Facebook -- A Bad Investment

One of the many benefits I have teaching at USC is to pick up on trends among the next generation even as they begin to coalesce. I mentoned recently the decline in stature of the student social network Facebook. As hot as it was with college students, it's cooling off now. So much so that founder Mark Zuckerberg (22) who dropped out of school to work it full time may regret not taking an offer in excess of the $1 billion range. Zuckerberg reportedly wanted $2 billion. (Consult Mark Cuban about when to sell). Viacom and Yahoo! were reportedly interested at the right price. A new BusinessWeek article reports "declining Facebook traffic numbers may have potential buyers waiting for a discount." Facebook has made many missteps lately. It is locked in a disagreement with rating services that measure web traffic and usage. It backed off of a unilateral attempt to expose users to automatic notification of friends every time, say, Megan broke up with Josh and so on. Zuckerberg kind of backed off and gave users an opt-in voice. Still, that stung with students at the start of the current semester. Then there was Facebooks' decision to open up the network to everyone even while preserving protected areas such as colleges and high schools. This Zuckerberg may yet have a future working for Viacom. That sounds like something Viacom would do. Facebook remains a powerful platform. In a way college students are locked into it -- hooked, invested with their pictures, groups and friends, but that doesn't mean they like it as much as they did last year and it definitely doesn't mean that it is still as cool. MySpace never really made it to cool. Students had preferred Facebook. Can Facebook be MySpace? Can MySpace be Fox and News Corp. My guess is that as popular as social networking is, it could be a bad investment for traditional media companies unless they go to school on their target audience.