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Facebook Businesses The Almighty Buck Twitter

Twitter Co-Founder Biz Stone To Facebook: Start a Premium Subscription Service 156

Posted by samzenpus from the bad-ideas dept.
An anonymous reader writes "Twitter co-founder Biz Stone today decided to offer some business advice for Facebook: launch a premium subscription service. For $10 a month, Stone figures the company could get rid of ads on its site for those willing to pay to go 'premium.' He says in part: ' Anywhoo, now that I’m using it and thinking about it, I’ve got an idea for Facebook. They could offer Facebook Premium. For $10 a month, people who really love Facebook (and can afford it), could see no ads. Maybe some special features too. If 10% percent of Facebook signed up, that’s $1B a month in revenue. Not too shabby. It’s a different type of company, but by way of validation, have a look at Pandora’s 1Q14 financial results. Of all Pandora’s revenue generators, the highest growth year-over-year by far (114% growth rate) is in subscriptions—people paying a monthly fee for an ad-free experience....."
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Twitter Co-Founder Biz Stone To Facebook: Start a Premium Subscription Service More

Twitter Co-Founder Biz Stone To Facebook: Start a Premium Subscription Service

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  • Yeah Right (Score:1)

    by Anonymous Coward

    10% ???? It would probably be more like 0.001%.

  • But... (Score:1)

    by Anonymous Coward

    ... they'd still track and sell your data anyway, so what exactly is the point?

  • Adblock + (Score:3)

    by MightyYar ( 622222 ) on Sunday July 21, 2013 @10:43AM (#44342101)

    If you were so addicted to Facebook that the ads really annoyed you, wouldn't you have Facebook enhancing crap installed, like Adblock+? Social Fixer is pretty great, but I'm not quite addicted enough to use it.

    • Re:Adblock + (Score:4, Interesting)

      by Andy_R ( 114137 ) on Sunday July 21, 2013 @11:49AM (#44342567) Homepage Journal

      Adblock + gets rid of the overt adverts, and FBPurity (http://www.fbpurity.com/) gets rid of the spammy content (game requests, 'questions', 'trending articles', 'promoted posts') and cleans up the UI cruft (news ticker, half the left column).

      With those two, and manually turning on the see all posts option for every page, FB doesn't have much left to charge for that you can't get for free.

    • ABP and their ilk might work effectively on sites where you do not have an "account". On sites that you do, they already have a mechanism to identify you and all ABP does would be to block the ad content from being displayed. The tracking and mining cannot be avoided.

      Of course, if just not displaying the ads is your concern, all is well.

      Even the paid Google Apps for Domain product has a check box to let Google display ads as it would for non-paid accounts. It probably implies Google is tracking and minin

  • The Pandora ads are obtrusive. Facebook ads are the same as web ads everywhere, easily ignored.

    • Shhhhhhhh!

    • Re:Big difference between Pandora and Facebook. (Score:4, Interesting)

      by Lehk228 ( 705449 ) on Sunday July 21, 2013 @10:57AM (#44342209) Journal
      you don't notice the feed spam ads? the ones where FB makes it look like your friend posted about a company when they really just "liked" their page 7 or 10 months ago?

      • you don't notice the feed spam ads? the ones where FB makes it look like your friend posted about a company when they really just "liked" their page 7 or 10 months ago?

        Nope - I filter them out with the power of my mind. E. E. Smith predicted this in 1950 in his novel First Lensman:

        ... the Dillingham began to pick up speed. Moving loud-speakers sang to him and yelled and blared at him, but he did not hear them. Brilliant signs, flashing and flaring all the colors of the spectrum-sheer triumphs of the electrician's art-blazed in or flamed into arresting words and eye-catching pictures, but he did not see them. Advertising -advertising designed by experts to sell everything from aardvarks to Martian zyzmol ("bottled ecstacy")-but the First Lensman was a seasoned big-city dweller. His mind had long since become a perfect filter, admitting to his consciousness only things which he wanted to perceive: only so can big-city life be made endurable.

