Everything you need to know in a nutshell. From Bruce Nussbaum, writing in the Harvard Business Review.

Facebook’s imbroglio over privacy reveals what may be a fatal business model. I know because my students at Parsons The New School For Design tell me so. They live on Facebook and they are furious at it. This was the technology platform they were born into, built their friendships around, and expected to be with them as they grew up, got jobs, and had families. They just assumed Facebook would evolve as their lives shifted from adolescent to adult and their needs changed. Facebook s failure to recognize this culture change deeply threatens its future profits. At the moment, it has an audience that is at war with its advertisers. Not good.

Here’s why. Facebook is wildly successful because its founder matched new social media technology to a deep Western cultural longing — the adolescent desire for connection to other adolescents in their own private space. There they can be free to design their personal identities without adult supervision. Think digital tree house. Generation Y accepted Facebook as a free gift and proceeded to connect, express, and visualize the embarrassing aspects of their young lives. Then Gen Y grew up and their culture and needs changed. My senior students started looking for jobs and watched, horrified, as corporations went on their Facebook pages to check them out. What was once a private, gated community of trusted friends became an increasingly OPEN, public commons of curious strangers. The few, original, loose tools of network control on Facebook no longer proved sufficient. The Gen Yers wanted better, more precise privacy controls that allowed them to secure their existing private social lives and separate them from their new public working lives.

Facebook’s business model, however, demands the opposite…

Worth reading in full.

If you want to understand why people are concerned about the erosion of privacy in Facebook, then have a look at Matt McKeon’s terrific animation of what’s being going on since 2005.

Revealing Timeline by the Electronic Frontier Foundation.

Viewed together, the successive policies tell a clear story. Facebook originally earned its core base of users by offering them simple and powerful controls over their personal information. As Facebook grew larger and became more important, it could have chosen to maintain or improve those controls. Instead, it’s slowly but surely helped itself — and its advertising and business partners — to more and more of its users’ information, while limiting the users’ options to control their own information.

danah boyd is one of the sanest and best-informed observers of social networking. This is a good (but too brief) Technology Review interview with her on the subject. Sample:

Danah Boyd: People started out with a sense that this is just for you and people in your college. Since then, it’s become just for you and all your friends. It slowly opened up and in the process people lost a lot of awareness of what was happening with their data. This is one of the things that frightens me. I started asking all of these nontechnological people about their Facebook privacy settings, and consistently found that their mental model of their privacy settings and what they saw in their data did not match.

TR: What’s been driving these changes for Facebook?

DB: When you think about Facebook, the market has very specific incentives: Encourage people to be public, increase ad revenue. All sorts of other things will happen from there. The technology makes it very easy to make people be as visible and searchable as possible. Technology is very, very aligned with the market.

TR: Some people dismiss concerns about this sort of situation by saying that privacy is dead.

DB: Facebook is saying, “Ah, the social norms have changed. We don’t have to pay attention to people’s privacy concerns, that’s just old fuddy-duddies.” Part of that is strategic. Law follows social norms.

TR: What do you think is actually happening to the social norms?

DB: I think the social norms have not changed. I think they’re being battered by the way the market forces are operating at this point. I think the market is pushing people in a direction that has huge consequences, especially for those who are marginalized.