We've become trained to believe that all of our online services should be free - but every so often a reminder comes along that there are problems with that idea. Facebook is trying to raise more capital, ahead of an IPO they hope to have eventually. Mike Arrington reports that they are looking at a new round at a much lower valuation than the last one:

Will Facebook take the expensive new money from General Atlantic? They may be forced to. They're burning as much as $20 million a month in cash and are dealing with ridiculous growth. They likely have less than two years runway left, and possibly significantly less if they continue to add new users by the tens of millions that are currently flocking there every month.

I thought about that in terms of how people use Facebook. There are new photos and videos being uploaded every day, all day. That costs both bandwidth and storage. Right now, they rely on advertising as the sole mode of payment. As long time readers here know, I'm skeptical of the future for pure ad plays anyway, and this one seems to rely on getting TV network style ad buys. I don't know that anyone expects to see that happening for any website.

It costs actual money to run a service like Facebook. At some point, the people behind it (and similar services) will have to find a way to charge for it.

Technorati Tags: advertising, revenue model