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Comment by goldinfra | Hacker News Reader

Isn't this intentionally priced so that people won't pay for it? Does Facebook really make €12.99 per month per user?

It seems designed to be priced as high as possible, so that users don't choose it and they can claim no one wants it, and that they have consent.

If it was €2.99/mo, which seems much more reasonable, how many people would choose it?

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Facebook ARPU for Europe is $19.04 per quarter, or $6.33 per month. This is based on monthly active users and includes Messenger. If you adjust for that - someone paying for a subscription is likely to be much more active than an average monthly user - it's likely that 10 EUR is a loss. The big winners are Apple and Google getting their cut if it's an IAP.

The economics are even worse in US/Canada, where an MAU is worth $56.11 per quarter, or $18.70 per month.

(EURUSD is 1.06, near parity.)

I think there's also a major tax difference between subs and ads, working in the same direction.

They don't need to collect VAT on the revenue from the vast majority of ads (basically only ads bought by individuals, which can't be common). They would need to do it for the subscriptions, and the end-user pricing is with VAT included. That's going to be another 20-25% off.

It seems very plausible that they are making less profit from the subscribers than from the non-subscribers at these prices. The pricing might still be more than people are willing to pay, but it's not any kind of scam.

Who are these people that make advertising so valuable? Everyone I know either doesn't click on FB ads, or if they did, they've got a story about how they got scammed by some fly-by-night drop shipper.

Evidently, your friends are clicking on those ads, as they are getting scammed. It's unlikely they just clicked on scams.

It's true that a lot of people essentially never click the ads, but it's also true that seemingly smart and educated people can be extremely dumb about these things.

how do you think they make money? its more likely that you live in a bubble than people dont click ads if you look at their earnings

Ever heard the story of cambridge analytica and the 2016 election? Granted, its an extreme of the system, but there are quiet some actors willing to pay for such services.

That seems plausible but can you cite where these figures are from? Is this just a rough estimate from total numbers for the entire company of $REVENUE / $MAUS?

Facebook publish ARPUs by geography (and a lot of other interesting numbers) every quarter as part of their earnings release. See slide 15 here:

https://s21.q4cdn.com/399680738/files/doc_earnings/2023/q3/p...

And no, Facebook is not lying about those numbers.

Thanks!

I wouldn't expect them to be lying but there to be some data hiding in the "average" part of the ARPU. We often want the median or some other percentile, not the mean.

"We define ARPU as our total revenue in a given geography during a given quarter, divided by the average of the number of MAUs in the geography at the beginning and end of the quarter."

So that is about what I expected. I'm not going to dig into this but it could be very meaningful or extremely misleading. Interesting though.

Facebook don’t have to make 12.99EUR/user.

There are two values here: what percentage of people opt for the “ad-free” experience and how much FB makes per user. In fact, as long as their ad revenue per user is LESS than 12.99, this will work out net positive for them.

The only way it would be less is if the alternative is “not having Facebook”, rather than “Facebook with ads”.

> Isn't this intentionally priced so that people won't pay for it?

yes

then they'll go back to the regulator and say "we tried, no-one was interested"

I would argue that people who potentially would like to pay for this are worth far less in terms of revenue for Meta than the rest. For instance, I use Facebook semi-regularly, mostly because I follow some people and also have a few Messenger chats open to the side, I ignore their advertising completely. Would I like Facebook ad-free? Yes. Would I pay for it? No. Would I, as a user, care if Meta declared bankruptcy tomorrow and ceased immediately? Certainly not.

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