Facebook costs nothing, its users’ untold hours of procrastination supported by all those thumbnail ads crowding the right margin of the homepage. “It’s free and always will be,” the social network boasts.
But what if Facebook charged a monthly fee in exchange for zero ads? Would people actually pay for something like that? Twitter co-founder Biz Stone thinks so: in a blog posting on Medium, he suggested a $10-a-month “Facebook Premium” with no ads and maybe “some special features” could translate into significant revenue for the social network.
“If 10 percent of Facebook signed up, that’s $1 billion a month in revenue,” he wrote. “Not too shabby.” Stone also pointed to Pandora, the Internet-radio service that draws a sizable amount of revenue from premium subscriptions: “people paying a monthly fee for an ad-free experience.”
Although he didn’t mention it, one social network already offers paid subscriptions: LinkedIn, with its tiers of premium accounts, which helped the company earn $324.7 million in the first quarter of 2013. But with its business focus, LinkedIn can exploit certain revenue verticals outside of Facebook’s reach—it’s hard to picture the latter launching a service just for corporate recruiters, for example.
Stone isn’t the first to suggest Facebook could charge money for an enhanced version, of course. Indeed, Facebook is already exploring ways to monetize certain features, such as charging fees for sending messages to people not on one’s friends list. A couple years back, it even experimented with streaming content, although that test never expanded into something larger—despite the resources at its disposal, challenging Netflix and Amazon would probably distract Facebook from its core mission.
Whether or not Facebook ever introduces a premium subscription mode, the company needs to generate tons of cash in order to keep Wall Street happy. Much of its efforts in that regard are focused on tablets and smartphones, which have become the center of many peoples’ computing lives—witness its huge push to introduce mobile advertising. Facebook also faces significant competition from Google and, yes, Twitter—which could make things that much more difficult as it tries to hold onto millions of users’ eyeballs.