3 Changes that will make Facebook money (and then kill it).

Kerpow!Since Facebook’s disaster of an IPO (and steadily tumbling stock price since), CEO Mark Zuckerberg has had one directive, and one directive only: get money. He’s delivered on that directive, rolling out three new lines of revenue which will both accomplish the goal of earnings, and guarantee Facebook’s demise as the King of Social Media. In no particular order:

Pay to Play

Hey, remember when Facebook had “Always free and always will be” on their home page in response to chain mails warning that they would begin charging to use the site? In October, Facebook launched their new promotional service using a time honored tactic of companies that hate their users: they simultaneously began stifling the reach of posts you make on Facebook, and offering a service to undo that stifling. Hey, create the problem, sell the solution, right?

The flaw in this is that Facebook (and many of its users) seem to have forgotten one simple fact: There are other social networks with just as much, if not more, reach. Facebook has become so ubiquitous that people forget when MySpace was king, and seem incapable of recognizing that social media platforms generally have an arc of effectiveness, with a half life. Zuck and crew feel like they can charge for something that was formerly a core function of the platform, and that they won’t lose any market share for it. With former “Ghost Town” Google+ growing 66% in the last nine months, there are obvious signs that Facebook has passed the peak of their arc, and social users are looking for a better platform. By crippling the core function of the site for the average user unless they pay for it, they’re accelerating their decline by restricting the one thing social networks depend on for life: engagement.

Product Driven “Experience”

Have you seen the invite yet to “enhance your timeline” with FordSocial’s “TimeShare” app? If not, you will. Ford is one of the top brands who has been an early adopter of new Facebook marketing tools, and this latest app will “fancy up your timeline” by adding seemingly organic ad content in between your posts. You can expect other Facebook top brand advertisers Target, Coke, and GM to follow suit quickly. Remember when MySpace was a nightmare because everyone had to add giant sparkling unicorn backgrounds and comic sans font? Imagine when every Facebook Timeline is simply a branded ad, with choice of sponsor dictated by the users. Sound appealing? Of course not.

The world’s largest unpaid stock photography site

Facebook’s acquisition of Instagram caused quite a stir, with pundits everywhere guessing how they would use it. The answer is now clear: they’re going to sell your photos, and they’re not going to pay you for it. While Facebook had caused a stir in the past by allowing some usage of your photos in connection with sponsored advertising, there’s nothing ambiguous about the updated verbiage of the Instagram TOS:

“you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.”

Additionally, the TOS goes on to disclaim any liability for oops! accidentally allowing photos you have marked ‘private’ to be used the same way. Given the deeper integration that Instagram is now getting, it’s reasonable to consider this a test case for Facebook’s entire image library.

Yes, companies need to make revenue, and online services are not free to operate. However, when revenue decisions are so myopic that they A: sincerely negatively impact the user, and B: rely on the presupposition the user will continue to use the service no matter what, it’s a recipe for disaster. For Facebook, the writing has been on the wall for a while. With these three latest changes, people are actually starting to read it.

Update: Looks like Facebook decided to up the ante and make it four.

Update 2: Instagram retracts that part of the TOS.