Facebook's imbroglio over privacy reveals what may be a fatal business model. Some people 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. They 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. It is trying to transform the private into a public arena it can offer advertisers. In doing this, the company is breaking three cardinal cultural norms:

1. It is taking back a free gift. In order to build profits, Facebook has been commercializing and monetizing friendship networks. What Facebook gave to Millenials, it is now trying to take away. Millennials are resisting the invasion to their privacy.

2. Facebook is ignoring the aging of the Millennials and the subsequent change in their culture. Older Gen Yers want less sociability and more privacy as actors outside their trusted cohort enter the Facebook space in search of information and connection. These older Millennials want more privacy tools for control of their information and networks.

3. Facebook is behaving as though it owned not only its proprietary technology platform but the friendship networks created on it. It doesn't. Millennials believe that ownership of their networks of friends belongs to them, not Facebook, and resist their commercialization.

Facebook, under intense pressure, is belatedly agreeing to streamline and strengthen its privacy tools. That will lower the anger of its audience but increase the anxiety of its advertisers. The brand value of Facebook has already taken a hit and competing social media platforms that promise privacy are beginning to appear.

What lessons can we draw from the Facebook flame-up? Lifecycle changes can trump generational change and cultural values perceived as crucial at the age of 13 can be very different at 20. A business founded on the values of a generation, such as Facebook, has to keep up with, and respect, evolving lives and needs.

Ownership in the social media world of networks is different from selling products and services in the traditional marketplace. Understanding the underlying cultural context of "free," "gift," and "creation" is important to businesses, including and perhaps especially high tech companies. It is not impossible to monetize that which is free. Apple did that with 99 cent songs on iTunes. But it is difficult.

Giving economic value to social networks is the new holy grail in advertising and the media. An army of economists and mathematicians are at work on this task. To date, most of the work has focused on metrics — how many friends, how many linkages, how much influence. Facebook's problems with privacy highlight the need to understand culture as well.