        This has been happening to me - every now and then I surprise myself by accidentally noticing the sheer amount of ads I automatically filter out. The human brain is awesome at this: filtering out the dross, and only letting significant items impinge on your consciousness. The advertisers don't really have a chance.

        • Re: (Score:3)

          by Lehk228 ( 705449 )
          problem is, these ads hitting the filter DO make subconcious predispositions towards certain products, they seem more familiar even when you don't actually know anything more about them than you do competing products.

          • That is only a problem if in the end when making a decision you don't pay attention to what you are buying and if that is the case then why bother discussing the issue.

  • Facebook isn't that good and people know it (Score:5, Insightful)

    by dingen ( 958134 ) on Sunday July 21, 2013 @10:46AM (#44342135)

    Anywhoo, now that I’m using it and thinking about it, I’ve got an idea for Facebook. They could offer Facebook Premium. For $10 a month, people who really love Facebook (and can afford it), could see no ads. Maybe some special features too. If 10% percent of Facebook signed up, that’s $1B a month in revenue. Not too shabby.

    The problem is highlighted in bold. People who love Facebook and are willing to pay $10 a month isn't 10% of Facebook's user base, it probably isn't even 1%. I think hardly anyone really "loves Facebook" at all actually, the only reason people stick around is because that's where their friends are.

    Facebook really needs to improve their platform *a lot* if they want to charge people money for it, because in it's current state, it isn't worth a dime.

    • Re: (Score:3)

      by siride ( 974284 )

      Outside of the data selling and privacy issues (which are, to be sure, BIG issues), the platform isn't actually bad. It's fairly straightforward and usually works just fine. Which might be a problem, actually, for Facebook, since there's not much they can offer for people to want to pay for.

      I don't want to see a bunch of responses giving me edge case examples of how the interface sucks. Every interface has those problems, and Facebook's is no exception. But in the main, it's fine. Also, I don't want to get

      • Re: (Score:2)

        by dingen ( 958134 )

        It used to be the case that Facebook was sort of OK. Nothing special, but not too bad too. But in the last couple of months (years maybe even), it really has declined in quality a lot.

        I fully agree that some edge cases are always going to be a problem, but Facebook's utter randomness really goes way beyond acceptable behavior from a software product.

        It seems to me that the more you use Facebook, the more you grow upset with it. Which is kind of hard to combine with the "lets let people who love Facebook pay

        • Re: (Score:3)

          by siride ( 974284 )

          People get pissed about FB changes, and then they keep on using it, because the problem is that people don't like change. Can you provide some specific examples of the downhill direction?

      • Outside of the data selling and privacy issues (which are, to be sure, BIG issues), the platform isn't actually bad. It's fairly straightforward and usually works just fine. Which might be a problem, actually, for Facebook, since there's not much they can offer for people to want to pay for.

        This. The only people bothered by Facebook's mostly unobtrusive ads are those who are already hypersensitive to advertising - and it's not clear they're more than a relatively small minority.

    • Frankly, I'd be surprised if 1% of Facebook users are even people.

      Imposing a fee on non-people (companies, etc) is an option, however. I know a lot of small companies that use FB as their entire web presence. Charging $10/month for them is a drop in the bucket and is just a part of the operating expenses.

      • Re: (Score:2)

        by skeib ( 630324 )

        $10 would be very silly. They should base the price upon the number of followers - a big corporation selling to consumers would probably easily pay $100.000 a month for a Facebook presence if it had no choice.

    • I don't think you have any basis for making such a claim. The real problem is the selling of data. Would paying customers expect more privacy, and how would that impact their business model? Knowing Facebook, it wouldn't. They would insist on continuing as is, with the addendum that paying users are now a lucrative segment of their market to feed advertisers. Who wouldn't want data on people who have that kind of disposable income that they choose to spend it on Facebook?
    • Actually, I believe quite the opposite. You'd probably get quite a few more people willing to pay if they'd promise not to change it ever again. A lot of non-tech savvy users take a big fit every 6 months when facebook decides to move everything around, add new privacy settings, and create privacy unfriendly defaults for all the new settings. If they promised to just leave things the way they are for a little while, so people wouldn't have to review their privacy settings all the time, and didn't have to

    • They could have easily charged for business pages. Any pages, really. Personal profiles would still be free.

