FB’s ARPU in US in 2019 was $112. Google’s was $256.
By comparison, paid services would cost $30/month. You might be willing to pay that, but many will not. People already share Netflix accounts or bootleg their friend’s HBO accounts.
I think a shift to paid services is _possible_ but I won’t bet on it. The economics and market forces that brought us metered data and text usage haven’t really changed. Destroying the advertising-supported offerings will not spawn competition overnight. But in any case I think the big players are positioned to weather the changes.
And by the way, $30/month/user is an average. If you are have high disposable income you are likely netting FB et al more than that.
I could see Facebook and Google move to a subscription-style model. People would easily pay, say, 3$ per month for Facebook and 5$ per month for Google if it was the only option. (Prices should be lower in less developed regions, of course.)
Once freed from the prime directive of collecting increasing amounts of data to improve ad tracking, operating and development costs should be much lower than they are now, too.
I think the jury's still out on this one. Most active Facebook users would say they're willing to pay a few bucks a month to keep using it, and there are many successful consumer products using a freemium model.
If App.net's ARPU can hit about $120 (100x that of Facebook), then it can capture only 1% of the market and be equally successful.
That's not the number that is being kicked around.
Facebook will yield more than $100 per active user in the US and Canada for fiscal 2018. That's going to $200 from here over the next six or seven years (it doubled from 2015 to 2017). No meaningful number of users are paying $15 per month out of pocket for Facebook.
Google search is similarly worth a lot per user in the US. People would be irate if they had to pay $10 or $20 per month to use search engines after commonly enjoying the free utility of that for the last two decades.
Indeed. At the rate their monetization is likely to grow as advertising & economy (retail etc) continues to shift online, just continuing the existing growth trend and assuming a slow-down over time, it's extremely likely Facebook will reach a ~$200 per year ARPU in the US/Canada market within five years or so.
There is no large audience in any developed market willing to pay $15+ per month for Facebook just to remove ads.
I don't know about that. The latest estimates I heard was that you would have to pay the average American $1k not to use facebook for a year.
That doesn't mean they would or can spend $1000 on FB, but with the proliferation of subscriptions on app stores that are $10+ a month, I bet FB could get $10 a month from a large chunk of users and start to move towards other revenue models.
Facebook ARPU for Europe is $19.04 per quarter, or $6.33 per month. This is based on monthly active users and includes Messenger. If you adjust for that - someone paying for a subscription is likely to be much more active than an average monthly user - it's likely that 10 EUR is a loss. The big winners are Apple and Google getting their cut if it's an IAP.
The economics are even worse in US/Canada, where an MAU is worth $56.11 per quarter, or $18.70 per month.
An enterprise software company I was closely familiar with in the 1990s budgeted about $50/call for user support. Mind that was 20+ years ago, and it was enterprise, rather than end-user support. But odds are strong that one service call per user eats up all, or multiples of, the actual worth of that user to Facebook. Cutting the account loose may well be the rational choice for the company.
ARPU varies by region. Within the US it's closer to $110/yr, in Europe, $35/yr, Asia & Pacific, $10/yr. Expect that support offerings are going to be measured against that, though possibly with a consideration as well to future growth and economic development.
At $25/call and servicing 1% of users/year, that's $750 million in support alone. If the cost or rates are doubled ... the maths are pretty easy.
I wonder two things though. 1) would their operating costs be lower if their infrastructure wasn't designed around this user tracking and advertising model? 2) regardless of the answer to number #1 but especially if that answer is yes, do they _need_ an ARPU of $27 to get by? Could they survive on $10? (of course I recognize not everyone can pay that, it's a privilege etc)
Yeah I understand the goal of capitalist companies is to endlessly print more money for the shareholders and the promise of ever better advertising enables FB to keep pulling in the dough. But maybe something like social media shouldn't operate in that context.
