Twitter founder Biz Stone has offered up some advice for rival Facebook- give users an ad free version of the social network for a $10 monthly fee. Writing on blog platform Medium, Stone admitted he only returned to using Facebook recently, but noticed a potential new revenue stream for the company. Stone asserts that Facebook […]
Twitter founder Biz Stone has offered up some advice for rival Facebook- give users an ad free version of the social network for a $10 monthly fee.
Writing on blog platform Medium, Stone admitted he only returned to using Facebook recently, but noticed a potential new revenue stream for the company.
Stone asserts that Facebook could make up to $1 billion a month in revenue if just 10% of its user base agreed to pay a suggested ‘$10 monthly fee’ for the service.
Stone champions online radio site Pandora as an example of how subscription services can pay off for companies that provide them as part of an incentive to ditch advertising.
He said that Pandora has found the highest growth rate among its revenue-generating operations in subscriptions.
In the blog, Stone writes:
“People love Facebook. They really love it. My mother-in-law looks hypnotized when she decides to put in some Facebook time. 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.”
The advice has already attracted criticism, with Forbes writer Mark Rogowsky listed three key problems with the plan:
“So what’s the problem then? Well, it’s three-fold. (1) Nowhere near that many people would pay for Facebook (2) A reasonable subscription fee is much lower than $120 year and (3) Everyone getting Facebook for free would, of course, lower the ad revenue so that free lunch comes with another price”
Rogowsky notes that Facebook only made $4.3 billion in total advertising in 2013 – a far cry from the $12 billion in annual revenue Facebook could seemingly earn via Stone’s plan.
In the Forbes article, Ragowsky also points out that the move would lead to a drop in ad revenues as brands see engagement rates drop.
“With consumers leaving the platform, advertisers and brands might decide to spend less on Facebook generally because of the smaller potential audience. That might cause ad dollars to fall even more, which could wipe out the new revenues almost as fast as they come in,” Rogowsky writes.
Rumors about Facebook charging for access, meanwhile, have surfaced many times over the years, but the social network has long denied that it’s in the works. “It’s free and always will be,” Facebook said plainly in 2011.
Read Biz Stone’s article here
