4 Billion yearly revenue
900 million users
equates to $4.44 per user annually
If they charged $1.99 per month in users fees, and even if 2/3 of users quit. That would still give them 300 million users each generating $23.88 annually.
300 million users
23.88 annually per user
7.16 Billion yearly revenue.
After that, any ad revenue would just a gravy.
Do you really think they are 900 million people using facebook? hell I got 5 accounts myself and that so I can send gift and other thing I need to play the games. Beside companies are onto the scam......people don't click on ads!!
First, so-called "broke" people are buying .99 cent downloaded mp3 music from iTunes even though they got used to getting it for free on Napster. (Albeit illegally)
Second, FB could give users total privacy of their data with the $1.99 per month charge. The biggest complaint users have is the sharing of their data. That would end that complaint. People pay for online data storage all of the time. FB would be that and more. The business model wouldn't be about advertising as much as it would be about user growth and retention.
It makes perfect sense. With more than half of users accessing FB from their smart phones, storage limitations of photos on their phones will surely be a problem. FB could be the answer to this problem.
Not easy to say bye if loyal/addicted users have no where else to go. $5 is the price of a crappy meal from Mickey Dee's. I think many will pay, especially as FB adds more and more features, like movies, music, online payment solutions etc. If only 1/2 billion users stick around, FB should do very well.
Finally someone that can see the bigger picture. If NFLX can get $7.99 per month for streaming B grade movies, FB should be able to get $4 to $5 bucks a month from it's addicted users, especially when they too start streaming movies. Hopefully better than NFLX content.
And one more thing. This instagram aquasition will be in high demand from FB users.
Don't forget that G+ is free and that there will be free competition moving in to pick up the PO'd users who drop FB. Cost backlash happens hard and fast on the internet. You can't just jack it up for all w/o adding value, IDK how cheap it is. I'd bet only 10% would pay if that's the cost. And when the 90% leaves, they will too. A prem acct would have to seriously add perks and would have to be an opt-in. Until then, it's Farmville and ads.