Facebook is not a charity

facebook2b1There is currently a Facebook group with over 3.8 million members circulating the message “We Will Not Pay To Use Facebook. We Are Gone If This Happens.”  Come on… are these people really serious?  Is Facebook a non-profit or a business?  I understand that most of them are saying they prefer advertising-supported over fee-based.  But is it really that ludicrous to consider paying for something of value?

I remember back in college when one of my buddies would host a party at his apartment.  When you showed up at the party, you were asked to pitch in a few bucks for the keg, or even “buy” a plastic cup to consume your fill of lukewarm Budweiser and nacho cheese Doritos.  If people refused to pitch in, my buddy would have stopped hosting parties.

 

Think of Facebook as a big online kegger.  If you’re having a good time you should not feel bad about pitching in.  I’m finding old friends, networking for business and getting a good laugh almost every day in Facebook.  If you value the experience, it’s worth something isn’t it?  Complaining about a company trying to make money is like fast forwarding through all the commercials with your Tivo and then whining about obvious product placements in your favorite shows!

 

The economy hums along based on money traded for value received.  If you don’t want to pay a cover charge for Facebook, I suggest you get busy clicking on those contextual ads for Six Pack Abs in the right sidebar.   

 

If you were the Facebook CEO, how would you try to make a profit?  More advertising?  Premium services?  Storage fees?  If all else fails, just leave the company and startup the next free bandwagon.  There seem to be at least 3.8 million partygoers ready to jump ship.

 

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11 Comments on “Facebook is not a charity”

  1. Ori Says:

    It’s all a question of what you’re accustomed to. If one is used to getting a service for free, then it’s unlikely he’ll be willing to start paying for it later. If you started with a freebie proposition then you have to figure out a way to make money through ads or premium services.
    A few years ago, a leading Israeli news site (Ynet.co.il) began to charge customers from outside of Israel to access its news content. Within days you saw a sharp drop in traffic from abroad as the vast majority switched to a competing news website.

  2. Anna Gardner Says:

    This makes sense to me David, I think that people are resistant to change anyway no matter what it is so it is normal for so many to get upset at first. The fee may just be something to focus on.

  3. Laura Schulz Says:

    Thought about this for web 2.0 class and have more questions than answers, but here’s my ramblings:

    Facebook needs to start making a profit. Creating value before profit (aka ‘first hit is free’) is fine, but third party industries are getting involved. Without a robust revenue model from FB, how do they know where their profit niche in the landscape is where they won’t be cannabalized? How do they know it’s safe to invest resources in the platform, and with that help build up the FB empire, if they don’t see financial security and the reassurance FB will be around in the future?

    On the advertising-sponsored side: There are around 200 million users now (the approximate population of Brazil) and with those accounts a whole lot of personal information. FB is sitting on (unprecedented?) geographic, demographic, psychographic and behavioralistic information from our profiles and posts. Paid advertising should get *really* targeted and theoretically enjoy high conversion, but it doesn’t seem to have the expected traction. Advertising works alright in Google since we go there with search intent and are more open to a pitch. In FB, we go to socialize and advertising is seen as intruding. Perhaps if it were more focused, I might actually pay more attention to the right sidebar. I may not even get completely irked if ads ended up in my newsfeed based on something I or a friend commented on…but it better be *dead on*. Am I looking a gift horse in the mouth? Probably, but FB gave me that option.

    On the fee-based side, the question is, “What would make me want to pay for FB?” I can think of two things: Make it my undisputed social media hub and let me have it my way.

    In the adaptive radiation of early social media, many channels evolved. It’s almost impossible to keep up with my accounts and I’m wasting time looking in too many places. Some apps let me link to other specific channels, but it’s all a bit too hodge-podge to enjoy any cohesiveness. Simplify my life. Make FB the aggregated hub for my connectedness. Like a cooler version of Friendfeed where all my friends are already. Let FB be my personal homepage that has my friend updates, which movies are showing at my favorite theaters in the genre I like, which events are happening in my hometown that interest me, which jobs were just posted specifically related to my resume, which bistros were rated highest by folks in the area, my social bookmarks, etc. Give me the option to buy movie tickets or books for my Kindle based on a recommendation right then and there (which FB has, of course, sold exclusive rights to one credit card company for FB payment options). Let me click a button and have a pic of my friend’s new baby stuck on a coffee mug and sent to them. Let me register for a course, have it automatically placed in my social calendar and then have Amazon bring up the required textbooks to purchase. Give me my friends’ blogrolls and RSS feeds from my hometown paper. Let me form mini work groups (like Google groups) where I can share docs and files. Let me automatically start a Webex session from that group. And let all that work with my smartphone. Forget low-rent “Johnny-sent-you-a-martini-that-you-can’t-actually-drink” apps and the near-virus PicDoodle. Give developers a solid revenue by writing robust apps that would be integrated into the subscription service as long as they followed firmly defined guidelines with high standards. I’d like to see real structure, focus and practical utilization, all in one place. I’d pay for that.

