It’s easier to spend money that wasn’t in your wallet in the first place. It’s when you start taking it out of the wallet that people react.
If facebook costed everybody $1000/year, I would definitely stop using it, because the network would be immediately broken since everybody would know everybody with any sense would stop using it.
If facebook only costed only me $1000/year, I would know the network was still intact, and I would consider it.
If it costs everyone $1000, there will be many many many people who cannot afford that.
If it costs only me $1000, I'd stop using it because... well I already stopped using it so I did it for free actually.
Second case, being the only one out (i.e. the black sheep) means you might consider paying for it to not stand out.
Source: I smoke, and about half the people I know do too.
Then everybody else would have to decide if the rest of the network still provides value to them, so a few more would disappear. At some point you'd reach an equilibrium where either a small portion of the original network is happy with what they still have for the money, or the whole network collapses.
It doesn't feel like people would quit because of the expectation that "everybody with any sense would stop using it". You could already say that now about FB, and you could definitely say it for many other products. Yet they are still used.
This question (can Facebook charge people to use its service?) is fundamentally vastly different from the one in the article, which basically is: can someone kill Facebook by buying enough people out of using it?
It would be a slam dunk lawsuit.
You can still offer discounts (airline tickets, Adobe, etc.) or negotiate pricing (cars, etc.) legally.
But, it is illegal to isolate someone and charge them more without justification as in OC's example.
So yes, Facebook charging a single person $1k/year is a true hypothetical. It couldn't happen legally in the US.
If Costco charges $1k for a bagel and gives it away to everyone for free except insists on you paying, that's a problem. You're not allowed to isolate discounts based on race, gender, etc. So Costco would have to have a pretty creative reason for making you pay and no one else. It wouldn't hold up in court and it would be price discrimination.
They lost their privacy without thinking about it, but giving up Facebook would require a conscious act. So now they're thinking about loss, and that causes feelings.
The second problem is I read the entire paper and as per problem #1 above, because its an extreme power law distribution, in "Auction 2 results" the average bid to give up FB was an insane $2076 but the SD is over eight thousand dollars and the 50% median was a mere $200.
The third problem is, I admit I don't use FB, but my understanding from my wife is if you disable your account for a day, you're really measuring the cost of time-shifting a days worth of content forward a day. They were not really measuring giving up FB for a day in the shorter samples (see discussion of Auction 1 results) they were measuring the cost of chronologically messing up the UI for one day, or something like that in concept. Its like arguing if I bought the new edition of "Refactoring" using amazon prime the 2 day delivery was worth $40 or whatever the book cost whereas in reality I don't really care about the shipping cost on 2-day vs media mail shipping, kinda.
The forth killer problem is the market is too weak and thin. Lots of brain power goes into evaluating the correct price for one share of GE or CAT or IBM. As such the price has a certain meaning and validation and use in the real world. No brain power goes into calculating the price of viewing a sunset or temporarily deactivating a FB account and as such a measurement merely measures random numbers and can't be used in the real world for any purpose, comparative or otherwise. In theory a widely popular and intensely studied marketplace of the cost of viewing a sunset or deactivating a FB account COULD exist, but since it doesn't, its just kinda a measure of random numbers mixed with how much money I feel I should get for a days minor annoyance, like a wifi or mobile phone outage. Some numbers from Auction 1 Results are creepily similar to "how much of a credit should I get for an internet outage", or "What is a fair per-diem reimbursement for a cheap company", not a specifically FB related cost.
If I'm reading the same data they are, the median price is $730. Which means if you offered everybody $730 half of them would quit. A few of those people would be really happy because all they wanted was $100.
If you were a deranged billionaire and you decided to burn Facebook, you might be able to get half of them to quit at an average of $400 apiece. But even that doesn't make sense because people are people. If my neighbor already got a check for $900 what are you doing giving me this check for $450? I want $900, same as him. Practically, you'd just have to cut checks for $730 and offer everyone the same amount, which means $1000 isn't a real number either. Because I'm sure as hell not gonna take $450 if my buddy knows the guy who got $5000. So it's $1000 checks and you get 65% of people to quit.
This was not an investigation into "how much do you need to pay people to quit" (if it was, their methodology would have been _highly_ flawed).
10 cigarettes a day * 30 days / 20 cigarettes in a pack = 15
15 packs a month * $6 per pack = $90 per month
$1000 a year / 12 months in a year= $83
Keeping in mind that each individual cigarette doesn't even have any event listeners hooked up to it to gather usage data...
Yeah, I'd take that bet.
Both scenarios are hypothetical, as no one is being actually paid to quit Facebook. So, why not make the hypothetical scenario: "Using Facebook now costs $X per month; how high does X need to be before you quit?"
They actually paid people to deactivate their Facebook accounts.
Seems to me that there's an application of this idea to early stage startups.