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What if the model was flipped, so instead of advertisers paying Facebook to cover their operation costs, individual users covered their own operation costs, and
by williamcotton 11y ago
What if the model was flipped, so instead of advertisers paying Facebook to cover their operation costs, individual users covered their own operation costs, and perhaps the advertisers directly subsidized individual users at the time of publication? This would mean that people who wanted to pay could turn off advertising and just use Facebook as pay-as-they-go service.
I dunno what kind of accounting they're doing at Facebook, but with their current approach of having advertising indirectly subsidizing users, there is no price discovery mechanism. Right now there's no way to price how much a user is worth and how much they actually cost, which seems like a very strange way to run a business.
This type of accounting, where the content itself is given a cost and a value, would mean it we're finally treating what people publish as intellectual property instead of the "user being the product".
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Edit, to expand on perhaps the advertisers directly subsidized individual users at the time of publication:
Ah, I think you're assuming that I'm saying they should go to a completely paid-for-in-cash-by-users model... which I'm not!
I'm just saying that if they flipped the model, and covered the operations costs directly from users, that the books would make more sense. This would make the accounting significantly more complex, so I wasn't making an argument for simplicity, rather as much detail and accuracy as possible! This information can be later analyzed and acted upon in simple ways.
This doesn't mean that there can't be a free to use service on top of a model like this. It just means that advertisers are literally paying on behalf of users for hosting, distribution and other operating costs.
This would mean that there wouldn't be advertisements on the read-side, in the "stream", rather on the write-side, when publishing... like with sponsored posts... Like, I personally choose to make my post sponsored by the Buffalo Bills because I love giving my money to the Buffalo Bills and the NFL (which I really do).
Or maybe some low-rent ads make you watch a 20 second video before paying for you to upload 200 photos from your phone, but at least you don't have to associate yourself with them.
We're smart enough to create the kinds of incentive structures that have made intellectual property function in a market economy for hundreds of years, we just need to revisit some deep fundamentals about how we buy and sell information.
It'll work out better for everyone. Facebook could take a percentage of the business for having created the market that introduced the advertisers to the authors. The authors are now free to do business as they please, directly covering their own costs or choosing to have them subsidized. The advertisers can establish better relationships with the authors, essentially treating them like business partners.
- Retra 11y agoWhy would anybody offer a pay-to-avoid-advertising scheme unless they were paying significantly more than the advertisers? Furthermore, if people thought their content were valuable intellectual property, they wouldn't be posting it for free on some corporations website. So you're having to resolve a conflict between where an economic process is assumed to work based on perceptions, and where the actual value of things isn't. I suppose you could run something like that as a co-op; users pay a subscription fee, and in exchange, they get actual shares in the company and the right to sell their own attention to advertisers.
- williamcotton 11y agoWell, considering that it is incredibly cheap to host and distribute digital media these days, individuals could still pay significantly more than the advertisers and it wouldn't cost them more than a few dollars a month. This co-op that your describing is basically the approach taken by certain songwriters and recording artists with Tidal, but again, we're talking about shares in the aggregator and purposefully deciding not to treat what is published as property in a marketplace. Songs played on terrestrial radio, for example, work very differently. You're right, if songwriters thought their content was valuable intellectual property, they wouldn't let a radio station play it for free, and they don't. Radio stations have to pay a percentage of their advertising profits as performance royalties to the songwriters. What's interesting is that Facebook seems to be headed towards a private version of this and is starting to share ad-revenue with content creators, mainly because when you don't do this, the content that people click on is so filled up with advertisements that it ruins the experience. Imagine Top 40 radio without performance royalties... the songs would probably be nothing but jingles as the songwriters would have to embed their profit making mechanisms directly in to the content itself!
- prostoalex 11y ago> What if the model was flipped, so instead of advertisers paying Facebook to cover their operation costs, individual users covered their own operation costs, Why would that be a good deal for Facebook? With current revenue scheme they cover operation costs, R&D, various projects that do not directly contribute any revenue, various internal projects that fail and no one else hears about them, growth and marketing campaigns, various campuses and real estate around the globe and even then have some profits left over. Why would any software company willingly cut its R&D funnel and profits that can be used as a rainy day fund? > Right now there's no way to price how much a user is worth and how much they actually cost, which seems like a very strange way to run a business. I'm sure there is if you have access to internal data, and entire departments in the company know not only operational cost per user, but can segment the costs by country and/or product (feed vs platform vs messaging vs video).