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Comment by cjy | Hacker News Reader

This is a popular idea on HN. You're only a customer if you pay. But, it's an oversimplification. A better definition of a customer is a user who's presence increases your profits.

One way customers increase firm profits is by paying. But, in two-sided markets customers increase profits apart from what they actually pay. An example of two-sided market is a dating site. You could charge men and women. But, if you charge women more, fewer will join, and the site becomes less valuable to men. The optimal solution may be to charge women nothing so you can charge men more. But, you're kidding yourself if you think that only men are your customers. The men are paying in cash, but the women are also paying by increasing the sites value. Indeed, it is likely that one non-paying woman is worth more than one subscribing man.

Facebook users are also customers. They're paying Facebook with a lot of valuable data and eyeballs.

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To further the original analogy, you can think of FB users or non-paying dating site users as "inventory". It sounds a bit dehumanizing, but it doesn't have to be: in traditional business you have to manage and maintain your inventory properly as well. E.g., frozen food has to be kept frozen, planes have to be serviced regularly, etc. Maintaining your inventory has a cost, but you need to bear it because that's part of what you're selling. When running a site like FB, you have acquisition costs for your inventory (things you do to get your users to sign up for your site) and maintenance costs for your inventory (things you do to keep your users using your site).

So making sure your users happy is an important part of your business because otherwise you're mismanaging your inventory. But you're free to decide that some of your inventory is too expensive to maintain vs. the value you and your customers derive from it, and it doesn't make sense to carry it anymore.

"This is a popular idea on HN. You're only a customer if you pay."

It's also a popular idea in the wider world of business, which predates FB by several thousand years. If you are interested in an abstract theory of wealth, that's great. But the rest of the world transacts in money, which is brought in as revenue and paid out as expenses. At the risk of oversimplifying, when you subtract the latter from the former and the number is greater than 0, then you can make a claim of profitability. Users donating data and attention might be good for your business model and help increase profits indirectly. But they are fundamentally different from customers who pay money (a means of transferring wealth) to use your product or service (a form of wealth).

Counter-example: Barnes and Noble does not consider users who visit their stores to read books and magazines without paying for them as customers. They provide B&N with incredibly valuable data (e.g. which books and magazines people want to read) and eyeballs, but they aren't customers. And neither are Facebook users.

That sort of thinking is what effectively killed Digg.

Semantics aside, whether or not FB users are "customers," FB obviously needs them in order to be in business. Without them, it gets 0 dollars.

So the original point, "you have no right to complain because you don't pay to use it," is silly. Whether or not users have a RIGHT to complain, FB should prefer responding to their complaints over losing them as users.

As it happens, it seems that most FB users aren't phased by anything FB does in terms of privacy or heavy-handed policies. So unless those complaints get loud enough to signal that users are about to start leaving en masse, FB doesn't need to care.

In general, I agree the statement "you have no right to complain because you don't pay to use it" is silly. In the context of "a user violates the terms of usage, is repeatedly reminded of them, continues to violate them, is banned, and then complains about it", it's not. The guy was spamming people to sell a book. It's a special case, not a general rule.

I get your point. You need actual dollars coming in to be profitable. But, my point is that in some markets a lot of people not paying is worth more than a few people paying.

Whether I pay you, or make your product more valuable so other people will pay you is irrelevant. Whether you call me a customer or not is irrelevant. You should treat me well if you want to stay in business.

I don't see how the B&N example fits. Browsers aren't making the bookstore more valuable to people who actually pay. Plus they take up seats. Get rid of browsers and B&N makes more money. Get rid of Facebook users and there is no Facebook.

That's exactly right. The users make the profits possible. If it wasn't for those "leachers" using the service for free, Facebook would be entirely worthless as a financial venture.

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