Could Facebook Soon Be A Pay Monthly Service?!
Last week Facebook after years of speculation finally floated on the stock exchange. The company was for a short time valued at around $100 billion! Questions immediately started to be asked about where the profits were going to come from to make this valuation realistic?
Most of us have seen the film The Social Network. Facebook started off as a college site for people to connect on. It soon started to grow rapidly and spread from college to college with hundreds of thousands of users! During all this time Facebook made no money as it didn’t want to destroy the integrity of the site, and it’s massive potential growth, by plastering it with adverts. Not yet anyway!
Over the past few years you will have noticed that Facebook has gradually introduced more and more adverts to the site! So can advertising revenue alone generate enough profit for Facebook to now satisfy $80 to $100 Billion Dollars worth of investors?
Just as Facebook floated on the stock market last week one of it’s biggest advertisers GM Motors (Vauxhall to you and I in the Uk) announced that they were no longer going to pay to advertise on Facebook. They said that they felt the adverts were ineffective and that there were better and cheaper ways for them to advertise away from Facebook. Another issue is that technology now makes it very easy for users to block adverts from showing up on their browser including Facebook. With all this in mind how long will it be before other advertisers follow GM Motors lead and stop advertising on Facebook?
So where will the profits come from if not from advertising?
There’s only one other way in my opinion that Facebook can generate enough profit to satisfy its shareholders and that is to start charging users for the service. This brings us back to the questions at the start of this article and throws up a few more. How indispensable has Facebook become to you? Would you pay £3.95 or $4.95 a month to use Facebook? Could you really be bothered to move to another social network where the same thing could happen?
£3.95 or $4.95 may not sound like a lot of money but for a company with nearly 1 Billion Users it’s an awful lot of Money!
So would You Pay to Use Facebook or go elsewhere? You might soon have to decide!