the distributor model works

a few months back, i was griping to a friend how the entities that make the most money are usually transactional based, the middlemen.

this morning (screwing the gym at 7...), a few things came together:

- google makes money on transactions. Adwords <> Adsense. When interviewers ask Eric S. whether Google is 1. a content company, or 2. a media company, he always has the same answer: "we are a distribution company." Google, at the core, is about transactions, and they are the purveyors of fine goods and ads transactions. But based on my observations of companies that make $, few of them start off as distributors. They start as content companies.

- facebook was and still is a content company. as it matures, it will make $ by being a distributor, and they will do it by having others do the work for them. this is a brilliant and "lazy" idea, so typically brilliant. they will take a share in revenue of third party apps (just signed a deal with videoegg to make 3rd party monetization easier).

so why does 1) Zuck explain that FB is not just a social-networking site but a "utility"*, and 2) emphasize the "social graph"** so much, and correct columnists when they claim something else?

Because 1) utility is a distributor is a transactional model, and 2) "social graph" is the secret sauce. it is the equivalent of Google's eigenvector.

*Quoted from this newsweek article: Speaking with NEWSWEEK between bites of a tofu snack, he is much more interested in explaining why Facebook is (1) not a social-networking site but a "utility," a tool to facilitate the information flow between users and their compatriots, family members and professional connections; (2) not just for college students, and (3) a world-changing idea of unlimited potential. Every so often he drifts back to No. 2 again, just for good measure. But the nub of his vision revolves around a concept he calls the "social graph.

**From the Economist: The fancy mathematical name he has for this map is a “social graph”, a model of nodes and links in which nodes are people and connections are friendships. Once this social graph, or map, is in place, it becomes a potent mechanism for spreading information. For instance, he says, “we automatically know who should have a new photo album,” because as soon as one person uploads it to the site, all her friends see it, and the friends of friends might notice too.