      But that ship sailed long ago. I've no idea why they didn't think of charging some small fee for pages. Or at least for access to the metrics and info that go along with pages. Stuff business and organisations would actually be happy to pay for, given the exposure.

  • Great idea! (Score:1)

    by Anonymous Coward

    perhaps it will deal the killing blow to facebook.

    • No. Facebook is good. Otherwise the rest of the net would be _full_ of attention whores.

      Definitions of signal and noise vary. Let there be a place on the net for AOLers. It reduces the noise elsewhere.

      I wish Zukerburg nothing but luck, letting his customers keep any money or privacy would be an unethical and immoral act. He should use a light touch or his userbase is liable to spill back out into the net in general.

  • I have better advice for Facebook, Google, Hulu and all other interactive media. Why don't you ask me what kind of ads/informertials I want to see? Stop trying to figure out what I may want and stop showing me crapy ads for insurance (I have one), laundry detergents (who cares) or senior mobility devices (still have couple decades to get there). Ask me what ads I would like to see (cars, computers, movies, music, etc.) and then make those ads not only entertaining but also educational/meaningful. I would be

    • Re: (Score:3)

      by siride ( 974284 )

      Honestly, I'd rather just pay. Why do I want to see ads at all? I don't. I want to watch a show or talk with friends. If I wanted to shop, I'd go shop, using sites and resources built for that kind of thing. Make it easy for people to pay and make it affordable. And, naturally, make it worth paying for. I pay 10 bucks a month for Spotify because I think it's a good service. I'd pay it even if there weren't a free version. Same with Netflix. Make it compelling, and people will pay. Not everyone. There will a

      • Netflix is pretty much the poster child for what people will pay for. No commercials, few restrictions. What's on offer is so good that people will go to extensive lengths to circumvent platform lockout, or simply Netflix ignoring platforms, in order to get the content onto their chosen output device. But that's in large part because you literally cannot go anywhere else to get what they have. Much of the content you can stream from Netflix simply cannot be streamed legally from any other location, and even

      • That is exactly why I have a Netflix subscription and no current plans to get a Hulu subscription.

        Sure, Hulu has more current shows (sometimes.... Seems to be getting less selection lately, though, and of course they don't have the Netflix originals), but they don't seem to be offering anything for the subscription price beyond, "if you've got a mobile device that can't do flash, you can use our app on it to watch our stuff and unskipable ads."

    • Comment removed based on user account deletion

  • when they offer a paid service to see who has actually visited your home page. Classmates.com is (and always has been) failing for this very reason. LinkedIn has joined them.

    Sorry, people, but if you have that information, either keep it to yourself, OR it should be my legal right to know who is e-stalking me. I shouldn't have to pay to know that.

  • Big Surprise (Score:1)

    by Anonymous Coward

    Twitter co-founders advice to facebook is to decimate their user base and drive users to twitter.

    In other news, Microsoft's advice to Apple is to bring back the Newton and the Pippin. Yahoo advises Google to remake their search engine to be more like Ask Jeeves. Jay Z advises Diddy to release a bluegrass record. Pepsi advises Coke to start peeing in the vats. AND SO ON

    • I thought the products whose names start with iP were the return of the Newton, and the new gaming functionality that ships in iOS 7 was the return of the Pippin. So you might want to revise your analogy.
  • There is a huge difference between Pandora's ads and Facebook's ads. Even without adblock its easy to ignore Facebook's ads, not so much when your music is interrupted with an ad on Pandora. The reason why Facebook has been mass adopted has been:

    1) Everyone is on it
    2) Its free
    3) Its not Myspace

    I don't think there's a single person who would say that Facebook is great or amazing, instead its simply adequate enough for most people's needs. Other than simply having a lot more people on it than other

  • Coming from a guy who's company's income is roughly 1/3rd of FB's advertising income. http://articles.latimes.com/2013/mar/27/business/la-fi-mo-twitter-ad-revenue-billion-2014-20130327 [latimes.com]

  • I thought Facebook was already premium. In order to skip the friend request CAPTCHA, post videos, add a page, or even to log in to your account after a while, you have to verify your account [facebook.com], which requires having a unique mobile phone number. A house phone won't work if you share this phone with another Facebook user in your household, and a lot of house phone carriers can't receive texts anyway.

