While rumors have loomed in the press for a while now, investment banks such as Morgan Stanley are moving in and the Wall Street Journal is saying that a Facebook IPO could come as soon as next Wednesday. Just last summer the social network Linked In had its IPO with shares selling for $122.70. Today, just six months later, the LKDN ticker hovers around 70 bucks. At first glance these IPO's resemble the pre-google dot coms. At its peak in 2000, Yahoo was selling for over 100 per share. Only two years later, it was under five bucks.
The dot com bubble grew and burst under one assumption – advertising generates revenue. Somewhere inside the Facebook headquarters there is a document which contains this same assumption. Users will have a chance to see what “friends” have posted and in exchange they will consider the purchase of new shoes, gadgets or whatever else the bots determine. However, in just this past year, Facebook has changed its status from “just another dot com / social network” to “a new paradigm in communication technology.”
On January 18th the world participated in an Internet blackout in protest against the Stop Online Piracy Act. The proposed SOPA/PIPA bills essentially obligated the attorney general to shut down any site that was accused of hijacking intellectual property - not after a trial, but upon receiving the subpoena. Time Warner and Universal were behind the bill claiming loss of revenues from pirated music and movies. Millions of people receive their daily news on Facebook and SOPA was a top headline. On January 18th the bills had 80 supporters and 31 opponents in Congress. On January 19 SOPA had 65 supporters and 101 opponents.
The power of Facebook has become increasingly evident since the ousting of Mubarak last year. The Egyptian resistance to the dictator was in large part organized by a Facebook page. El Shaheed was the brain child of Wael Ghonim who just released his book Revolution 2.0. Shortly after the Arab Spring, Wall Street Protests gave rise to the Occupy movement with encampments in every major US city, each with it's own Facebook page.
The IPO will inevitably create a frenzy, but based on what assumption? Advertising revenue will only go to far as the NoScript and Flashblock Firefox plug-ins will allow. If the company followed the Steve Jobs model, they might make a proprietary box for viewing Facebook and sell that as well. But this IPO may not only be about making money in big media; it is about power and control. While Time Warner and Universal are busy trying to redirect the Internet media pipeline into their occupied territory with legislation, Morgan Stanley and Goldman are going to do it with an IPO.
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