I just heard a report on the coming IPO of Facebook, possibly at a value of $100 billion. What could justify such an enormous sum assigned to a social networking site? It gives a price to earnings ratio of 100 or more. That is, investors, if they give it that value, are betting that its profits will double every year for many years, so said the financial analysts.
Why would they assume this? Because Facebook is pitching itself as the ultimate of advertising pitchmen, with a new system that integrates the members of its network, and all the information it holds about them, to create ads based on links between people. That is, I buy a toaster, FB knows who I know, ads appear at those nodes for toasters and whatnot that I and they like. We all become elements in the grand scheme of managed buying, selling, consumption. Am I wrong to find this a bit dispiriting?
Remember the days when the Internet was new, and people were dreaming of how it would create a completely different sort of social network? It has! And it’s all based upon sales!