[randy]

I don't understand what everyone's so surprised about. Myspace makes nearly $1 billion in revenue, and Facebook is larger, has better technology, has a more affluent audience, of which they have more information about, has multiple revenue streams (billions of CPM ads [I estimate 6B by Quantcast numbers, they also have a lot more space for them since the re-design], tens of thousands of targeted ad campaigns [many of which I've seen, some of which I've clicked], newsfeed insertion partnerships [youtube charges in excess of 200K for front page ads], gifts [obviously not the core of their revenue stream, but I guarantee they pull in a few million], platform [they aren't really monetizing it yet, but developers are making hundreds of thousands to millions a month on it, so I wouldn't be surprised if FB eventually gets in on some of that action]), etc.

I know it's fashionable to hate or doubt Facebook nowadays, but if you look at the numbers instead of your own personal experience with Facebook (which, since your on Hacker News, is probably not very similar with their core user base), I think you'll come to the conclusion that the demise of Facebook is not just around the corner.

[bigbang]

"I don't understand what everyone's so surprised about. Myspace makes nearly $1 billion in revenue, and Facebook is larger, has better technology, has a more affluent audience,"

Probably thats the problem. More affluent(generalizing to educated) people and people who use better a network for technology, dont click on ads.

[randy]

I for one would like to see some proof on that matter, not that I neccesarily disbelieve that statement, but it is an interesting dynamic. Obviously more educated people may stray away from clicking on ads for free iPods or hot local singles dying to meet them, but you could say the same about less affluent people clicking on ads regarding BMW's, high fashion, SaaS's, or a wild excursion on the Serengeti (obviously some these examples are slightly strawman-ish, but the point is there are many products out there that need more exposure, of which advertising is an option, that require money, of which affluent people have more of and are presumably more willing to spend because of that). Rich or poor, educated or uneducated, everyone has needs, everyone.

But of course, that's not even the point, because at the end of the day, you really care about maximizing user value, which for ads is frequency * (CPC or CPM). Now, obviously the CPC rates are higher for a BMW relative to a free iPod and the CPM rates are also higher if you know the audience is affluent, higher still if they are a fan of BMW on FB, higher still if you know their status is 'looking for a new car', etc. LinkedIn has fairly high CPM's from what I hear.

So is my conclusion that more affluent users are more valuable than less affluent ones? No, I don't know that, but that is my hypothesis, and I'd like to see some evidence pointing one way or the other (actual non-anecdotal evidence, and not just Myspace makes more than Facebook, since they run two very different ad systems and since we all know that correlation only goes so far).

[ig1]

The fact that linkedin has the highest CPM rate of any of the major networks would seem to suggest otherwise.