What everyone missed about the Facebook fiasco

There's been lots of chatter since The Consumerist pointed out Facebook changed its terms of service so that its license doesn't expire after users leave. Bloggers cried foul, thinking Facebook wanted to "own" their content forever even if they delete their Facebook accounts.

We told BusinessWeek yesterday that everyone is missing the point: It's not about Facebook wanting your content. Facebook wants to keep you in a prospect database forever.

It's simple, folks. Facebook, like Google and YouTube and MySpace and Twitter, is building an enormous data set of millions of consumers, their demographics, interests, and interpersonal connections. Facebook now has a list, if you will, of 175 million people, what they like, and who is just like them. This information is incredibly valuable to marketers.

Of course Facebook does not want to reduce that list. If 5% or 10% of Facebook users delete their accounts per year (as the social media site, like others before it, begins to crest and fade), Facebook would have to continuously update its prospect database. Since much of the value of that data lies in the connections between people -- which allow marketers to perform lookalike modeling, proven in studies by AT&T to quintuple response rates to advertising -- scrubbing the list of dead accounts would be a royal pain.

The real story here is Facebook is anticipating customer churn so has expanded its legal language as a preemptive strike to keep the data on your relationships, even after you leave. Perhaps Facebook's execs realize that all social media sites have a limited window of popularity, so it's best to lock in the customer database value while you're at the top.

So stop worrying, people. As we told BusinessWeek, Facebook doesn't want your baby photos. It wants you and the relationships you hold.

Photo: Marco Bellucci