    • Re: (Score:2)

      by siride ( 974284 )

      Facebook doesn't make any money off that. Likewise, Facebook requires that you have a computer with an internet connection. That also doesn't make Facebook premium.

      • Facebook doesn't make any money off that.

        It makes money selling peace of mind to advertisers that 1. each account represents a unique cell phone subscriber, and 2. users are rich enough to afford a personal cell phone. And I don't know whether Facebook owns a position in one of the major carriers or vice versa, but if so, it'd make money when more people sign up for a cell phone.

        Likewise, Facebook requires that you have a computer with an internet connection.

        Facebook requires users to have access to a computer with an Internet connection, but it requires each user to have exclusive access to a mobile phone. One of several memb

    • I've tried entering a Google Voice number in that space, but FB wouldn't take it. It's easy to ignore that screen though.

  • the only reason I would pay.. (Score:4, Insightful)

    by houbou ( 1097327 ) on Sunday July 21, 2013 @11:02AM (#44342249) Journal
    for Facebook is IF not only would the experience be AD free, but I would have 100% control and ownership of the material that I posted. If I decide to delete/remove something, it would be 100% gone, not archived anywhere. If I want to backup my posts, my entire account, I would be able to do so.
  • I can't help but wonder if he came up with this great idea all on his own or if he managed to read one the chain letter typed rumors about "Facebook Premium" that are posted and circulated on Facebook every week. I guess Stone is to blame for all the "Starting on (pick one of 50+ dates claimed) Facebook will no longer be free. Tell your friends." messages I have had to deal with in my timeline for the last several years.

  • Biz Stone misses the point of Facebook completely. The ads are not there to finance a free subscription model, the subscriptions are there as targets for the ads.

    And no way will Facebook change that. In fact, they started as a premium service with limited access, in order to build up a demographic base to have to sell.

    • Re: (Score:2)

      by dingen ( 958134 )

      This is exactly why Facebook's entire business model would collapse if people could buy their way out of seeing ads. Even if only 1% of the users would disable ads this way, companies purchasing ads would surely miss out on the 1% of the most addicted, most active users. The people who would pay money to disable ads are exactly the people advertisers want to target.

    • Yikes - you butchered that analogy.

      We can see where you started with the mantra "facebook (A) is not the product for users (B), but users (B) are the product for advertisers (C)" ... 3 separate entities and a reasonable concept ...

      You've concluded that "ads (A) don't finance users (B), users (B) are the target of ads (A)" ... only 2 entities and logically inconsistent given the ads are there EXACTLY to finance a free subscription model

      What has been proposed may actually make sense given it makes facebook th

      • Re: (Score:2)

        by mvdwege ( 243851 )

        No, the ads are not there to support the free subscriptions. The ads are not a means to an end, they are an end in itself, and the consumer of the ad is the product being sold. Giving that consumer an out means that that consumer should pay a lot more in subscription fees than they bring in in ad revenue, especially considering that with a significant amount of the users opting out the value of the rest of the userbase drops.

        Unless of course you pull the bait and switch tactic of promising an ad-free experi

        • means that that consumer should pay a lot more in subscription fees than they bring in in ad revenue, especially considering that with a significant amount of the users opting out the value of the rest of the userbase drops.

          That is really the guts of it ...

          Ad revenue is actually tiny at around $0.15/mth/user up from closer to $0.05/mth/user last year ... any subscription would be SUBSTANTIALLY higher than that and it questionable how far they can push ad revenue given people are complaining at the current levels.

          I agree the userbase is the product so you can't afford to push them away with too much advertising - the question is how to monetize the userbase.

          • Re: (Score:2)

            by mvdwege ( 243851 )

            your numbers are a bit off. Ad revenue is around 1 billion and rising (especially in the mobile space), on around 600 million active users. Around $1 per user is still not $120 per year, but I figure the a losses will be higher if a significant fraction of users drop out of the target audience for ads.

