Given the situation other social networks on the web are facing, Facebook is in a good position financially. While it hasn’t managed to get acquired like its rival MySpace (despite some rumors about an $800m deal with Viacom), it’s been quite lucky in most aspects. For its initial funding, it received $500,000 from Peter Theil, co-founder of PayPal. A few months later, it was also able to get $13 million from Accel Partners, who are also investors in 15 other Web 2.0 startups, and $25 million from Greylock Partners, making their overall venture equal to approximately $40 million.
For users, Facebook’s core service is completely free and ad-supported. In fact, in August 2006 Facebook signed a three year deal with Microsoft to provide and sell ads on their site in return for a revenue split. The deal followed an announcement from Facebook’s direct competitor MySpace who signed a similar deal with Google. The youthful demographic that both the services attract is highly prized amongst advertisers and should return a good amount of revenue for both the services to stay alive - and profit. Another deal which made news in July was Facebook’s agreement with Apple to give away 10 million free iTunes samplers to Facebook users. A deal has also been signed to provide Facebook credit cards.
For users, Facebook’s core service is completely free and ad-supported. In fact, in August 2006 Facebook signed a three year deal with Microsoft to provide and sell ads on their site in return for a revenue split. The deal followed an announcement from Facebook’s direct competitor MySpace who signed a similar deal with Google. The youthful demographic that both the services attract is highly prized amongst advertisers and should return a good amount of revenue for both the services to stay alive - and profit. Another deal which made news in July was Facebook’s agreement with Apple to give away 10 million free iTunes samplers to Facebook users. A deal has also been signed to provide Facebook credit cards.
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