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Ignoring the adverse selection problem for a moment, why don't you think FB could make more money on subs? Facebook revenue per user is $30 in the US. As long a

• thrwaway-adtech 6y ago
  Because many people would not spend 2.50 a month for Facebook, and their value prop of “all your friends are here” would collapse for many users. And then you have adverse selection putting downward pressure on the revenue per free user.
  • loonster 6y ago
    Your argument would be stronger if you used the same one that you used in your initial post. As you previously stated, revenue is not distributed evenly. For sake of argument, the actual numbers for 5 users could be: 120, 30, 0, 0, 0 . The ad-free subscriber would not pay the average profit, they would need to pay the average profit of a paid subscriber. If we assume only the whales would pay for an ad-free experience, they would need to pay $10/month and not $2.50.
• dalbasal 6y ago
  So, two points. First, I think facebook's global revenue per user is $30. US should be much higher. My back-of the envelope has it @ $225 per year currently ($43bn revenue from 190m users)... I may be wrong. Don't hurt me. Second, they make $225 (or $30) per user while also maintaining a very high number of users. You can't expect to put up a paywall and not lose users. So, to reach parity, you need to charge enough for subs to replace those. For FB, it's flat impossible. That's why I picked it as an example. You cannot have 190 million americans as paying users at any price. You definitely can't have that many @ $20 per month.