I’d pay for Facebook

With Facebook now preparing to launch its new Newsfeed format, friends often ask whether or not I’d buy stock in the company. Not at the moment, but one condition under which I’d consider it is if Facebook allowed me to pay for its services.

Mark Zuckerberg tells us Facebook is free, and “always will be.” That’s great, but I’d pay them $50 a year if they’d let me strip out all the ads for games, certain types of sponsored posts that only ever litter my feed, and put my timeline in true chronological order.

Right now Facebook earns about $5/user/year. When you have nearly a billion active users, that’s still a lot of money, but it’s a lot less than Zuckerberg and company could make if they finally started thinking about the service they provide as a business, and their users as customers. I am literally asking them to take my money and they’re telling me no.

Facebook initially faced the same problem large general interest newspapers do, in that you’ll find yourself less and less inclined to pay for them, since you have so many free substitutes available to you. But the network is much more established than LinkedIn (more professionally focused) and Google+ (too substantially similar, and too late to market), so it enjoys a near-monopoly in its space. And Facebook now brings you so much spam, and so many companies and other interests trying to game EdgeRank with sponsored content that it may now be thinkable for it to transition to a Freemium model.

Suppose 5 percent of Facebook’s active users — 50 million people — paid $50 a year for their service. That’d be another $2.5 billion a year in revenue for the company, and as much as 50 percent more than it’s earning now. Does the company really want to leave all that on the table?

As Mark Zuckerberg himself famously said when he filed Facebook’s S-1 to go public, “We don’t build services to make money; we make money to build better services.”

Fine, but people buy stocks to make money. I’m willing to give you some, and you’re saying no.

4 Responses to “I’d pay for Facebook”

  1. Damir March 8, 2013 at 10:04 pm #

    Nope. I find very little use in Facebook. I’d pay for Twitter in a heartbeat, though.

    • Josh Levy March 10, 2013 at 11:59 pm #

      Sure, but his point is correct. These companies should be offering the option to pay for better service, more functionality, increased reliability, etc. It would increase revenue, and build customer loyalty.

  2. David Shefner March 18, 2013 at 7:41 pm #

    Convincing even 1% would be challenging. More importantly, inventing a pay-for version of facebook would destroy their brand. Even if most users see no change in service, millions would leave the site and facebook’s ad and game revenues would plummet by way more than the extra fees.
    Facebook is very very successful but it doesn’t earn enough money to justify its stock’s price. Cockamamie ideas like this one won’t quadruple profits to a reasonable multiple. Sometimes a stock is just overvalued.

  3. David Donadio March 18, 2013 at 10:05 pm #

    No question about the stock, but do you really think it would destroy FB’s brand or its ad and game revenues to give people the option of paying? They’re so far ahead of Google+ in terms of active users and engagement, they’re essentially a monopolist, and they’re not capitalizing on it.

    They could even break the subs up into tiers, and charge advertisers extra for the privilege of reaching (presumably higher-earning) FB users who’d opted out of ads at intermediate price levels. Maybe $25 a year to get out of the most persistently annoying ads, $50 a year to get out of most ads, and $100 a year to get out of ads completely.

    We get the option of paying to customize our feeds, and they get more money. What’s not to like?

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