This grabbed my attention the other day, from this article on the New York Times Dealbook site (via Ana Andjelic)
“Facebook counts as “active” users who go to its Web site or its mobile site. But it also counts an entire other category of people who don’t click on facebook.com as “active users.” According to the company, a user is considered active if he or she “took an action to share content or activity with his or her Facebook friends or connections via a third-party Web site that is integrated with Facebook.”
In other words, every time you press the “Like” button on NFL.com, for example, you’re an “active user” of Facebook. Perhaps you share a Twitter message on your Facebook account? That would make you an active Facebook user, too. Have you ever shared music on Spotify with a friend? You’re an active Facebook user. If you’ve logged into Huffington Post using your Facebook account and left a comment on the site — and your comment was automatically shared on Facebook — you, too, are an “active user” even though you’ve never actually spent any time on facebook.com.”
Which made me wonder if it’s an unintentional Ponzi scheme?
An Attention Ponzi.
A traditional Ponzi scheme is one that “pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation“.
If every investor asks for their money back, there’s not nearly enough in the pot to cover it, and the scheme is exposed, and collapses.
Now, if Facebook really does calculate “active daily users” as suggested in the NYT article above, it’s an attention Ponzi.
The currency is attention. Facebook shows ‘investors’ that they have a large pot of attention. But that includes attention they themselves contributed, or it’s the attention provided by past ‘investors’.
By showing companies the tremendous “active daily users” figures, they fan the flames of interest – ‘they have cornered the market in attention’, thinks the company, ‘so we’ve got to be on there, in amongst it, getting some of it’.
They do this through advertising, or through social projects of their own.
If you are running social projects on Facebook, it’s common practice to put a like button everywhere on your own site, linked to your own Facebook page.
So people are logged in to Facebook when they are on your site, but they then count as being “active daily users” if they send an action back to Facebook.
The ‘attention pot’ gets bigger, the next company are attracted in the same way, and you are convinced that it’s becoming a more important site, because the “active daily users” figures keep going up and up.
Now, by and large every tech firm is guilty of manipulating their figures to look better. It’s how the market works, it seems.
What matters specifically in the case of Facebook is what proportion of “active daily users” actually visit Facebook, and can be advertised to, or are in ‘circulation’ enough on the site to be useful to companies undertaking social projects there.
It matters for investors in the forthcoming IPO, as they should know how Facebook plans to make money from the users, and it matters for companies using Facebook, as it would give them a sense of how important Facebook really is for a given audience they’re looking to connect with.
It’s certainly an area that will continue to get a lot of attention. Wherever it’s counted.