    Then give me UI remodelling powers like the organization pages used to be. Let me stick in my FBML modules (ala Drupal style) to customize what I want to see and where. Give me a wicked storage system to archive my favorite posts so stuff doesn’t get lost in the stream, like my own personal scrapbook. Let me have more control as to which of my activities goes out into the news stream and let me more cleverly segment my friends, coworkers and family to have better control over my personal brand. I’d pay for that as well.

  4. davidgoad Says:

    Laura, you should send this to the folks at Facebook and ask for a job in user experience design. I’m serious. They couldn’t get this many good ideas from a focus group of 20 people.

  5. Matt Heminger Says:

    Laura is ‘wicked smaht’ as we say back in Boston. This is the age old ‘give them the first hit for free’ switch-a-roo that they use in the crack cocaine business. They call it a ‘build value first’ model in the venture capital world but that’s just window dressing.

    I am not comparing a harmless (mostly) social networking site to crack of course though I do know some peope who seem to have nothing better to do than to send me plants so I can save some rain forest somewhere I will never visit (unless they are planning on putting a casino their someday then who knows).

    The point is most of these people are hooked, I am not hooked but I am interested enough in it conceptually and utilize it often enough to reconnect to old co-workers, classmates, friends,and lovers, that I’d pay for continued access. I am not used to getting something of value for free, I am an American and I know there is no such thing as a ‘free lunch.”

    I doubt facebook would see a loss of greater than a few percentage points if they charged a nominal 5.95-9.95 per month fee for basic access.

  6. davidgoad Says:

    You are a fine American, Matt. A fine American 🙂

  7. Ron Says:

    I think one side effect might be to find out the real value of these sites to their users. Regardless of our current administration’s proclivities, this is a capitalist system, and most of us outside the government believe in free markets. That allows us to decide what products will succeed and which won’t.

    Folks might actually decide they ca , God forbid, survive without their daily dose of “I love me” that is their Facebook life.

    Or, they’ll decide it is worth paying for and support it.

    My guess? You’ll see some of those 3.8 million big talkers migrate to another site (Facebook 2?) and others will pony up a reasonable fee because they’re so addictedtjey HAVE to have their Facebook crack.

    The new free site will either survive with some other business model, or it will be the next failed website, and those users will move on to the next site run by others who don’t understand you have to have a source of income.

    In any case a value for the product will be established by the marketplace.

    Or just maybe the government will discover a “right to Facebook” in the Constitution, and make the rest of us support their failure.

    It’s the new American Way, after all.

    But then again, you don’t want to get me started… 😉

  8. Laura Schulz Says:

    Matt, recreational pharmaceuticals were exactly what I thought about. 🙂 I heard Biz Stone mention something along these lines recently, but there’s a difference. Crack dealers thought through their business model and had an established revenue strategy before passing out freebies. Most social media channels don’t, which is fine because it’s early social media. The value is organically defined after inception with the profit model structured later. Google had same problem, but then repurposed PPC and we know how that’s working out.

    Seems like FB could satisfy all factions with a graduated freemium model. For those who are just casual users, who (say they) could give it up anytime (those 3.8 million from original post), let them have it for free with loads of advertisements and basic apps- pretty much what you get today with more ads. If it must be.

    For middle users (probably majority), charge nominally and add better daily life apps and channel connectivity. Can FB’s open API be restricted for newer generation apps (meaning subscription-based level)? Is that floodgate already open or can newer versions of the API be closed for top-notch (contracted?) developers and companies? I’ve no clue. Not exactly s.m. spirited, but hey. Make FB a bit better than it is now for them to entice subscription and settle grumbling.

    For the hardcore/business users wanting a streamlined and robust “full online life” platform, offer the killer apps that partner with corporations and all the bells and whistles. Charge both the user (in a premium subscription) and the companies for accessing the user and being part of the Facebook collective.

    Don’t know if that holds water, but thanks for helping think through my homework for class discussion tonight. 🙂

  9. Max Says:

    The moment facebook starts charging, people will switch to other social network, you ever heard of friendster? I can’t believe you wrote these many word talking about this lame idea.

    • davidgoad Says:

      Good point. And I’m sure the smart people at Facebook know this. My reaction was really to the attitude of the FB users – who seem to have no problem with benefiting from the value without paying any price. The times they are a changin’.

  10. Andy Says:

    I use FaceBook… What about all the unemployed, low paid workers and those on benefits??? These people wont be able to pay for something that has been provided for free upto now.

    If FB does start chargeing then all those people (including me) will lose an access point to keep in contact with friends and family around the UK (and the world).


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