What if there were a “Facebook Premium”?

Facebook has been under much public scrutiny lately, not the least of which are criticisms of Facebook’s business model of aggregating and monetizing user attention and data. Most vocal critique of Facebook has come from The New York Times with a series of revelations. And the latest to join the polemic is an early investor, Roger McNamee with his recently published book titled, “Zucked.” Counter-intuitively however, both Facebook’s ad revenue and adoption continue to grow at a robust clip. And coming soon too is the back-end consolidation of the “family of apps,” the ensuing public debate and threat of antitrust regulation notwithstanding. To be fair, and in Facebook's defense though, it is only another hyper-growth technology company trying to beat the market profitably, albeit one that has a disproportionate impact on public discourse and popular culture without them even having realized the degree of that impact early on!

Let us take a closer look at the world of Facebook, the Daily Active Users (DAU) have grown to a staggering 1.52 billion users, up 9% from last year. Its quarterly revenue is $16.9 billion, even though 74% of that still comes from the Americas and Europe. Facebook’s annual revenue of approximately $55 billion amounts to a 38% growth from last year! An average Facebook employee (one of the prized 35,587 worldwide) contributes to more than 7 times the revenue brought in by an average employee at IBM. That is just phenomenal value creation!

As a marketer, one simply cannot afford not to increase the marketing spend on the Facebook ecosystem. The reason is rather simple. Every minute conservatively, 510,000 comments, 293,000 status updates, and 136,000 photos are posted on Facebook, and I would not even begin to bore you with the mind-boggling usage statistics for the family, especially Instagram. For there are far more credible sources that all of us can look up, and be dazzled by the sheer scale at which Facebook is an inherent part of so many lives. Facebook remains a dominant force when it comes to engaging a target audience at scale, albeit with sophisticated nuance.

My heuristics work better without passing judgments. So I conducted a thought experiment wherein Facebook looks a bit different, and perhaps in ways better for the critics.

What if there were a Facebook Premium?

For a user, Facebook Premium could entail an “ad-free experience,” more control over the algorithm that curates and serves content from one’s network, and more control over cross-pollination of one’s behavioral data across the family of apps. For Facebook, any potential leakage in ad revenue could be addressed with a small subscription fee. Even if a conservative 20% of their current monthly active users (MAU, 2.32 billion people!) paid between $1-4 a month for various tiers, that is a cool $8 billion. And if half of them paid only a $1 every month, that is a cooler $14 billion or so! I’d say perhaps good enough to offset any ad revenue loss while doing wonders to check the erosion in credibility. The latter effect could arguably catapult adoption to yet another level unprecedented in the platform’s history.

Another strong revenue stream going forward would be “Facebook Spaces”. Facebook could charge users between $6-12 a month for virtual-reality hangouts, social gaming and meet-ups with friends and family, with the latest version of Oculus hardware made available on subscription or as-a-service (free). This would also allow Facebook to circumvent the hardware-in-the-home arms race underway with the smart speakers, and get a new category device in the hands of its users. The service would not be called “Prime”! If a conservative 50 million Facebook users were to enroll in the first year, that is about $8 billion predictable annuity revenue right there! And if this does take off, it could morph every other revenue stream, including one hopes, the ads revenue!

So much for wishful thinking, the idea wasn’t to pass any judgments but simply to explore an alternative reality. As a Facebook user, much less avid than I was a long time ago I must admit, I am still loath even remotely to consider deleting Facebook, a namesake movement notwithstanding. For it still is the default “Museum of me,” much like Intel’s campaign from back in the day. For a sample of one, and all its worth if I were posed this question in a Facebook survey, "Will I pay for a Facebook Premium?", my answer will always be an emphatic yes, much like I pay for access to the Times or the Economist.

Views expressed are personal, and do not represent those of any other entity or person.