4 ms·

Let's do an interesting exercise. Facebook has 100 million users. Let's suppose 10% of that user base would be willing to pay a $1.99 to have a premium account

by rodmaz 18y ago

Let's do an interesting exercise. Facebook has 100 million users. Let's suppose 10% of that user base would be willing to pay a $1.99 to have a premium account (like unlimited number of photo albuns, customizable look&feel etc). That would mean almost $20m dollars monthly revenue, much much larger than their burn-rate. College students don't pay for SMS? Why some of them wouldn't then pay this small amount to Facebook? Sure, this is a very rough estimation based on old subscription-based business model. A product in a free market operates much differently than if you charge US$ $.01. But it only shows that Facebook has many ways to become successfully profitable. They are only being cautious.

aston 18y ago
10% conversion rate would be astronomical for a site like Facebook.
- netcan 18y ago
  These calculations are sorta dangerous. Online Newspaper X has over 20m online readers. Most of them have at some point subscribed to print publications @ $200+ per year. If it was a membership site at just $2 per month, wouldn't they be able to keep some readers? 10%? 5%?. You're not telling me someone making $80k per year would replace the newspaper she reads every day to to save a few cents a read? Wouldn't people pay to use google? What if it was just $0.50 a month? or $0.01 per search? The concept that if people use a site, it's worth money, has not proved itself.
brm 18y ago
it would be far easier to get 1% to pay $10 than 10% to pay $1
- rodmaz 18y ago
  Yes, I agree! We can debate the conversion rates. My whole point is that simply asking whether Facebook will be ever profitable is a simplistic question. They can become profitable already. The question is that there are probably much better ways to monetize their site and typical audience than requiring subscription. Like PG mentioned, when Google came along, the best way to monetize search engines was to become a "media" portal and pollute browsers with ads and pop-ups.
jmatt 18y ago
If we are going to look at profitable online communities then look at MMORPGs. It may be outside the realm of facebook and linkedin but there is plenty of profitability to be had beyond myspace clones or even websites. World of Warcraft takes in 12.99 - 14.99 per user per month and has approximately 10 million active subscribers. Plus additional profits whenever an expansion comes out. http://www.mmogchart.com/Chart1.html http://www.mmogchart.com/Chart1.html faq... http://www.mmogchart.com/faq/ http://www.mmogchart.com/faq/ [EDIT: added "per month" to second paragraph, first sentence]

by rodmaz 18y ago

aston 18y ago

10% conversion rate would be astronomical for a site like Facebook.

netcan 18y ago
These calculations are sorta dangerous. Online Newspaper X has over 20m online readers. Most of them have at some point subscribed to print publications @ $200+ per year. If it was a membership site at just $2 per month, wouldn't they be able to keep some readers? 10%? 5%?. You're not telling me someone making $80k per year would replace the newspaper she reads every day to to save a few cents a read? Wouldn't people pay to use google? What if it was just $0.50 a month? or $0.01 per search? The concept that if people use a site, it's worth money, has not proved itself.

brm 18y ago

it would be far easier to get 1% to pay $10 than 10% to pay $1

rodmaz 18y ago
Yes, I agree! We can debate the conversion rates. My whole point is that simply asking whether Facebook will be ever profitable is a simplistic question. They can become profitable already. The question is that there are probably much better ways to monetize their site and typical audience than requiring subscription. Like PG mentioned, when Google came along, the best way to monetize search engines was to become a "media" portal and pollute browsers with ads and pop-ups.

jmatt 18y ago

If we are going to look at profitable online communities then look at MMORPGs. It may be outside the realm of facebook and linkedin but there is plenty of profitability to be had beyond myspace clones or even websites. World of Warcraft takes in 12.99 - 14.99 per user per month and has approximately 10 million active subscribers. Plus additional profits whenever an expansion comes out. http://www.mmogchart.com/Chart1.html http://www.mmogchart.com/Chart1.html faq... http://www.mmogchart.com/faq/ http://www.mmogchart.com/faq/ [EDIT: added "per month" to second paragraph, first sentence]