

Facebook is an American company based in Menlo Park, California that provides an online social networking service (SNS) for over 1.3 billion users worldwide (Newsroom.fb.com, 2004). A social networking service (SNS) is defined as a platform to build social networks or social relations for people with real-life connection or who share common interests. A social network service consists of a representation of each user (often a profile), his or her social links, and a variety of additional services. Social network sites are web-based services that allow individuals to create a public profile, to create a list of users with whom to share connections, and view and cross the connections within the system (Freebase.com, 2015). …show more content…

Many people think of a revenue model or operating model when they think of business model but a business model is much more than either of those concepts.
A business model describes the rational of how an organization creates, delivers and captures value. A business model dictates the long term and short term strategies for competitive advantage which in turn get translated to an Operating model (Business Process, Technology, People, Ownership and Metrics) for execution (Converge Consulting, 2012).
Facebook is a “Multi-sided Platform”. The platform’s value for a particular user group depends substantially on the number of users on the platform’s “other sides”. Facebook attracts users and advertisers because of the number of users on the platform. If the users went elsewhere, which is what happened to MySpace, advertisers would take their dollars and invest elsewhere. On use it. This also applies to the developers who develop apps for Facebook. They depend on large amounts of users to use their apps (Converge Consulting, 2012).

From a strategic perspective, one way multi-sided platforms solve this problem is by subsidizing a customer segment. Though a platform operator incurs costs by serving all customer groups, it often decides to lure one segment to the platform with an inexpensive value proposition in order to subsequently attract users of the platforms “other side”

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