Facebook is having trouble ramping up revenue as fast as it would like and as fast as its newest investors would like. That's because its ads are very cheap and it's got way too much page views to know what to do with them (how to monetize them).
The problem is even worse as people move to the mobile apps and sites, which are even more poorly monetized or not at all.
But there's a larger problem, there is a growing trend of ditching advertising online. Having ads fund your site means that you'll make changes to make sure you're going to run as many ads as profitably as possible.
These changes are not necessarily in the users’ interest. This is the source of the page-view driven web and all of its evils. The alternative, a seemingly eccentric one on the web, is to charge for content.
Actually, that's misleading, it's hard to get people to pay for content, even of the highest quality, there's just too much of it available. It's not impossible, but it's hard. Penny Arcade's KickStarter is the perfect example.
The site asked its fans, and there are many of them, to fund the site for a year. In that year, no ads would be run on Penny Arcade, freeing the team to do all sorts of interesting things and to focus more on actually creating stuff.
The KickStarter has been successful
, the site got more than half a million dollars, yet it wasn't as successful as it could have been.
Alternatively, you can charge for a service. This is what App.net is doing
and again, the project has been successful, to a degree. No one is expecting App.net to scale like Facebook or indeed even Twitter though.
Or can it? This idea has been around for years, charge for Facebook. It sounded stupid, it is stupid to a degree and it's been used in plenty of scams.
But, is it that farfetched? It seems, at least some people would pay for Facebook. Marketing Land ran a survey
asking people how much they would pay to have all ads removed from Facebook.
It wasn't a huge survey and it can't be labeled as scientific, but the results are interesting, more than 10 percent of those asked would pay $10, EUR8 or more for a year of ad-free Facebook.
10 percent of the soon to be one billion people that use Facebook paying $10 would add up to $1 billion, EUR800 million in yearly revenue. It's not that much, Facebook already does about four times that in a year. But it would be more than what Facebook makes per user per year from ads, which is very roughly around $4, EUR3.2.
Keep in mind though that this would mean Facebook loses the ad revenue for these people, so it would only be making $6, EUR4.8 more per user per year than before. It's a decent sum, but this would also mean that it would be hurting its ad business even more as advertisers will have fewer people to target.
What's more, it's going to be those who can afford it that will more likely opt to pay and those are the biggest target for advertisers and the biggest earners for Facebook.