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It seems weird to me that a company would actively hurt their bottom line just because I guess the argument is that they like tracking in the abstract? Like, if

by saurik 3y ago

It seems weird to me that a company would actively hurt their bottom line just because I guess the argument is that they like tracking in the abstract? Like, if you are correct, and Facebook would make more money per user charging them €25 instead of showing them ads, then wouldn't they be idiots to purposefully price their product so high as to "avoid" people making them more profitable? The narrative that Facebook doesn't want to make more money on these users is just really awkward as it would imply the company doesn't have a working profit motive. Maybe a different explanation is that, sure, on average they make €20 per user per year... but the distribution of how much money they make is extremely lopsided, such as a power law. They want everyone using the platform--even the most unprofitable people--as the service only really makes sense if you can find and communicate with everyone on it... but the people who are most likely to be willing to randomly fork over a bunch of cash to not get tracked are the very kind of person who also are most likely to pay for stuff in general and so facebook in fact might be making 10x as much off these users than people who wouldn't pay for the service at any price?

soco 3y ago
There are two points there: one is ads and the other is tracking. You could say that ads are based on tracking, true, but ads mean income from other parties. That should be better predictable and better estimable for Meta, making a fairly reliable basis to set the monthly user pricing. But tracking? That's a basis for many future applications which even Meta might not know yet, and giving up on that would mean ruining all those future initiatives. I'm not sure how to put a price tag on that, and I'm not sure they even want to (nor trust them).
mrweasel 3y ago
I did not consider the possibility that those willing to pay might be the most valuable users, but that might very well be the case. That does sort of leave the whole business model with a problem where Facebook is an unnecessary middle man for customers who where willing to buy your product anyway. The more you think about it the weirder the model of ad supported services becomes. There is a set of service that is valuable, but not to an extend where we'd want to pay for it.
latexr 3y ago
> Like, if you are correct, and Facebook would make more money per user charging them €25 instead of showing them ads, then wouldn't they be idiots to purposefully price their product so high as to "avoid" people making them more profitable? Each user that signs up to pay decreases the value of the ones who don’t because it lowers their number. If the price is reasonable and “too many” people sign up, they’re decreasing revenue on the other side. Plus, paying users have a bigger voice in general, in that they can stop paying and you’ll notice. Free users are easier to control as they’ll stick around and accept much more crap.
gls2ro 3y ago
IANAL but in some courts the contract has a different penalty/enforcement when money are exchanged between two parties. So in a way: going to a court the user has more chances of winning when they paid for a service than when using it freely, even if using it freely means they pay with their privacy, when there is a breach of the contract. Not saying this is what Meta is doing but saying that in some cases it is better to give something away for free than to ask even 1 EUR for it.

by saurik 3y ago

soco 3y ago

There are two points there: one is ads and the other is tracking. You could say that ads are based on tracking, true, but ads mean income from other parties. That should be better predictable and better estimable for Meta, making a fairly reliable basis to set the monthly user pricing. But tracking? That's a basis for many future applications which even Meta might not know yet, and giving up on that would mean ruining all those future initiatives. I'm not sure how to put a price tag on that, and I'm not sure they even want to (nor trust them).

mrweasel 3y ago

I did not consider the possibility that those willing to pay might be the most valuable users, but that might very well be the case. That does sort of leave the whole business model with a problem where Facebook is an unnecessary middle man for customers who where willing to buy your product anyway. The more you think about it the weirder the model of ad supported services becomes. There is a set of service that is valuable, but not to an extend where we'd want to pay for it.

latexr 3y ago

> Like, if you are correct, and Facebook would make more money per user charging them €25 instead of showing them ads, then wouldn't they be idiots to purposefully price their product so high as to "avoid" people making them more profitable? Each user that signs up to pay decreases the value of the ones who don’t because it lowers their number. If the price is reasonable and “too many” people sign up, they’re decreasing revenue on the other side. Plus, paying users have a bigger voice in general, in that they can stop paying and you’ll notice. Free users are easier to control as they’ll stick around and accept much more crap.

gls2ro 3y ago

IANAL but in some courts the contract has a different penalty/enforcement when money are exchanged between two parties. So in a way: going to a court the user has more chances of winning when they paid for a service than when using it freely, even if using it freely means they pay with their privacy, when there is a breach of the contract. Not saying this is what Meta is doing but saying that in some cases it is better to give something away for free than to ask even 1 EUR for it.