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Why can't FB charge a minimal subscription fee? For 2-3 bucks a year, wouldn't they keep the vast majority of users and simultaneously remove their dependence o

Why can't FB charge a minimal subscription fee? For 2-3 bucks a year, wouldn't they keep the vast majority of users and simultaneously remove their dependence on shadowy advertisement dollars?

qroshan 7y ago
ha ha, classic arm-chair expert who has run ZERO business in their lives.
- pengstrom 7y ago
  Now that's just rude and uncalled for. Why not write a few lines and explain why you think he's wrong?
  - sidr 7y ago
    Because price stickiness is real, and the stickiness at free is very very strong. Being a service whose appeal derives entirely from the network effect, they will never ever give their users an exogenous push to leave the platform.
callalex 7y ago
Their average revenue per active user faaaaar exceeds $2-3/yr in the US at least.
yourself92 7y ago
Because they've determined they can make more money by not doing that
whiddershins 7y ago
The people who would pay it are the exact same people who are worth the most to advertise to. This is why you can’t pay to get a version of The NY Times that has no ads.
- greenshackle2 7y ago
  And yet I can pay to not see ads on Youtube and Twitch. Is there something different about video vs written content?
  - BetaDeltaAlpha 7y ago
    I don't know about twitch, but YouTube hemorrhages money and couldn't exist independently of Alphabet.
knzhou 7y ago
Because in practice a negligible fraction of people is willing to pay even a nominal fee for something they think they can get for free. Just a few days ago we had an article full of outrage that Google asked people to pay a small fee once their extremely generous Gmail storage filled up, because they were used to thinking email was free.
scottmf 7y ago
Because they make more money from ads than they could charge users to remove ads
ankit219 7y ago
I did a back of the paper calculation as to how much fb would earn via me as a user. I noticed a user like me spends about 15 mins a day on facebook and see around 6 sponsored posts. Internally FB ads are all CPM based, at about $4-5 per CPM, no matter the optimization advertisers choose. In a year he would have seen about 2000 impressions, and hence minimum price would be around $10 per year. (There are many users who spends a lot more time and hence the revenue multiple will be higher) But there is more revenue than just that. FB allows advertisers to reach specific audiences, and even create lookalikes, so overall, there will be a %age of the users seeing more ads than me, potentially personalized for them, and average revenue per user would be higher.
- s1artibartfast 7y ago
  I think your numbers are pretty far off if you look at Facebook financial statements, and a more accurate cost would be around $200/yr for a daily user [1]. US & Canada had 189 million daily users and a quarterly Ad revenue of 8.487 Billion dollars. That is $45 per user per quarter. [1] https://s21.q4cdn.com/399680738/files/doc_financials/2019/q3/Q3-2019-Earnings-Presentation.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2019/q3...
  - ankit219 7y ago
    You might be right. I was replying to the parent comment which said facebook should have a ad free subscription product at $2-3 per year. Just tried to say that the Revenue per user is more than that. Also, the numbers you posted include all the inventory - facebook news feed, ads on the side right on desktop, instagram, messenger ads, stories ads, instant articles, and even the ad network. According to facebook (read somewhere) 70% of their ads are on the ad network.
nidificate 7y ago
Facebook makes more than $5 per user but the average is brought down by lower revenue in Asia/Pacific. For users in US/Canada the revenue per user is over $20. https://www.cnbc.com/2017/11/02/facebooks-revenue-topped-5-per-user-for-the-first-time.html https://www.cnbc.com/2017/11/02/facebooks-revenue-topped-5-p...

Why can't FB charge a minimal subscription fee? For 2-3 bucks a year, wouldn't they keep the vast majority of users and simultaneously remove their dependence on shadowy advertisement dollars?

qroshan 7y ago

ha ha, classic arm-chair expert who has run ZERO business in their lives.

pengstrom 7y ago
Now that's just rude and uncalled for. Why not write a few lines and explain why you think he's wrong?
- sidr 7y ago
  Because price stickiness is real, and the stickiness at free is very very strong. Being a service whose appeal derives entirely from the network effect, they will never ever give their users an exogenous push to leave the platform.

callalex 7y ago

Their average revenue per active user faaaaar exceeds $2-3/yr in the US at least.

yourself92 7y ago

Because they've determined they can make more money by not doing that

whiddershins 7y ago

The people who would pay it are the exact same people who are worth the most to advertise to. This is why you can’t pay to get a version of The NY Times that has no ads.

greenshackle2 7y ago
And yet I can pay to not see ads on Youtube and Twitch. Is there something different about video vs written content?
- BetaDeltaAlpha 7y ago
  I don't know about twitch, but YouTube hemorrhages money and couldn't exist independently of Alphabet.

knzhou 7y ago

Because in practice a negligible fraction of people is willing to pay even a nominal fee for something they think they can get for free. Just a few days ago we had an article full of outrage that Google asked people to pay a small fee once their extremely generous Gmail storage filled up, because they were used to thinking email was free.

scottmf 7y ago

Because they make more money from ads than they could charge users to remove ads

ankit219 7y ago

I did a back of the paper calculation as to how much fb would earn via me as a user. I noticed a user like me spends about 15 mins a day on facebook and see around 6 sponsored posts. Internally FB ads are all CPM based, at about $4-5 per CPM, no matter the optimization advertisers choose. In a year he would have seen about 2000 impressions, and hence minimum price would be around $10 per year. (There are many users who spends a lot more time and hence the revenue multiple will be higher) But there is more revenue than just that. FB allows advertisers to reach specific audiences, and even create lookalikes, so overall, there will be a %age of the users seeing more ads than me, potentially personalized for them, and average revenue per user would be higher.

s1artibartfast 7y ago
I think your numbers are pretty far off if you look at Facebook financial statements, and a more accurate cost would be around $200/yr for a daily user [1]. US & Canada had 189 million daily users and a quarterly Ad revenue of 8.487 Billion dollars. That is $45 per user per quarter. [1] https://s21.q4cdn.com/399680738/files/doc_financials/2019/q3/Q3-2019-Earnings-Presentation.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2019/q3...
- ankit219 7y ago
  You might be right. I was replying to the parent comment which said facebook should have a ad free subscription product at $2-3 per year. Just tried to say that the Revenue per user is more than that. Also, the numbers you posted include all the inventory - facebook news feed, ads on the side right on desktop, instagram, messenger ads, stories ads, instant articles, and even the ad network. According to facebook (read somewhere) 70% of their ads are on the ad network.

nidificate 7y ago

Facebook makes more than $5 per user but the average is brought down by lower revenue in Asia/Pacific. For users in US/Canada the revenue per user is over $20. https://www.cnbc.com/2017/11/02/facebooks-revenue-topped-5-per-user-for-the-first-time.html https://www.cnbc.com/2017/11/02/facebooks-revenue-topped-5-p...