Would you pay, if Facebook decided to start charging a weekly, monthly, or annual fee? If so, how much? Be honest.
Consider Newsweek’s experience with what they call a “paywall” in online vernacular. The first attempt was an admitted failure, and the second shot at it is still far from good. Mainly what happened is a lot of people stopped going to the Newsweek website. You can’t pay to download a single story that you want to read; you’ve got to pay the monthly fee.
I read all sorts of stuff on my desktop computer and on my iPad. Newspapers, Drudge, Huffington, Slate, on and on. And it’s all free. I download the “ap” from the iTunes store and read away. On the first of January, a consultant whose stuff I really like put up a paywall. I’m not sure how it’s working for him, because I didn’t avail myself of the opportunity to subscribe.
I ask the Facebook question above, because I’m still intrigued by Facebook jumping into the sack with Goldmine Sachs. Goldmine is putting out an offering for “special investors” to buy a piece of the Facebook company. Facebook has 500 million “users” and annual revenue of 2 Billion. So, each “customer” is worth 4 bucks a year. (Do the math.)
So, the question I ask, again, is: if Facebook started charging, would you pay? How many of the 500 million people who use Facebook do you think would pay? 5 percent? 15 percent? If recent paywall experience is applicable, not very many people would stick around if Facebook started charging.
Which leads to the next question: what is Facebook REALLY worth, given a business model with so many users and so little revenue? If Goldmine is paying 375 million dollars for a stake of a little less than 1 percent, that makes Facebook “worth” about 50 billion dollars. (Do the math.)
And, my final question: have we learned ANYTHING from the financial meltdown that caused the recession we’re still in?
I wouldn't pay for Facebook. They make revenue from selling your profile information (and that of your friends) to advertisers (most Facebook games and quizzes exist in order to give the appmaker access to your information).
ReplyDeleteThe question is not "users v. revenue."
ReplyDeleteThe question is "revenue less costs."
Number of users is irrelevant. Only the pre-tax profit matters.
If the bankers think they can spin social-media straw into gold, let them have at it. They will do so without a subsidy from me.
ReplyDeleteThey might want to discuss it though with the owners of Newsday (the Dolan family, of Madison Square Garden fame), who,like Newsweek, installed a paywall and doggedly stuck with it for about a year.
Their Cablecom and print subscribers could get in for free, but the number of nonsubscriber types who bought in was in the middle teens. The Newsday journalists ended up posting stories for their own amusement.The number of clicks fell off a cliff.
The paywall has now gone away and the Dolans are hoping to get some of their advertisers back.
Rupert Murdoch was emboldened by his paywall success at the Wall Street Journal. WSJ is a niche publication that has positioned itself as a must-read for its well-heeled audience -- a group ready, willing and able (with a little help from their corporate treasuries) to pay for the convenience of accessing the site on their phones and what have you.
When Mr.Murdoch tried to extend that success to The Times of London, the paywall was a disaster. One leaked report -- thought to be conservative -- says the number of visits and views almost immediately plummeted by 80 percent. Rupert was handed two things he really hates: Failure, and losing money doing it.
Given that ghastly outcome, it is unlikely he will be saddling his MySpace site with a paywall anytime soon. So rival Facebook ventures into that dismal territory at its peril.
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