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I appreciate the work you did to run those rough calculations. Unfortunately, it completely ignores the most salient point. Empirically, most people seem to va
by victorhooi 9y ago
I appreciate the work you did to run those rough calculations.
Unfortunately, it completely ignores the most salient point. Empirically, most people seem to vastly prefer seeing the occasional (ideally targeted) advertisement, versus paying $20-40 a month of their own hard cash.
Hence, you cannot take total number of users, and divide by expenses. You can take maybe 1-2% (maybe less), and divide by expenses.
The actual conversion of these currently free users to paid users is what matters - and I doubt most people on Facebook would pony up.
For example, see the sibling post from Guest9812398 about his experiences running a popular community site - only 100 of the 100,000 users opted in to this, which doesn't even cover his hosting bills. The only way he can survive is through advertising.
The no ads model has been tried on the internet before, many a time - and the majority of people simply will not pay.
- bzbarsky 9y agoOh, I think I agree that Facebook couldn't actually go to a fee-based model, for precisely the reason you describe. I just suspect that the revenue-optimizing number is still below $20/month for them. And even then they won't get enough conversions.