Posted by Tom Foremski - January 31, 2008
In a conference call with financial analysts following its Q4 financial report, Google said it is having problems monetizing social network sites.
... the company had trouble making money off ads on social networking sites, including News Corp.'s MySpace, Google executives said. Under the MySpace deal, Google is committed to paying revenue even if advertisers don't click on ads.
"We have found that social networking inventory is not monetizing as well as expected," said Chief Financial Officer George Reyes.
This increases the challenge for Facebook as it searches for a way to monetize its service without alienating its users. Microsoft's recent investment in Facebook values it at $15bn, raised the pressure on management to justify that valuation.
This is a challenging situation for any CEO of a large media business, especially a 23 year old with no prior experience. Figuring out a sustainable business model that meets Facebook's $15bn-plus valuation is a top priority for Facebook's investors. They will likely seek to bring in a new CEO with more experience in the same way Eric Schmidt was brought in to Google.
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