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The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet a

by huac 7y ago

The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet ad at a $2000 CPM). At the same time, the richest people are the ones who can afford to pay whatever subscription fee FB or Google would charge. I don't think that there is a lack of demand, it's just that the people who make up that demand create an adverse selection problem, the users who would opt out are the ones who make your platform valuable. I don't think that antitrust regulation solves this particular adverse selection problem. It's certainly difficult to compete against the established giants, for many reasons, but this theoretical opting out is definitely not some consumer benefit that we can expect.

Deimorz 7y ago
It's not really the same thing you're talking about at all, but I think there's also an interesting conflict of this type between where the largest sites are getting their user growth from now, and the users that are most valuable as advertising targets to them. The larger sites (Facebook, Twitter, etc.) are pretty close to saturation in North America and a lot of other English-speaking countries. There just aren't many people left here that don't know what Facebook is and might still be convinced they should start using it regularly. Almost all of the growth comes from other parts of the world, but the users from those locations are worth far less in terms of advertising revenue. If you look at Facebook's Q2 2019 presentation [1], their average revenue per user from US & Canada is now $33.27, Europe $10.70, Asia-Pacific $3.04, and Rest of World $2.13. One US/Canada user is worth more to them than 15 from "Rest of World". However, 74% of their Monthly Active Users are from Asia-Pacific/Rest-of-World now, and that only corresponds to 28% of their revenue. I don't really have a particular point I'm trying to make, I just think it's interesting. These companies worry a lot about showing continued user growth (or at least not shrinking), but the growth sources now don't have anywhere near the same value as the old ones. [1]: https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2/Q2-2019-Earnings-Presentation-07.24.2019.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2...
- buboard 7y ago
  continued growth is good for their stock. It will of course reach a tipping point where the sheer amount of users will start yielding net negative revenue at which point there will be a reckoning
robocat 7y ago
"Facebook made an average of $6.18 off each user in Q4". But your point is that price discrimination really matters. The same thing with whales playing "free" games. Gotta agree with your main point. > The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet ad at a $2000 CPM) Rubbish. The 1000x $2 eyeballs is definitely worth money to the beer sellers, independently to the 1x "$2000" eyeball for the private jet advertiser (ignoring profit margin etc). Note, from the article: "The private jet ad might sell at a $200 CPM as opposed to the $2 CPM beer ad targeted to an anonymous user" not sure why you changed value to 2k.

by huac 7y ago

Deimorz 7y ago

It's not really the same thing you're talking about at all, but I think there's also an interesting conflict of this type between where the largest sites are getting their user growth from now, and the users that are most valuable as advertising targets to them. The larger sites (Facebook, Twitter, etc.) are pretty close to saturation in North America and a lot of other English-speaking countries. There just aren't many people left here that don't know what Facebook is and might still be convinced they should start using it regularly. Almost all of the growth comes from other parts of the world, but the users from those locations are worth far less in terms of advertising revenue. If you look at Facebook's Q2 2019 presentation [1], their average revenue per user from US & Canada is now $33.27, Europe $10.70, Asia-Pacific $3.04, and Rest of World $2.13. One US/Canada user is worth more to them than 15 from "Rest of World". However, 74% of their Monthly Active Users are from Asia-Pacific/Rest-of-World now, and that only corresponds to 28% of their revenue. I don't really have a particular point I'm trying to make, I just think it's interesting. These companies worry a lot about showing continued user growth (or at least not shrinking), but the growth sources now don't have anywhere near the same value as the old ones. [1]: https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2/Q2-2019-Earnings-Presentation-07.24.2019.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2...

buboard 7y ago
continued growth is good for their stock. It will of course reach a tipping point where the sheer amount of users will start yielding net negative revenue at which point there will be a reckoning

robocat 7y ago

"Facebook made an average of $6.18 off each user in Q4". But your point is that price discrimination really matters. The same thing with whales playing "free" games. Gotta agree with your main point. > The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet ad at a $2000 CPM) Rubbish. The 1000x $2 eyeballs is definitely worth money to the beer sellers, independently to the 1x "$2000" eyeball for the private jet advertiser (ignoring profit margin etc). Note, from the article: "The private jet ad might sell at a $200 CPM as opposed to the $2 CPM beer ad targeted to an anonymous user" not sure why you changed value to 2k.