How Internet Tech Company Getting Revenue?!

My wife used to ask me a simple question related to Facebook, “Facebook is free, nobody charged to use its service, and even my friend use it to sell something like clothes to other friends and for sure can increase their income. Facebook have pleasure office, pay their engineer a lot of money each month. How is it possible, a company building something free without charge but can be very rich?they must be very stupid, they should charge people to use their service. Do you think one day they will charge us to use Facebook?”.

Well, she is obviously not a tech person, so the best explanation I can give is telling her story if I have a restaurant and I would like to advertise my restaurant.

I told her that lot of people use Facebook around the world, including in Qatar. Access to internet in country such as Qatar is very easy, and almost all citizen in Qatar can afford to buy gadget such as android or apple, they can easily open Facebook account, and with LTE / 4G in Qatar from Ooredoo people can enjoy Facebook any time. Let say, people living in Qatar is 2 Million, and *only* 30% of them using Facebook which resulting 600 thousand. If, I want to advertise my new restaurant, there is a chance to reach those 600 thousand people living in Qatar through Facebook. Do not underestimate the power of Facebook application in a gadget such as handphone – I told my wife –  even you always read Facebook timeline before going to bed.

In any chance, the advertisement of my new restaurant can reach your phone any time. You may be interested to visit the restaurant, maybe not. Even if you’re not interested, maybe your close friend was interested to visit with her family and then put the status including photos when they are dining on my restaurant, giving review that the restaurant very nice one. Then the next weekend, you ask me to visit that restaurant.

In order to make advertisement of my new restaurant reach unknown people (compare to people who collect friends one by one to advertise their product through Facebook), I would pay amount of money. Let say to reach 5 thousand people in Qatar I will pay 10 usd, 50 thousand people paying 50 usd, etc. So, that’s one of method how Facebook get revenue. They have huge user base / subscriber who use their service for free, and they can do anything for targeting those people. They can charge people who willing to pay amount of money to help them targeting those people through advertisement, people who have their own business can get benefit from advertising on Facebook and Facebook can get money from them. There are million of business around the world, so you can imagine how much money Facebook collecting every month.

My wife understood the concept.

I then told her that is one of method to show how valuable a company such as Facebook. If she understand IT, I will tell her another interesting stuff company such as Facebook, Google, and Twitter do with their engineer. Unfortunately, she doesn’t interested to hear more as her question regarding Facebook already answered. She prepared to go sleep hehehe…

There are other interesting side from internet tech company, what make them more valuable. They don’t always do operation and maintenance of their infrastructure around the world, they don’t just develop new module to add more feature to their product such as Facebook website, they do other stuff as well, and that what make them very valuable company.

Its late already, I will continue other time 🙂

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