martinibuster - 9:22 am on Oct 7, 2011 (gmt 0)

But the fact that FB had more traffic enabled them to build a business model out of it.

It's not the traffic that enabled FB to monetize. The key was the reasons people went to FaceBook. FB is a community organized around topics and relationships, both business and personal. LinkedIn only has a single topic, business back-scratching. MySpace only had one money-related topic, music. And that's in a decade when teens have grown up consuming music off torrents rather than paying for it.

Take a closer look at MySpace. The traffic to that site was from school age kids that didn't have money to buy anything. Google made the mistake of following traffic by guaranteeing earnings to MySpace. Google lost money and at the first opportunity to bail they did. Then Murdoch sold MySpace for less than what he paid for it.

Traffic is great, but the reasons people visit are what determine if a site is profitable or not.

But even Facebook feels like an exception to me because it's a rare and extraordinary example. I believe Facebook has a shelf life. The direction it is moving toward feels like AOL 1998. In 1998 who would have guessed that in 2011 AOL and Netscape would be as diminished as they are today?