Why Zuck is right in thinking that we won’t pay for an Ad-Free Facebook?

Facebook getting battered for the so-called misuse of our data has been in the news for over a month now.  If we leave aside the Cambridge Analytica (CA) issue, only thing Facebook ever wanted to do with our data was- show us relevant ads.  Ads (as long as they’re legal) are the only way they could make money, given that it is a free service to users. We must also agree that, by and large Facebook has made itself a safe place for people to interact socially by keeping away content related to drugs, sex, violence or crime.

Are Ads Bad?
It is irrational to conclude that Ad-based models are universally bad, be it Facebook or Google or other Apps.

Let us agree on this- we do not find ads morally objectionable. We cannot watch any sporting event be it Super Bowl or IPL on TV/Internet without seeing a fair share of ads. We are used to it by now. Over a period of time, we have observed, that ads on Internet were increasingly getting personalized. So even targeted/personalized ads be it on Facebook, on various web pages on the Internet, have been around for some time now, and we had gotten used to them too. We were creeped out initially but later reconciled to targeted ads as the new normal.

So, what has changed now?

Because of the CA issue, data privacy issues have come to the forefront.  And we’re suddenly woken up to the issue that personalized ads were made possible by harvesting of user data.  What was considered fair use earlier (targeted ads) is also being questioned- why should our data be used/harvested at all for ads?
Looks like our concern has morphed from misuse, to the very use of personal profile data. And this is an extreme stance!

Coming back to Facebook. If we want Facebook to stop building our profile for targeted ads, then it would need an alternate source of revenue, as its ad revenue will necessarily drop. Some people say let Facebook be a paid subscription-based service.
As Sheryl Sandberg (COO Facebook) says, “users would have to pay to opt out of Facebook Ads”.
If we opt for “don’t give me ads”- how much will we have to pay for this luxury?  And are we really willing to pay for this?

What is the minimum that needs to be paid for an “Ad-Free” Facebook? $10, $5 or $1?

Facebook, the world’s most popular media owner, creates no content. If Facebook is a media company,  the closest paid media service is Netflix. The minimum subscription for Netflix is $8 per month. So, would you pay $8 per month for Facebook? That’s about how much you would have to pay for using ad-free, no data harvesting policy Facebook.

When Shakespeare said, All the world’s a stage, and all the men and women merely players”, we had wait for 400 years for it become a reality. Facebook is “The Stage” where we get to perform.
Frankly for the same price ($8), what would we rather watch? Our friends pretending to lead glamorous lives (on Facebook), or professional/glamourous actors pretending to be our friends (on Netflix).  From the paying customers perspective, s/he would rather pay & watch a “Seinfeld” or “Quentin Tarantino movie” on Netflix than us performing (through our posts/ photos/videos) on Facebook.

And this is the reason why paid Facebook will not work, and Zuck knows it too!
He made this abundantly clear in his testimony to US congress that Facebook will be a free ad-based service. Is it that he does not want to get paid?  He does. It is just that he knows that you and I will not pay, or definitely pay far lesser than what he can get from advertisers.

Facebook will make sure that they will (mis)use the data only to give you relevant government approved (legal) ads. They will not show political ads if they are illegal. Facebook can and will abide by the law of the land. If Facebook needs to sell its service, then it may find most analysts putting a sell notice on its stock, as Facebook stock will take a dive.

To summarize:

  • An ad-based Facebook is better than a paid Facebook. Why? Because the paid model would lead to significant reduction in user base, which through network effect will cause drop in the value perceived by users.
  • Ads would remain even in a paid Facebook, and targeted ads are better than random ads. You may be creeped out, at least you are engaged!

1 Comment

  1. Btw facebook has the data of how many have stopped using facebook because of the fiasco.
    If you still get that high of dopamine if you get a pic likes… facebook is not going anywhere, rather only getting stronger

    Liked by 1 person

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