It’s finally lights out for the Facebook Beacon case, as the U.S. Supreme Court declined to hear an appeal of the disputed settlement of the class-action suit against the social network, The Wall Street Journal reported.
The $9.5 million settlement in a class-action lawsuit over Facebook’s now-defunct Beacon program, initially announced nearly three years ago (March 2010), will stand despite objections from six judges on the Ninth U.S. Circuit Court of Appeals.
Newton Lee’s book, Facebook Nation: Total Information Awareness, is a great book for social media experts, offering a comprehensive look at Facebook in the context of social media, and covering privacy well.
There’s been a long-standing claim against every social network: You are not their consumer, you are their product. The topic makes for great link bait — it’s an easily understandable, headline-grabbing claim that companies like Facebook are going to strip-mine the places where you love to spend time in the pursuit of advertising dollars.
In yet another example of the blistering speed of the U.S. legal system, the $9.5 million settlement in a class-action lawsuit over Facebook’s now-defunct Beacon program, initially announced in March 2010, was finally approved by the Ninth U.S. Circuit Court of Appeals, and that decision wasn’t even unanimous.
The privacy settlement between Facebook and the Federal Trade Commission, announced in late November of last year, is now finalized, as the period of public comment has expired.
Over the past few days there has been a lot of buzz about Facebook Beacon. I wrote last week that Beacon was not actually relaunched but was instead never shut down. In the past day though, Facebook has shut down promotions of beacon and Techcrunch confirmed that Facebook Beacon was on the way out the door. Facebook Connect is the new system.
Beacon Was a Failed System
When Beacon launched, Facebook learned a lot of lessons including how not to launch a new advertising product. One of the largest problems initially was that the service was opt-out instead of opt-in. Immediately there was a substantial amount of backlash within the blogosphere about the new offering. Within days, Facebook made the system opt-in and suddenly we heard very little about the new product.
Last week a few bloggers noticed that Beacon was not completely gone and it drove some to write about how Beacon was back. While it had never left, it appears that Facebook may actually be shutting down the product for good as Facebook Connect begins to roll-out.
How Will Facebook Profit From Connect?
Beacon was launched as an advertising program that websites could participate in via direct agreements with Facebook. While the price of those partnerships were never revealed, it was clear that Facebook intended Beacon to be another revenue generator. So as Facebook Beacon slowly disappears and becomes a small piece of Facebook’s history, Facebook Connect is beginning to roll-out.
As I wrote last week, Facebook Connect is essentially the same as Facebook Beacon. The only difference is that there is no unnoticeable pop-up in the lower corner of your browser notifying you of an action that’s about to be posted to Facebook. The system is opt-in and this time around there is a good chance that the service could become commonplace across the net.
So if Beacon was intended to be an advertising product and Facebook Connect is essentially the same service for any site on the web, how does Connect help advertisers? Facebook Connect makes it easy for advertisers to promote a user’s activities taking place anywhere on the web. Did they just look at your product on another site? Post about it to their news feed.
Did a user just read an article on your news site? Post about it to their news feed. Facebook Connect makes it easier for product and service providers to publish any activities of a user within that company’s domain. This is a powerful product but how will it make money for Facebook? While Facebook has stated nothing about pay for placement, the only thing I can think of is exactly that: pay for placement.
While it could be a conflict of interest (the same way that Google owning an SEO company would be a conflict of interest), paying to ensure news feed stories make it to the general news feed is not a far fetched idea. Just last week Fred Wilson posted about opening up the feeds to marketers. While Facebook already has paid news feed advertisements, this could be another type of them.
If Facebook decides to move forward with paid promotion of news feed items from Facebook Connect activity, I can guarantee you that a large number of bloggers will lash out about the conflict of interest. Facebook needs to be making your news feed better, not charging advertisers to make it more inefficient. There’s one other way that Facebook can generate revenue that I’ve spoken about previously.
Facebook could start extending the Facebook advertising network to other sites with the help of Facebook Connect. While Facebook advertising has experienced mixed results on Facebook, off the site, the advertisements could prove to be much more effective. A few sources I spoke with last year suggested that Facebook had been testing out such a service but has yet to officially roll anything out.
How do you think Facebook will generate revenue from Facebook Connect?
Facebook contacted me to let me know that Beacon was never actually an advertising service which is why they went and removed it from their “Business Services” page over the weekend. Also, we will see Facebook Connect rolled out across individual sites over the coming weeks and months and then later this fall Connect will be rolled out for everyone.