WASHINGTON, DC: Following two days of congressional hearings in which Facebook CEO Mark Zuckerberg faced questions on the nature of his business, its relationship to data, and that data’s use in advertising, there was a hint the social media giant could move away from its current business model.
On Tuesday, Senator Orrin Hatch (R-UT) asked Zuckerberg if he remembered in 2010 telling lawmakers that Facebook would always be free. Yes, he replied, but with a caveat: “there will always be a version of Facebook that is free.”
His are not the only comments that suggest a change in thinking from 2010. Last week, COO, Sheryl Sandberg told CNBC that despite users being able to opt out of some features, “we don’t have an opt-out at the highest level. That would be a paid product.”
But will users actually pay for such a service, and if so, how much? A study by the Vox Media channel Recode, in association with the research firm Toluna, asked 750 US adults this question.
A paid service, unsurprisingly, would be a tough sell, as 77% would continue to use the ad-supported version; a healthy minority of 23%, however would be willing to pay.
According to Statista, annual revenue per user worldwide was $20.21 in 2017, but revenues are much higher for US users. Recode pegs US RPU at roughly $9 a month.
Respondents – the minority willing to pay – were not willing to part with much. Just under half (41.6%) said they would be willing to spend between $1 and $5 a month on Facebook. Yet 24.9% would pay between $6 and $10 a month.
Though a minority of respondents from Facebook’s most lucrative market said they would pay, it is much less clear how many of its 2 billion global users would.
But place this in the context of Facebook’s change in strategy prior to the unethical data scraping scandal, and the possibility of a paid version could make more sense. In the company’s Q4 earnings call, Zuckerberg explained: “The most important driver of our business has never been time spent by itself. It’s the quality of the conversations and connections”.
This thinking translates to the company’s ad strategy. “When you care about something, you’re willing to see ads to experience it. But if you just come across a viral video then you’re more likely to skip over it if you see an ad,” he said.
In the context of revenue, more engagement did the company a favour, with an ARPU increase of 26%, equivalent to $6 per user compared to Q3 2017.
Sourced from Recode, The Verge, CNBC; additional content by WARC staff