Considering the recent flame-out of what used to be a web 2.0 darling, Pownce, and the current weakened state of the economy, it’s possible to believe that other social networking and social computing sites may soon run out of funding and sources of revenue.

Peter Schwartz of the Huffington Post thinks the end is nigh for Facebook:

Web 2.0 will die. The universal social networks that are its public face cannot survive because they cannot propagate a sustainable user base willing to pay for its services. Remember America Online? Netscape killed it (and so AOL killed Netscape). Facebook is nothing more than a new version of America Online, with lots of calories but not much nutrition.

Sure, there’s at least anecdotal evidence that Facebook is looking to start capitalizing on its traffic through advertising, and that it’s becoming expensive for them to run their service without stronger revenue streams.  But I doubt they’re out of ideas just yet.  One simple idea is: charge for access for developers to use applications on Facebook.  Or even potentially charge for people to leverage Facebook Connect. 

Charging for monthly or annual access to the site would likely ultimately drive the user base away, and end up being a surefire way to kill all possible revenue streams.  Charging for developers to use the site as a platform to launch their applications wouldn’t likely drive the developers away, especially if developers are making money through advertising, or reselling "premium" services to customers (a la Slide and others).

And long before Facebook goes completely kaput, Google, Microsoft or even potentially Amazon.com would swoop in to purchase them, rather than let the site go.

The comparison to AOL is weak.  At its peak, AOL had somewhere around 27 million subscribers in 2002.  Facebook has over 120 million users. And Netscape had absolutely nothing to do with killing AOL — AOL killed itself by charging ludicrous amounts ($27/month) for slow dial-up speed while the rest of the country was moving on to broadband, or lower cost dial-up alternatives that connected users to an ever-expanding world wide web.

AOL was a portal primarily aimed at providing access to an online community, and later allowed its users to access the internet.  There was never a concept of allowing users to build a profile, connect with other users, or broadcast their activities to others.  If there had been, AOL would’ve never became a dinosaur and died off the way it has.

There’s no question that Facebook must avoid the fate of AOL and other tech companies like SGI.  But they’re already proving to be a different breed of tech company by being ahead of the curve with technological innovations.  Rather than wait for people to demand data portability, and allowing other developers to leverage the social graph in Facebook, they’re already pushing out services like Facebook Connect.

AOL was about two things: overpriced access to media and marketing hype.  They appealed to people that were still learning about the world wide web and what it had to offer.  Facebook is a whole new ball game, and they’re just getting started.

Filed under: Consumer Web, Social Computing