There has been so much talk lately about Yahoo looking to acquire Facebook that I can't let this pass by without a comment. There are so many posts, but the ones I've been following religiously are the posts by MarketWatch's Bambi Francisco. Bambi has a great video called Why Yahoo Needs Facebook and in case you don't want to watch it, here are the major points she lists for Yahoo buying Facebook:
- Back in July Yahoo pulled an offer for around $1 Billion for Facebook
- I believe she said, Facebook should generate $60 million in revenue this year, my guess is mostly from the MSN search agreement they have for $200 million over 3 years
- Bambi says they are the fastest growing site, the #3 social network, and tied with Amazon for the #1 site based on pageviews (not sure what her source is for the last statement - this August comScore report shows Facebook as 7. Bambi, if you read this please clarify)
- Yahoo is in trouble with warnings on their sales revenue and they have half the searches of Google
And, in my opinion, Facebook in its purest form, fills two important needs for Yahoo: 1) College demographics 2) Provides a real social networking platform. Plus, MSN has already placed a $200 million value on the search revenue over 3 years so Yahoo buying that for around 5x revenue makes some sense. Finally, as I've written before, the game plan Yahoo should be following is not capturing of eyeballs but building out content, keeping people longer on their network instead of letting them wander around. So based on all of this it makes a lot of sense to me (BTW - the same comScore report shows Facebook as the #2 site for average # pageviews per user).
To be perfectly blunt, I still have some reservations. No, I'm not disagreeing with Bambi on this at all or myself for that matter, because I think it is going to happen for the reasons above. My biggest reservations are the audience now and where it will be going.
Right now, if Yahoo buys Facebook it is buying its audience in its almost purest form - a social network for high school and college students. Yes, I know they opened it up, but when I browse through Facebook all I really see in my region 
are high school and college students. When you look at the graph based on counts in my region, you see the drop off. What happens when these people "grow" up? Will they still use Facebook? Will non-students really join this social network in mass or will they still congregate over at MySpace? I'd guess MySpace unless Facebook's interface radically changes and then the game becomes, can Yahoo keep Facebook relevant and replace outgoing seniors with incoming students when they hit 18?
Speaking of the platform, the search criteria they use is really 
geared towards dating and meeting college students. Again, not a shot against Facebook, but if I was still in college, I can definitely see the ease of use of searching for 18-22 year old women, seeking men for just random play. As Facebook says in their About Page: "Facebook is a social utility that helps people better understand the world around them. Facebook develops technologies that facilitate the spread of information through social networks allowing people to share information online the same way they do in the real world." However, I don't see how that is being accomplished with what's available now. MySpace is better equipped to deliver on that promise (I can't believe I wrote something nice about MySpace).
As social networks go, I always believed that Facebook had a unique audience (students) and that's what separated them from the other social networks. If Yahoo is paying $1 billion for the search revenue over 3-5 years plus a bet that at worst they have the current user base profile and at best something more, than it makes sense. However, the downside is that Facebook's base gets watered down, new 18 year olds stop thinking it is cool, and then they go elsewhere leaving Yahoo $1 billion poorer with no social networking platform. I'd vote no to the deal, unless Yahoo has concrete plans for upgrades that keeps that base happy over the next 3-5 years. I'm sure people will be lining up to be Chief Facebook Yahoo.
PardonMyFrench,
Eric
--------------------UPDATE THIS MORNING---------------------------
Courtesy of AdRants there are already petitions by Facebook students to protest opening up the user base to non-college students.
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