TakeAway: Facebook has been massively successful enlisting posters … but far less successful making money. Which raises an obvious question: why not charge for the service?
* * * * *
Excerpted from Business Week: How Facebook Could Cash in on Its Upscale Fans, Oct 12, 2009
Nielsen says that 17% of the time people spend surfing the Internet is devoted to social sites, up 6% from a year earlier. No doubt, the quick and addictive status updates posted daily by users of Facebook and Twitter have something to do with the increase.
Facebook is the king of social networking. But the site is stuck with an old business model that may prevent it from turning the increasing affluence of its users into profits. Simply put: Facebook should charge, says BusinessWeek blogger Douglas MacMillan.
A recent study by Nielsen Claritas that divides 200,000-plus participants into three segments based on affluence showed that 25% of the top tier were more likely to use Facebook than the bottom tier. In the lowest segment, 37% were more likely to use MySpace.
Not only has Facebook won over many younger users of MySpace but it has introduced social networking to people in their 20s, 30s, 40s, and older. As the Nielsen Claritas study hints, these users have jobs and bank accounts, and might be willing to shell out a few bucks a month for an increasingly valuable tool.
Facebook has shot down the idea of charging all of its members. But the site may have plans to put a price tag on services, such as offering to print the millions of photos people upload to the site. It could also charge a nominal fee, like $1 per month, to let members avoid ads.
The company reports positive cash flow and talks up bold advertising initiatives. But is it building a business that taps the deep pockets of its users?
http://www.businessweek.com/magazine/content/09_41/c4150executive737881_page_3.htm
http://www.businessweek.com/the_thread/blogspotting/archives/2009/09/facebook_users.html
* * * * *
The Homa Files 
Leave a comment