Facebook Freemium Model

One of Twitter's co-founders recently suggested Facebook begin to charge for an ad free version of the social networking site. After taking a hiatus from the site for an extended time period, he returned and pointed out that he doesn't find the ads particularly useful or engaging. He suggests a freemium model, like Pandora or Spotify, where users can pay to get rid of ads and potentially receive special features. Assuming a small conversion rate, 5-10%, for users interested in this sort of a model it could be very lucrative for facebook due to their large user base, which would definitely help in their efforts to monetize.

While I think this is an interesting concept, I don't see this really taking off. While Facebook may have a lot of ads, they are typically very cheap for a marketer because they 1.) have a ton of inventory and 2.) aren't as effective as other digital marketing tactics, search for example. As a user of the site, I can probably count on one hand the amount of times I've even noticed an ad. Assuming my one person sample is similar to many users, I doubt many people would be willing to pay to get rid of something they hardly notice.

http://mashable.com/2013/07/21/biz-stone-facebook-premium/

In general, the ads on Facebook don’t seem particularly useful or engaging. However, ads on the service are universally tolerated because that’s what makes Facebook free and free is nice.

Anywhoo, now that I’m using it and thinking about it, I’ve got an idea for Facebook. They could offer Facebook Premium. For $10 a month, people who really love Facebook (and can afford it), could see no ads. Maybe some special features too. If 10% percent of Facebook signed up, that’s $1B a month in revenue. Not too shabby.