A recent article in the Economist, Social Media: Is Facebook really worth $50 Billion, commented on the idea of Facebook being a natural monopoly. While Myspace used to be the most popular social network on the internet, it has quickly been taken over by Facebook. With investors funding a total of $50 billion dollars into the development of Facebook itself, other social networks aren't as lucky. Twitter, for example, has only a 'mere fraction of Facebook's [...] which are said to have hit $2 billion last year' (paragraph 5). In spite of Facebook's popularity, it is no surprise that investors are 'falling over on another to get their hands on Facebook's shares' (paragraph 8).
Throughout chapter 3 in the Working with Economics textbook, we learn a lot about natural monopolies and how they work. First of all, a natural monopoly is defined in economics as an industry where the fixed cost of the capital goods is so high, it's not even profitable for a second firm to enter and compete. So basically, no other companies can barge into that industry selling the same product or service. The article also does a good job at explaining why Facebook should be considered a natural monopoly in the social networking industry. With Facebook currently being the number one go-to social network in cyberspace, all the other similiar websites should start thinking about shutting down as there really are no more reasons for them to stay.
As a frequent Facebook user myself, i know what the benefits of using that website are. Additionally, with all the extra money being put into the website by investors, it's no surprise that Facebook will get even better in the near future. Perhaps people don't want to let go too quickly of all the other social network websites, but sooner or later, all people will crave for is Facebook. And rest assured, Facebook knows.
Link: http://www.economist.com/node/17853336?story_id=17853336
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