            • Nope - think we agree on the numbers

              $1 billion / 600 million users / 12 months = $0.139/user/month ... $0.15 is close enough

  • So, then what happens is that people pay to not have ads. Then pretty soon, they will have ads on the premium service as well. Then people will get pissed and leave.

  • Why is it that the current model in large scale endeavors like this is to purposely make something so annoying that the customer would pay to remove that annoyance? Why spend all that money on a clean and simple, easy-to-use interface to attract customers - and then purposely make it annoying? It seems like we go through cycles - a great product appears, it attracts a massive userbase, marketing steps in and fraks it up, users jump-ship to the "next great thing", repeat. I realize that these are businesses

    • Re: (Score:2)

      by siride ( 974284 )

      We'll drive it until it stops making money. I guess it still works (at least for a little while), so there's no disincentive for the marketing and management folks.

    • Answer: Because it is not a failed model but is the traditional life-cycle of ANY business product.

      The cycle is:
      - develop a product
      - create demand for the product
      - monetize the demand
      - continue until the life-cycle is over

      Part of monetizing the product is to segment the market based on willingness/ability to pay. Premium vs ad-supported is a very easy and successful way to do that with media-type products.

      Where this model fails is where there is not a viable business to start with and an attempt to monetize

      • Take your pick. The problem is that people tend to think of these services, especially within social media, as something other than a "product" with a shelf life. It's not like we make our lives available to our friends and extended family with the idea that it's 'only until the company can't make money any more and the service dies'. Anything on the web that survives for more than about a year, we tend to think of as "permanent"... but it never is. But honestly, the life cycle really seems to be:

        - develop

  • I pay subscription fees for two websites. One is a forum that costs me around $3 a month (I pay a year in advance.) The other is di.fm which is $5 a month for ad-free. Since the ads are auditory and cannot be ignored, the $5 a month for me is very much worth it to improve the music listening experience. The forum gives me an avatar, no ads, and many other perks for paying them - plus I spend enough time on there to justify it.

    I'd pay at most a dollar a month just to get rid of ads on Facebook - if
  • The internet is a cesspool of spammy, useless ads, and sex ads. Nice try, Twitter, but I already have a pleasant viewing experience without having to fork out money to get rid of ads.

    If anyone wishes to join me on this side, it's much greener: Go Here [adblockplus.org]

  • Bad advice (Score:1)

    by Anonymous Coward

    The part about launching a premium service is something I'm sure Zuckerberg thinks about all the time (see: Amazon Prime), but not if they exclude the ads. That's telling their advertisers that they won't be reaching the very people they want to target the most.

  • $10 a month just so I don't get to see ads is not a deal. How about for $10 Facebook won't sell my personal information, browsing habits, and connections of everyone I associate with (and also their associations) to every "partner" they have. And while they're at it, perhaps gain some trust from their users by actually growing a backbone and keeping Big Brother out of Big Data.

    $10 a month just for no ads is just a cash grab

    .

  • freemium model (Score:1)

    by Anonymous Coward

    Biz's suggestion is naive and unrealistic. There is a VERY big cliff between 0 and 1 penny. I've been a part of several major startups that have offered free services and tried to charge. Unless you are blocking access to very valuable information that the user wants or needs (ala linkedin), people just wont pay. The uptake on that for facebook would be more like .01%. If it is a such a great suggestion why doesn't twitter try this?

  • Do I get to opt-out of all the information gathering about me and the partnerships Facebook has with other's in the industry who want to track my buying habits, my social preferences and in general just want to look at me as a giant piece of data that can be mined?

  • I would love for Facebook to do this - anything that further opens the door for a competitor to swoop in and steal Facebook's thunder is a good thing.

    And lest anyone think that's impossible, please do try to remember Facebook's own origin story. Myspace was _THE_ social networking website but everyone hated it. People used it because people used it but nobody liked it. Then Facebook came along with a clean, simple site that allowed people to do what they wanted most - stay in touch with their friends and fa

  • Anywhoo (Score:3)

    by Curunir_wolf ( 588405 ) on Sunday July 21, 2013 @12:14PM (#44342749) Homepage Journal
    Did he really say "anywhoo"? Just ignore anything after that, it won't be worth hearing.

