FB Friend or Foe: Background Information

Facebook's advent of technology into social networking has created a "critical mass" into society and over 200 million users. In February of 2004, Mark Zuckerburg founded TheFacebook, which was later incorporated simply as Facebook. Based off of a Harvard College networking concept, Zuckerburg created 4 convenient networking categories: city, workplace, school, and region.

Facebook generates revenue from advertising, mostly banner ads, which are exclusively from Microsoft. In 2007, Microsoft and Facebook, Inc. made a $240 million dollar deal. Gifts and referral marketing are the most recent ways of bringing in cash. "We are trying to provide the antidote for the consumer rebellion against interrruptive advertising," says Sheryl Sanders, Facebooks' chief operating officer and Zuckerburg's consigliere.

Engagment ads ask users to become fans of of products and companies, and invitation ads ask users to vote in some way or another about the brand. For each vote and fan-page addition, the company pays Facebook for this member participation.

Since its foundation, Facebook, Inc. has received over $600 million in financing. One of the first investors, Peter Thiel of PayPal, put $500k cash into this growing site. Accel Partners invested $12.7 million in venture capital; Greylock Partners $27.5 million; and most recently, Russia's Digital Sky Technologies invested $200 million for a 1.96% stake in the company. Digital Sky is not on the Board, but is working almost exclusively with Facebook on figuring out how to make money in its European market. (Note: It is a prominent Internet investor in Russia and Europe, where it owns stakes in Web companies that account for 70 percent of all page views on the Russian-speaking Internet, according to the firm. nytimes.com)

With this boom of technology came the definition of the law of information by Herbert Simon which staes, "The rapid growth of information causes scarcity of attention." Attention Economy is to create a marketplace where consumers are happy. It is an exchange of consumer's attention for a retailer's services. There are two keys, relevancy and privacy. Steve Gimor and Seth Goldstein have constructed Attention Trust. Property, economy, and transparency are three things that are a part of the Attention Economy. In the Orlando Business Journal, New Statistics say that Facebook beats out Myspace worldwide. Facebook has about three times the users and has about 1 billion chat messages everyday.