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Facebook, Twitter turning media companies: drawing blood from stone?

September 4, 2012

Mickey Alam Khan is editor in chief of Luxury Daily


The flaw in business models for new-media and technology companies goes back to the early days of the Internet. Sooner or later, the 1990s’ revenue-will-follow-eyeballs model will meet its comeuppance, if Facebook’s current stock-price malaise is any indication.

Extreme leniency from Wall Street, venture capitalists and angel investors in the past two decades has enabled flights of fancy and the launch of ventures that would never have lasted a year in the pre-Internet era. Now, the chickens are coming home to roost – and Wall Street, Silicon Valley types and gullible investors are paying the price for missing the point of any long-sustaining business: make a dollar more than you spend in meeting a need that requires fulfilling uniquely and repeatedly.

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