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The Digital Skeptic: Facebook Isn't Much More Exciting Than Email

Keep in mind that the market rollout of Facebook and email are far too similar to be accidental. Facebook and email both hit a billion users roughly a half-decade after initial commercial deployment. And Facebook is on track to follow email in terms of global penetration. The Radicati Group, the Palo Alto, Calif.-based research group that studies mass messaging, including email, estimates that there will be 4.3 billion email users by the end of 2016.

"This represents an average annual growth rate of 6% over the next four years," said the company.

Fair enough. That's not exactly what Facebook is doing, but it's not far off.

Facebook doesn't make any money either
The chilling part for investors, of course, is that email offers as grim a prediction as possible for the future of Facebook.

First off, email -- like Facebook -- still struggles to find customers who are willing to pay for it. The Radicati Group report confirms that the vast majority of email accounts (somewhere around 75%) are given away for nothing. And like Facebook, the money that spins out of email is not exactly the stuff of fatted calves.

This year Google (GOOG - Get Report) boasted that its Gmail product reached 425 million users worldwide, with 5 million businesses using its professional Google Apps package. Sure, that sounds great. But Boston-based analysis shop Trefis estimates that even though revenue will grow, just 1.1% of the share price of Google stock comes from the value of Gmail.

And let's not forget that email -- just like Facebook -- faces brutal security issues that drive up costs for customers. According to the Messaging Anti-Abuse Working Group, the San Francisco-based trade group that monitors spam and malware in email, the overall amount of so-called abusive email was holding steady at between 88% and 90% of total traffic. This costs everybody in this sector loads. Sterling Heights, Mich.-based CMS created a handy online calculator thatr estimates that a business with 10 employees loses about 20 days of work a year to email spam.

Web 1.0 after all
Honestly, if you turn off the hype fog machine for a sec and compare any modern Web-based email service from Gmail to AOL (AOL) Mail to Yahoo! (YHOO) or even Hotmail and enable all the latest functions for list management, rich media sharing and Web-based list and group management, really, how different is that experience from Facebook?

The answer is: not much.

Ignore the investor spam: Facebook is no upgrade from Web 1.0. It is Web 1.0. It is time to value it as such.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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