[LINK] HBR: 'Facebook's Culture Problem May Be Fatal'

Roger Clarke Roger.Clarke at xamax.com.au
Wed May 26 22:40:07 AEST 2010

Facebook's Culture Problem May Be Fatal
Bruce Nussbaum
The Conversation Blog
Harvard Business Review
4:28 PM Monday May 24, 2010

Facebook's imbroglio over privacy reveals what may be a fatal 
business model. I know because my students at Parsons The New School 
For Design tell me so. They live on Facebook and they are furious at 
it. This was the technology platform they were born into, built their 
friendships around, and expected to be with them as they grew up, got 
jobs, and had families. They just assumed Facebook would evolve as 
their lives shifted from adolescent to adult and their needs changed. 
Facebook's failure to recognize this culture change deeply threatens 
its future profits. At the moment, it has an audience that is at war 
with its advertisers. Not good.

Here's why. Facebook is wildly successful because its founder matched 
new social media technology to a deep Western cultural longing — the 
adolescent desire for connection to other adolescents in their own 
private space. There they can be free to design their personal 
identities without adult supervision. Think digital tree house. 
Generation Y accepted Facebook as a free gift and proceeded to 
connect, express, and visualize the embarrassing aspects of their 
young lives.

Then Gen Y grew up and their culture and needs changed. My senior 
students started looking for jobs and watched, horrified, as 
corporations went on their Facebook pages to check them out. What was 
once a private, gated community of trusted friends became an 
increasingly open, public commons of curious strangers. The few, 
original, loose tools of network control on Facebook no longer proved 
sufficient. The Gen Yers wanted better, more precise privacy controls 
that allowed them to secure their existing private social lives and 
separate them from their new public working lives.

Facebook's business model, however, demands the opposite. It is 
trying to transform the private into a public arena it can offer 
advertisers. In doing this, the company is breaking three cardinal 
cultural norms:

1. It is taking back a free gift. In order to build profits, Facebook 
has been commercializing and monetizing friendship networks. What 
Facebook gave to Millenials, it is now trying to take away. 
Millennials are resisting the invasion to their privacy.

2. Facebook is ignoring the aging of the Millennials and the 
subsequent change in their culture. Older Gen Yers want less 
sociability and more privacy as actors outside their trusted cohort 
enter the Facebook space in search of information and connection. 
These older Millennials want more privacy tools for control of their 
information and networks.

3. Facebook is behaving as though it owned not only its proprietary 
technology platform but the friendship networks created on it. It 
doesn't. Millennials believe that ownership of their networks of 
friends belongs to them, not Facebook, and resist their 

Facebook, under intense pressure, is belatedly agreeing to streamline 
and strengthen its privacy tools. That will lower the anger of its 
audience but increase the anxiety of its advertisers. The brand value 
of Facebook has already taken a hit and competing social media 
platforms that promise privacy are beginning to appear.

What lessons can we draw from the Facebook flameup? Lifecycle changes 
can trump generational change and cultural values perceived as 
crucial at the age of 13 can be very different at 20. A business 
founded on the values of a generation, such as Facebook, has to keep 
up with, and respect, evolving lives and needs.

Ownership in the social media world of networks is different from 
selling products and services in the traditional marketplace. 
Understanding the underlying cultural context of "free," "gift," and 
"creation" is important to businesses, including and perhaps 
especially high tech companies. It is not impossible to monetize that 
which is free. Apple did that with 99 cent songs on iTunes. But it is 

Giving economic value to social networks is the new holy grail in 
advertising and the media. An army of economists and mathematicians 
are at work on this task. To date, most of the work has focused on 
metrics — how many friends, how many linkages, how much influence. 
Facebook's problems with privacy highlight the need to understand 
culture as well.

Roger Clarke                                 http://www.rogerclarke.com/
Xamax Consultancy Pty Ltd      78 Sidaway St, Chapman ACT 2611 AUSTRALIA
                    Tel: +61 2 6288 1472, and 6288 6916
mailto:Roger.Clarke at xamax.com.au                http://www.xamax.com.au/

Visiting Professor in the Cyberspace Law & Policy Centre      Uni of NSW
Visiting Professor in Computer Science    Australian National University

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