On Facebook Charging Subscription
By: Lance Ng
Tags: Mark Zuckerberg, Facebook, Technology, Social Media, Finance

On Facebook Charging Subscription

Why paying $2.57 per month is the best solution to the modern ‘social media dilemma’ and even a way to avoid ‘Armageddon’.

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Mark Zuckerberg F8 2018 Keynote — Anthony Quintano on Flickr

How much would you need to pay Facebook to ensure that you didn’t get any advertisements in its family of social apps — Facebook, Instagram, Messenger, and WhatsApp.

US$2.57 per month.

Yes, as little as that.

How did I arrive at that figure?

Well, it’s easy. In 2019, Facebook made US$69.655 billion from advertising. There were 2.26 billion users who used one or more of its family of apps at least once a day — what Facebook defined as Daily Active People (DAP).

Simple division tells us that each active user, on average, created US$2.57 in ad revenue per month for the company.

In other words, if each of those users were willing to pay Facebook that amount in monthly subscription fees, Facebook would have made the same amount of money in 2019 without having to sell any ads. (Advertising accounted for 98.5% of total revenue for Facebook.)

Think about it.

It’s entire business model could then be inverted to serve the needs of its users — instead of advertisers.

Wouldn’t you pay US$2.57 per month to ensure you have no data privacy issues, no annoying ads and perhaps even the ability to control how much time your addicted child gets to spend on social media each day?

Will everyone pay?

All right… I admit; I’m getting ahead of myself.

The reality is: Many of Facebook’s users are from developing countries. US$2.57 a month could be drag for them.

That’s fine. Keep a basic version free.

For the US$2.57 per month, paying users will get a better experience — no ads, unlimited connections, unlimited messaging, advance privacy options, cooler emoticons, special e-shopping deals, etc., etc.

Is US$2.57 too high? Too low? Not worth the money?

Well, the cheapest Apple Music or Spotify subscription fee — $9.99 per month. Netflix — $8.99, Amazon — $12.99, Hulu — $5.99.

What about cloud storage? iCloud — $0.99, Dropbox — $9.99, Google Drive — $1.99.

Starbucks latte — $2.95…

Okay, you get the drift.

Proven models in many other businesses within the modern digital economy. Time to think within the box Facebook! You can have your cake and eat it too. The need to attain quick and massive adoption as a startup is over. There’s no more need for free.

It is time to look after the folks (aka your users) who got you there in the first place and give them some options.

Could it be that with all the brains you’ve hired, there is no better way to come up with solutions other than relying on AI and an army of human curators to keep out objectionable ads?

What about fake news and politically motivated ads?

Admittedly bad actors with the financial means won’t be deterred. But at least you can make it such that it will no longer be free to generate thousands of fake accounts with unlimited abilities to share and like fake news.

It could also potentially shut down all the so-called digital marketing firms in less-developed countries selling ‘likes’ and ‘followers’ to anyone looking for a quick boost to their accounts and posts.

To avoid Armageddon…

Ok, I’ll admit it. Over discussed topic. Is this whole ‘evils of social media’ debate worth your time?

Well, it wasn’t me. Netflix was the one that got the world going at it again.

The renewed debate over social media ills has been sparked off again by a rather ‘in-your-face,’ awe and shock documentary called “The Social Dilemma.”

Prominently recommended by Netflix to its subscribers, the film strings together interviews of many eminent technologists and researchers — including former employees of social media giants who were responsible for creating the features and business models that made them so successful.

The filmmakers also hired actors to enact scenes of politically charged civil unrest, teenage depression, cyberbullying, and three ‘AI bots’ manipulating users to keep them addicted.

The conclusion at the end of the film — the world will fall into social dysfunction and civil war at this rate, i.e. social media will cause Armageddon if left unchecked. (Yes, I’m not exaggerating. That’s what the ‘experts’ literally said.)

Screenshot from documentary “The Social Dilemma”

CNBC published an article on the film, saying that while the interviews were “interesting,” the documentary “offers few solutions.”

“Despite the confessionals and doomsaying, however, the final recommendations to the average consumer of these tech products are disappointingly unoriginal.” — “Popular Netflix movie ‘The Social Dilemma’ slams social media but offers few solutions,” CNBC

Ironic though, because that same CNBC article proposed no solutions either…

So I shan’t be guilty of the same.

Social media has become a way of life; a need for survival even — especially for the average teenager. It’s not going away any time soon.

Asking people to delete their social media accounts is like environmentalists saying we should all ditch automobiles and air travel. Some could do it, but the majority would find it too uncomfortable and radical.

In the end, the debate heats up but the problem doesn’t get solved…

Let me resolutely propose that $2.57 per month is the answer.

Mark, my words

Is putting a price tag on it really the cure? And why nag just Facebook? Aren’t there other social apps out there just as responsible?

Well, look, Facebook is certainly the biggest and most powerful. Great change requires power like that. So Mark, your responsibility is greater than most.

Therefore I repeat, providing a differentiated service and charging for it is the simplest and best way you can meet the needs of both your shareholders and your users — plus, even your advertisers; because there is a free-ride segment of users they can still hit.

In any case subscription revenue is far more stable than finicky cost-per-click or cost-per-impression ads.

Would competition come in with something free to steal your users? Sure they will try, but the novelty is over and you are the leader by a huge mile, with a huge cash pile and the best talent in the business — the advantage is clearly on your side to out-innovate and out-build anyone trying to compete.

There’s no excuse for not trying — you are a ‘God’ now, and the fate of humanity rests in your hands (or at least that’s what the folks who made ‘The Social Dilemma’ thinks…)

So Mark, how about it? Sometimes K.I.S.S. is the answer (Keep it Simple, Stupid).

At least give people the option?

Hashtag #dollar257.

Peace out.