Facebook – Business as a database?

Unless you live in Los Angeles you probably won't have seen Fred Vogelstein's article "The Facebook revolution" in today's Los Angeles Times.

Fred is a great journalist and always thinks outside the box – the premise of his article is that another way to look at Facebook is as a huge database of interactions between friends, neighbors and colleagues – a digital version of word of mouth information distribution.

Facebook could find some interesting ways of monetizing that database – not only does it have a detailed set of relationship data, it also has a rich transaction stream – every time you add a friend, change your profile, interact with an application… Facebook generates a transaction. Mining both the database and the log of transactions could provide very valuable data.

I've become very interested in business opportunities that monetize information mining – I think this is another way of building revenue for Internet facing companies that offer a substantially free service and build a large user base. Information mining provides an adjunct (or alternative!) to revenue from advertising that could be very useful in getting to profitability.