Why Everyone Would Pay $1 to use Facebook
My brother and I were having a discussion last night about Facebook and how Zuckerburg seems to have a ton of money, but it doesn’t seem like Facebook is generating anywhere near the amount of money it’s getting in venture capital (investor money). My brother cited ads, but ads don’t generate as much income as one would think, even with 500 Million (active) users. See, Facebook has a ton of costs- paying a good sized employee pool (1400*), giving them a ton of perks (that are Google-esque!), massive server farms to keep Facebook up and running and backed up, 8 offices around the world*, and other costs. To make matters more interesting, people are valuing Facebook at $34 Billion. It’s revenue in 2009 was $800 Million*, or $1.60/user. Not even 1/34 of what it’s valued at. There are lots of ways for Facebook to make money. My brother proposed that if they wanted to make a quick half billion, charge everyone $1, one time. And you know what? We’d all do it.
I know there are some nay-sayers out there claiming they’d never pay for Facebook, not even $1. They’re lying. Here’s why:
- $1 is a low barrier for entry, especially one time: $1 is less than a cup of coffee. It’s the cost of most cell phone apps. We pay more than $1 for most things- Gas per gallon, Milk, coffee, a bagel, a slice of pizza, the ability to text, etc. One Dollar is nothing, especially if it’s a one time charge. Think of the event you promote on Facebook. How much would it cost to put it out in front of 500 million people otherwise?
- Everyone on Facebook cares too much about what everyone else is doing: Facebook is the de-facto way to see what our friends are doing and we care about what our friends are doing. Why else would we use Facebook in the first place? People like gossip/drama/whatever, especially when it’s happening to people they know. The people who don’t care probably aren’t on Facebook. They definitely aren’t active.
- We validate ourselves through our Friend count: It’s true. Our popularity, however shallow and unscientific, is quantified through our Facebook profile, and we all secretly love it.
- We are all narcissistic: We want everyone to hear our thoughts & we love photo sharing. Why else would we post status updates regularly? We want people to know what we are thinking, and Facebook gives us a soapbox to do so. Furthermore, it’s the number one photo sharing app online- and that’s something we all definitely care about. We like sharing photos with our friends and family. Plus, we create events and pages for causes we promote.
- We are addicted to some facet of Facebook: How many of you play Farmville or Poker? How many of you use the notes regularly, for either real thoughts or those games where you tag 150 of your friends to see what their least favorite food is? All of us are addicted to some feature on Facebook- it could be as fun as a game, or a informational as keeping up with our favorite organization.
Aside from that, it’s the best way to say in contact with most people. It’s easier than remembering an email address or a phone number, and in most cases, moreÂ convenient. My cousins are on Facebook now and since they’ve joined, we’ve been talking more, sharing photos, and keeping each other updated. Facebook is helping us do something we only usually did at those sparse family gatherings. I think that alone is worth $1.00.
*According to Wikipedia