Thursday, October 13, 2011

Facebook: Charging Users?

There are many rumors being spread that Facebook is going to start charging its users an additional fee for membership. The real question is why would anyone want to pay for something that they could get for free on Google, Twitter, MySpace or any other social networking site? Facebook’s’ main goal is to connect everyone in the world. If one had to pay, it would be leaving out millions of people that weren’t able to afford a membership no matter what the cost may be. This idea is a great indicator of supply and demand. The demand for Facebook has skyrocketed since it started in 2004. In one day, half a billion people have used the website. Facebook’s business model completely revolves around having as many users as possible. The company realized that they can’t reach their ultimate goal if they charge users.  Also, the idea of charging users is a perfect example of opportunity cost. Creators are giving up potential revenue that they could receive, for the need of masses of users to fuel their company to be successful. One final example of charging users is the idea of a tradeoff for the company.  Facebook doesn’t need any money at this point because they are bringing 4 billion in revenue this year, raising more than 2 billion in venture capital. In 2012, the company is expected to be with 100 billion. They have chosen to make their money by advertising, Facebook credits, and social games such as Farmville and Mafia wars. Eventually they may charge for subscriptions to music and TV services, but it wouldn’t make sense to charge a user to their personal account.

5 comments:

Andrew Boyd said...

I believe that if Facebook starts charging for personal accounts, they will see a shift in demand. ONe way to cause a shift in demand is by consumer expectations, and if Facebook begins to charge money for accounts, consumers will not have been expecting that and it will cause a decrese in demand. When a new user to Facebook joins, he or she is joining for a FREE social networking site, not to be charged to talk to friends and view photos. Some Facebook users may have a inelastic demand, however, with other social networking sites like Myspace, it would be easier to switch to Myspace instead of paying for a Facebook account.

Daniel said...

If Facebook decides to charge it will lost a large amount of users who wouldn't want to pay fees. Other social networking sites exist and are free and if Facebook decides to charge other social networking sites could start up in response to this and possibly cause Facebook to go out of business or possibly lose a great amount of yearly revenue. Facebook makes enough money off of adds. It would be in Facebook's best interest to keep its many users and find a different way to obtain money. The charges would cause an inward shift in demand.

Katie R said...

Facebook is a popular form of communication in our world today. When many people first got a Facebook account, it was free. But now, the "threat" of charging users could possibly halt or alter the popularity of Facebook. Eventually, Facebook could possibly fade away if charges are required from users

Eric M said...

I completely agree, Cassidy. Facebook needs to continue to improve its usability in order to maintain precedence as the superior and most popular social networking website without frocing a cost. The goal of social networking websites is to maximize users in order to be a complete representation of communities and be a more useful tool to connect people. Where Google+ is different, for better or worse, is that they have a strict age requirement for who can use the website. Users must be 18, and Google has been actively closing accounts of policy violators. Facebook's ability to incorporate more users and change to be more useful and visually appealing has made it the current phenomenon. Many users are always signed in with their mobile apps on their cell phones, and have the Facebook wall as their home screen on their computers. By creating a membership cost, facebook will be disadvantaged toother free competitors, at least in the short run.

Cassidy Hansen said...

Thank yall so much for commenting! I completely agree with everything you guys are saying. Facebook has quickly become one of the most used, popular social networking sites in the world. If they began charging people, the demand for the site would go way down and the use of other social networking sites such as twitter, myspace etc. would sky rocket. It is very accurate that IF facebook decided to charge users they would lose the yearly ammount of revenue they've been recieving. If facebook began Charging users, lets just say the social networking site wouldnt have such a bright future.