    • Someone using a standard expression used by millions all of a sudden makes his opinions worthless? It was more interesting that you thought his opinion was worth hearing before he used that word.

      One of my college professors used anywhoo a lot and was one of the smartest people I know. Another used the phrase "way much better" though from Croatian origin that may not come as a surprise. Do those words suddenly make their opinions worthless too?

      • One of my college professors used anywhoo a lot and was one of the smartest people I know.

        You could have done him a huge favor by mentioning to him that he was doing that, he probably wasn't aware of it, any more than people saying "you know" after every other phrase, or starting every sentence with "so, ..."

        It's not that I think people that do that don't have opinions worth listening to, it's just a annoying, cringe-worthy speech habit that's so distracting I tend to tune out the rest. I do the same thing when people start a point with "The fact of the matter is..." because I know what follows

        • So by speaking in a cringe worthy way you disregard what people say based on their geographic upbringing or socio economic conditions. These cringe worthy ways of speaking are picked up through years of exposure to that specific language.

          Effectively you're promoting a more subtle form of racism. You don't think people are worth listening to because of they way they sound.

  • Basic math is, if 10% of users paying 10$ a month produces 1 billion a month revenue, it is enough for 100% of the users to produce 1$ in ad-revenue to be cost neutral. If the current set of users are not producing that much revenue, or if you have to be so obtrusive in ad serving to get just 1$ a month from the users, will it really work if it is not free? If FB users are split in two groups some getting "premium" and others not, what percentage of non-premium users would shun their premium friends?

    An

    • And that's the problem ... Around $0.15/user/month in ad revenue is a lot lower than $1

      And your logic problem:
      - it's not 10% * $10/mth subscription vs 100% * $1/mth ads
      - it is (10% * $10/mth subs + 90% * $1/mth ads) vs (100% * $1/mth ads)

      Replacing 10% of your user-base at higher profits ($10 vs $0.15) while retaining the ad-revenue for the rest kind of makes it a no-brainer.

      As for Office - it still has something like 90-95% market share ... it may be struggling in certain niches (in fact, I'm sure it is!) b

  • I don't think Zuck will change it like this? Facebook is free and always will.* *Conditions Apply

  • Facebook's traffic, user count, revenue, and profits peaked in mid-2012. They're already on the Myspace track to decline.

    The future of "social" is on phones, not the Web.

  • how about (Score:5, Funny)

    by Xicor ( 2738029 ) on Sunday July 21, 2013 @01:18PM (#44343273)
    10$ a month to have total anonymity to the government. pay 10$ a month and the government cant access your facebook... EVERYONE would buy that

    • Re: (Score:2)

      by Zouden ( 232738 )

      The government already knows everything about you, and doesn't care if you get drunk on weekends with your friends. It's prospective employers that you want to keep away from your facebook profile.

  • They want facebook users who have a little disposible inome that they might intice to buy something. Users without much money are less likely to buy on-line and won't be able to afford $10/month. Users who can afford $10/month are the very ones who the advertsiers want.

    So: if facebook were to do this they would hurt their advertisers who would see less reason to advertise with facebook. Ie this would be a total fail for facebook.

  • Comment removed based on user account deletion

  • Why on earth would someone pay $120/year... (Score:3)

    by rnturn ( 11092 ) on Sunday July 21, 2013 @08:44PM (#44346319)

    ... to eliminate annoying ads from their Facebook pages, news feeds. etc. and replace them with "special features" that are highly likely to be even more annoying than the ads you used to get?

  • ...company; however, great advice for a private company.

    Suddenly the majority of your revenue base is entirely dependent upon subscriptions. That works great for a few quarters (really great actually), and if Wall Street wasn't a ridiculous place where people could care less if you posted 1B in revenue two quarters in a row - they only care about growth irrespective of how healthy or profitable your business is - it could work.

    Sadly, that's not how publicly traded companies are evaluated. Finding new reve

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