Thursday, May 17, 2012

Would Facebook Users Pay to Use Facebook?

In this article I just read, the question of Facebook's value is discussed.

At the IPO price of $38 that was announced Thursday evening, Facebook is priced at the top of the $34-$38 range announced at its filing. That pegs the company's total value at an opening-day record of $104 billion -- and it will have roughly $16 billion more in its coffers come Friday morning. Put another way, Facebook CEO Mark Zuckerberg now has enough cash on hand to buy 16 more Instagrams.

But some are concerned it's being overestimated, especially considering that advertising on Facebook has been less than successful.

At the heart of the stellar valuation lie questions about Facebook's actual ability to make money, an issue that was brought into sharp focus earlier this week when General Motors announced plans to withdraw its $10 million advertising buy from the site. While badly timed for the Facebook crew, this decision wasn't that surprising. As numerous experts -- including our own -- have noted, the click-through rate on Facebook ads averages a dismal 0.051%, or roughly one click per 2,000 viewers. In other words, as dozens of other websites have already discovered, customers respond poorly to online advertising, and prefer to shop via sites they find on their own.

I'm not sure any online advertising works right now...not at this point. I never pay attention to online ads. If anything they annoy me. Clearly, these dismal figures above corroborate how I feel about all online ads, not just facebook. And it's why I never bothered with ads here on this blog.

Now, what is interesting is that General Motors still has all its facebook fan pages up. They didn't take those down. And they aren't paying a dime to keep them there. So if Facebook wanted to really play with them, and others who might be thinking of pulling their ads, Facebook could start to charge for fan pages. Now I think that would be more than interesting, to see if anyone would actually pay for a fan page on Facebook.

Although Facebook hasn't announced any plans to charge for its fan pages, it is in a unique position to monetize social media. If -- when -- it chooses to charge for access to its hundreds of millions of users, questions about the site's financial position will be rendered completely moot.

If Facebook did this, and I think at this point it's a huge "if," I know I wouldn't pay to use facebook. I can't speak for others, but I could live a perfectly happy, well-balanced life without facebook and all the things that happen on facebook. One thing in particular is this ability to "report" or "block" users and have accounts taken down without notice or question. It seems that no one at Facebook is really paying attention to these reports, and decent people are being blocked and reported by Internet haters for no reason at all. This is a huge flaw in the basic system. Because it's the small users, not the large companies like GM, that made Facebook what it is today. I do hope they take that extra 16 billion and invest in a few more employees who will only be in charge of evaluating complaints regarding reporting and blocking someone.

But the other interesting factor is that from what I've seen, those who have been blocked always go back. They say they won't. But they always do. So there's an underlying psychological factor that Facebook has tapped into that has revolutionized society as we know it. And that makes me wonder if people would be willing to pay a fee in order to use facebook.


Rush said...

Would I be willing to pay for FB? Absolutely not. In any case It would give me the extra time to write since, and I admit mea culpa, I spend way too much time on it. Think about all the youngsters who wouldn't be paying either. Less eBullying, less headaches even though there are other social medias out there. But no, I would definitely Not pay.

ryan field said...

I think you would be in the majority, too.

Jon Michaelsen said...

Ryan - when I first read this post, I thought - "ABSOLUTELY NOT"!! Then I realized how much I post on fb, and with a new release tomorrow, and considering how much self-marketing I've been doing - I had a step back and rethink my position. I've never clicked on one of the ads on fb, so I've never understood the "value" from that aspect - but, from a social networking aspect - FB has created a cultural, would I pay? Probably - but only if there wasn't another upstart offering the same opportunity for social networking free.

Great post!!

ryan field said...

I'd have to think about paying for FB for a long, long, long time first. Most of the positive things I've taken from facebook are meeting people, like you, and I would miss that. I would miss the social interaction, but probably not the networking. I know when I get hit with "Read My Book" e-mails from facebook it's an automatic delete. And most of the hits on my blog come from google, or sources other than facebook...and I average about 10,000 a week.

Rustu said...


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Best regards

ryan field said...

For some reason, this post has received tons of hits. And, since I wrote it and started really thinking about it, I'm starting to think that I might pay a small fee to join if they started to charge people on FB. It would have to be yearly, though, like a magazine subscription. I wouldn't pay automatic monthly fees.

Thanks for commenting.