Hacker News Reader

Comment by leftnode | Hacker News Reader

Simply charge them for it. I don't understand why not. I haven't read the latest stats on how big Facebook is, but lets put it at 200 million real users. Let's say that Facebook says that it now costs $5 a month to use. You get all of the same features you have now, unlimited everything, just like now. If only 5 million stayed and paid that amount, thats $25,000,000 a month.

I would much rather have $25,000,000 a month in real cash, than having other people give me money and have part of my company. Facebook is unlike Twitter. There are a bunch of Twitter clones out there, and Twitter is fairly easy to copy. If Twitter started charging for its services, 99% of the users would migrate somewhere else. I think Facebook has a powerful enough application that other companies couldn't touch it for years, and people would pay for it.

View on HN

You are missing one very important point. If facebook were to do that there would be a free alternative with traction within 24 hours and the 195 million that go away will pull the remaining 5 million with them. Facebooks sole raison d'etre is the fact that they have a userbase that has a high probability of including some people that you know.

See 'metcalfe's law' about the value of telecommunications networks.

It's very easy to destroy a community that was built on 'free' by starting to charge for it.

It is always easy to solve other peoples/businesses issues in five minutes, in practice things are seldom as simple as they appear to an outsider.

I doubt that very much. There is a point of diminishing returns, I agree. If the charge were $1, less people would leave than if the charge was $100. But, the value of facebook or other social networking sites is in the social aspect.

For pay services have competed favourably with free services. Ringtones are one example where people opined that paid services would fail because free options would emerge. And yet, people still pay and download ringtones.

The catch to making people pay the $1 or $5 is to make it easy. If you require them to pull up a credit card or some such, you will lose people. If there was a simple way to pay such that the money came out of some account (PayPal or some such) then you'll get the $1 in a heartbeat.

The only way that I know of - also known as the freemium concept - to convert a large userbase of free users to a paying userbase is to provide a lot of new features under a premium banner that you only get access to when you pay.

Over time the weight of the new features starts to be larger than the 'simple' free version. The free version is the hook that you use to get people to use the service and to stave off encroachment by competitors.

If a free competitor should arrive on the scene that offers part of your premium features for free then you can choose to selectively offer those features to all your users (not just your paid users) but here you have to be careful not to erode your paying userbase because it is possible that people are paying for just that one feature and they'll possibly cancel their subscription.

This is not as trivial as it sounds.

For the record, I manage a website that has an active userbase of about 100K people a small percentage of those are paying users.

Facebook and Twitter (and their like) have yet to turn a profit or even come up with a plan to make one. Meanwhile, Blizzard's World of Warcraft continues to rack up millions a month from loyal and paying users. If you want to make money on the internet you need to take a good long look at what Blizzard is doing.

There are more ways to skin a cat. By your account the owners of icq never made money either. Until they were bought out that is...

Not every strategy is based on making money operating a service, some people aim for the big exit and are well willing to operate under a loss as long as they hold on to the service. It's a risky strategy, if your timing is off then you usually fail big time. But if the timing is right and you can find a partner that perceives an upside to having access to your users you just might score the jackpot.

Facebook's value is because of it's increasing users. If it's paid and 195M leave (according to your estimates) then it's real value will be eroded and it's revenue ($25M your estimate) will continue declining and it will be history within a year or less! Take my word for it. Don't you think they would have thought about this a million times over at facebook?

You get all of the same features you have now, unlimited everything, just like now. If only 5 million stayed and paid that amount, thats $25,000,000 a month.

But the major draw of facebook, for most people, is that they can keep in touch with their family, friends and colleagues - the people who make up the 200 million people. If my peeps leave as part of that 195 million, why would I still stay?

Gotta think big picture leftnode.

It's very hard to just shut off the lights on a free service or otherwise take away features to create a premium tier. I can't even think of a viable way to do it. Do you set a time table? 60 days and your account goes dark if you don't pay? I don't think I would be over estimating to say they could easily lose 50% or more of their users in one day Even people who would be willing to pay would have an intense feeling of bait & switch. It would be a disaster.

Facebook's core value (as with most social networks) boils down to network effect...if they impose any real barriers, they cease to provide value to new and existing users.

http://en.wikipedia.org/wiki/Network_effect

You do realize your example essentially says that if ~98% of your fb friends left, you would still choose to stay & pay fb $5/mo?

Reply on news.ycombinator.com