Melber: ‘You are the product’

>>> well our facebook friend is here with a status update.

>> thanks, dylan. as you all know, facebook has now filed papers to go public. wall street analysts believe this company could be worth $100 billion and lots of early executives are cashing in. but let's think for a minute. why exactly is facebook worth so much money? its current revenues of a few billion dollars don't support this valuation. but facebook owns something that can make a lot more money down the road. it owns us. i don't mean that as a metaphor. i mean the company's terms of use policy, the contract you have to click on when you sign up, gives the company legal rights to the photos, information, and data of its users. and because facebook is so popular and easy to use it is basically crowd sourced the largest, most valuable data base known to man. the cia and old school surveillance can't compete with a social network that makes users competitive about sharing. for the most part the users don't seem to mind. there have been a few back lashes which you might remember like when facebook basically took too much personal information and monetized it, the creepy social ads where they said oh, you went to this restaurant and tried to turn it into an advertisement. people didn't like that. for the most part i think it looks like people have been ignoring or accepting the site's tradeoffs. there is an old saying on the internet that there are no free services online. when the product is free, you're not the customer. you are the product. now facebook may be a product that's worth a hundred billion dollars and i think it says a lot about our acquiescence that facebook users don't even expect a cut. dylan?

>> there is an interesting dynamic that is some of the entrepreneurs down in austin were sharing with me which is a new business model they're calling the lp 3 . which, and i haven't looked into it. i would invite our audience to do the same thing. i am looking into it. i invite you to do so. it basically says the community has value. we have proven the community has value. but the capital markets are still exploiting the community which this is an example of. do you think people acknowledge communities have a value proposition ?

>> i think that is the big question whether an lp 3 or a different kind of contract something that says you are involved, you're creating the contract, your photos are for sale. you should have a role in it.

>> that is the emerging debate as the validity of the community value continues to be manifest. first through the huffington post sale and now through the facebook ipo. interesting times .