Selling You on Facebook (Wall Street Journal)

Facebook provides a free service that is, in effect, paid for by users providing information about their lives – location, birthday, interests, activities, etc. Facebook then takes this information and uses it to attract advertisers and other business opportunities. Dubbed the “app economy,” which includes smartphone app makers as well as Facebook, it is estimated to have generated $20 million in revenue in 2011 by selling downloads, advertising, “virtual goods” and other products, according to Market research firm Rubinson Partners. Apps that collect user information can go viral or fall into obscurity on a whim, so developers seek to cash in by gathering as much user information as possible and hope to find a way to make money from it.