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Facebook May Soon Become A Paid Service

Face

Back in 2010, a young and starry-eyed Mark Zuckerberg declared that Facebook would always be free. Fast forward to 2018 and a more grounded and pragmatic Zuckerberg updated his stance and told congress: “There will always be a version of Facebook that is free.”

Zuckerberg's latest statement came after he stepped into the Capitol Hill hot seat to answer to accusations of reckless use of private data by his company. In effect, it opens up the possibility that Facebook might one day offer a paid, likely ad-free, version of the social media app.

That probably won't be too jarring, either. After all, nearly 120 million customers happily pay at least $10.99 per month for an ad-free Netflix subscription; 70 million pay a dollar less for a monthly Spotify subscription, 100 million users part with $99 each year for an Amazon Prime subscription, and--perhaps grudgingly--another 90 million dole out around $100 a month for a cable TV subscription.

No Free Lunches

Perhaps there's something wantonly cavalier about people expecting internet companies that provide free services to also go the distance to try and protect customer data.

At least that's how a former high-ranking Facebook executive feels.

Chamath Palihapitiya recently talked to Squawk Box where he said there's a need for consumers to re-evaluate their relationship with companies like Facebook after 20 years of getting freebies.

If that name does not ring a bell, Chamath is the guy who in December admitted feeling “tremendous guilt” for the company he helped create. The guilt partly stems from how social media companies like FB help create a society that confuses popularity with the truth by providing tools that erode how the social fabric works. Related: Kenya: The Blockchain Capital Of Africa

And maybe he should be in the know, being former Facebook vice president for user growth.

Chamath says it's super-hard for companies to safeguard user data, let alone a company like Facebook whose #1 priority is probably not its 2 billion users but rather the thousands of marketers who pay to have their ads displayed on the platform.

Facebook probably started pandering more to marketers than users back in 2013 after being raked over the coals by Forrester Research who ranked the platform as having the lowest ROI.

According to Forrester, marketers' beef with Facebook was that it was not displaying nearly enough ads to users, and neither did the majority of those ads target the right users. Facebook responded by not only increasing its ad load but also its targeting methods.

Today, only FB can be mentioned in the same breath as Google when it comes to giving marketers bang for their buck.

In a recent survey by Cowen and Company, Google Search topped the list of platforms that provide marketers with the best ROI with a 48 percent score vs. 30 percent by Facebook.

(Click to enlarge)

Source: AdvertiseMint

Are Facebook Users Willing To Pay?

Chamath says he's on board with the idea of paying for Facebook use in return for assurances around his data and how he's tracked.

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But how does the average FB user feel about the subject?

Turns out a paid version of FB might not be such a bad idea after all. A full one-third of respondents in an April survey of 750 U.S. adults said they would be willing to pay more than $10 per month to use FB with nearly 12 percent saying they would gladly pay more than $15. The average FB user in the U.S. generates about $9 per month in ads for the company.

(Click to enlarge)

Source: Recode

The only problem would be that Facebook, like Netflix, would be forced to largely depend on user growth for top-line expansion. Not a good idea when user growth is slowing and is probably the reason why some people are predicting that Netflix will have ads, someday.

The grass is not always greener on the other side.

By Alex Kimani for Safehaven.com

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