Media ghosts hover over Facebook’s I.P.O. with a valuation of $105 billion, raising old questions about how to turn the attention of millions into profit from advertisers.
The answers have never been clear, but for someone who spent decades in that search, the past suggests a rocky road to future profits for new bridegroom Mark Zuckerberg’s enterprise.
In 1997, when stock of the Internet’s first phenomenon was soaring, in a New York Times OpEd piece, “AOL’s Bottom Line,” I questioned how a dial-up service was eating up traditional journalism, eventually swallowing a chunk of it in what has been called the worst merger in media history.
I compared AOL then to mass magazines of my era which kept accruing ever higher circulations at cut rates while consumers needed them less and less in the hope that advertisers would provide revenue to save them.
The magazines died but AOL was bailed out, ironically, by a merger with Time Inc., the healthiest dead-tree dinosaur, which worked out so miserably that AOL had to be spun off before it sank the remains of Henry Luce’s empire.
That history does not bode well for Facebook, in the light of almost a century’s media experience with the American information industry, the only big business in which customers don’t pay for the product. What has value is a byproduct, their attention, which is then resold to advertisers.
MORE.