More and more press has been garnered upon Facebook in recent days. Will they follow myspace’s lead in capitulating and placing ads all over your ‘page’? So far they’ve purposely circumvented this strategy, instead asking their investors to be patient while they try to find a ‘real’ business model. But if it’s not going to be advertising, what is it? Is Facebook’s stalling tactic just an admission that their CPMs really stink (around a dollar compared to premium properties like CNN or The Times that rake in upwards of $20) and that advertising on social networking will never really get them there? And though it’s lured users, Facebook hasn’t been able to monetize even when people are using it’s site, something this article talks a lot about.
Let’s do the math – with 1 of 5 users WW (yes!) on Facebook, they are growing at a insane pace, having just eclipsed 200M uniques according to ComScore. What if they were to charge, say, $9.95 for a YEAR access to their service, would you pay? In revenue terms, $10 x 200M would net them $2B in annual sales. Not bad considering they are supposed to do about $350M revenue this year from advertising and other means (btw MySpace will do about $1B in 2009 sales despite having half the user base).
So…. Would you pay? Or would you shut down your account? As we’ve come accustom to from the Google Generation, and as this wsj article The Economics of Giving It Away nicely summarizes, the internet has been the land of the free.
1 comment:
I would pay at least $10 a year for face book, and probably more. I assume most other people would pay it as well. Even if you take a conservative view and estimate 50% are willing to pay $10, that still is a billion dollars of revenue . I really don't see how else facebook can survive. Eventually their investors will get bored of owning hype and will want returns on their investment
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