I mean, I feel like ad services are not making such unaffordable amounts of revenue per user. Facebook reports $112 of revenue per user in the US, and that number plummets to just $25 globally.
Facebook is the privacy boogeyman these days, jokes about Zuckerberg are in no short supply.
Yet if you told people you can pay $9 a month and Facebook never needs your data ever again except host it for you, they'd say no. In fact they might be insulted you had the audacity to ask for such a thing. You could ask for $1 and they'd still say no.
It's just the same way they don't value their digital presence, they don't value digital goods and services.
They'll pay $6 every morning for the same cup of coffee worth 30 cents of ingredients and 5 minutes of work, but balk at the idea of an app asking for 99 cents for a lifetime of development work.
I'm not saying that from a place of bitterness to be clear, it's just what I've found to be the inconvenient reality of things.
> I assume it'd be pennies in most cases considering your Facebook account is really only worth like $12 a year to Facebook.
Facebook quarterly ARPU was USD$26.76 for US/Canada and USD$8.86 in Europe in Q4 2017. I'm also guessing that people willing to pay for Facebook are more likely to be a high value demographic, and would conversely need to pay more than the average user for that region.
>large enough population pays $4/month and can thus subsidize some part of the population
Just in case, FB ARPU in US in Q4 2017 was $27. People who talk about "i ready to pay 10$ per year if im not tracked and not exposed to ads" _seriously_ underestimate FB money-printing ability.
Think about it, FB makes almost as much as NFLX per US user (admittedly in Q4, the hottest quarter in advertising), but you dont need to enter your credit card. At all.
Yeah but there's still a point to be made here. Maybe the amount is closer to $10/month instead of $3/year, which is still pretty cheap considering the social utility and "entertainment" hours people are getting out of the service.
Also, maybe the costs of running facebook's infrastructure and code drop (and employee headcount, etc) off dramatically if they take an axe to all the parts of it that are devoted to advertising and user data tracking/sales and just focus on the useful core tech bits, which also helps increase the profit margin on the new income model. It's possible there's a rational price that the masses would pay that would still turn them a profit under this kind of setup.
First, I think facebook's global revenue per user is $30. US should be much higher. My back-of the envelope has it @ $225 per year currently ($43bn revenue from 190m users)... I may be wrong. Don't hurt me.
Second, they make $225 (or $30) per user while also maintaining a very high number of users. You can't expect to put up a paywall and not lose users. So, to reach parity, you need to charge enough for subs to replace those.
For FB, it's flat impossible. That's why I picked it as an example. You cannot have 190 million americans as paying users at any price. You definitely can't have that many @ $20 per month.
You don't think Facebook provides value worth paying money for? They wouldn't have to charge premium members (assuming they could convert enough free users) much to match their ad revenue... They have over 2 billion users, at least a handful which you have to imagine would be willing to pay to socialize with privacy from external corporate entities. I understand why they had to make it free to get to this point, but they've got almost 7x the population of the United States as daily active users now. If they could convert 10% of their user base to pay $9.99/month, that's $24B a year... A decent start seemingly, and I can imagine there are many ways to further monetize those users with other services.
The idea of paying for use instead of data collection is a good one. The problem is that the companies are treating it as another money grab instead of a reasonable alternative payment option. They don't make anywhere close to $10 a month selling ads to a user. If they wanted to offer $2 bucks a month, they would probably still profit more on this, and it would also be a reasonable deal for the user.
edit: not correct. Closer to $20 per month per user in the US for FB actually.
By comparison, paid services would cost $30/month. You might be willing to pay that, but many will not. People already share Netflix accounts or bootleg their friend’s HBO accounts.
I think a shift to paid services is _possible_ but I won’t bet on it. The economics and market forces that brought us metered data and text usage haven’t really changed. Destroying the advertising-supported offerings will not spawn competition overnight. But in any case I think the big players are positioned to weather the changes.
And by the way, $30/month/user is an average. If you are have high disposable income you are likely netting FB et al more than that.
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