Is it time for an Ad Free, subscription based version of Facebook?

Facebook is undergoing a great deal of scrutiny these days. Over the last 18 months, they have come under fire for being a service that rampantly spread fake news without any checks and balances applied to their service and did not protect their customer’s data from being hijacked. Some have even gone as far as to accuse them of having an impact on the 2016 presidential election.

Then last week the news that Cambridge Analytica abused Facebook in onerous ways has put Facebook CEO Mark Zuckerberg in the headlights of US and EU officials and has brought Facebook’s leadership under great pressure to clean up their act, or they will come under stiff regulation from US and EU legislative bodies very soon.

In talking to users of Facebook, I am starting to understand their frustrations with this social media service, but I also sense that it still provides real value to them in the way they can connect with family and friends and get legitimate information and even ads that are actually useful to them. However, the thing I keep hearing from these discussions is that they are losing faith in Facebook and are not sure they can trust them to protect them from nefarious actors who prey on them in multiple ways.

If you look deeply at Facebook’s business model, the culprit, so to speak, that allows this unrestrained flow of information is the fact that Facebook is ad driven. Everything they do is tied to the ways they can use data collected through their users to serve them targeted ads. This is at the heart of Facebook’s overall financial growth and keeps them profitable.

In my conversations with Facebook and some Twitter users, there is one theme that keeps coming up, and that is that they want to have these connections with friends and family and that they understand ads are the way this service is free to them. However, what they want are these services to protect their privacy and keep them from being exploited or misused by their data being harvested and used beyond a proper ad model they are willing to accept.

In a recent insider post about Apple’s purchase of Texture, I pointed out that the acquisition of this magazine service is tied to magazines that are trusted sources. In most cases, the magazines use highly accepted journalistic practices, and people trust what they read in them. I called Texture a “Safe Haven” for content and that Apple now has a type of service that will be important to their customers and extends the content reach of their ecosystem.

The idea of trusted content or sources is really important in this day of fake news. People are tired of being duped and are willing to pay for a trusted service like the one Texture delivers for $9.99 a month that gives them access to over 200 magazines.

Given what Facebook is going through and has had to deal with, perhaps it is time that they offer what I call a “trusted” or Safe Haven version of Facebook and do it as a subscription service. I realize this idea has been kicking around most likely inside Facebook as well as with other parties who look at Facebook’s future. But given what happened recently with Cambridge Analytica, and the fact that it does not seem Facebook really knows how to deal with protecting our data given their ad-based business model, I am beginning to think that millions of people may be willing to actually pay for an ad based version of Facebook if it does not use their data for ads and ad targeting.

So how much would a user cost Facebook if they had to charge them? Chris Wilson, Director of Data Journalism at Time Magazine answers this question in a recent post, and I share the relevant part of this article below:

“So how much would this cost users? Facebook estimates that it pulled down $20.21 in revenue per active user worldwide last year, for a total of $40.65 billion. That sum amply covered the $20.45 billion the company paid in costs and expenses. After taxes, Facebook posted $15.92 billion in profits. That per-user revenue was considerably higher in the U.S. and Canada, where a more developed and monetized audience netted $84.41 per user. That’s still less than what you might pay for Netflix or HBO, though perhaps more than many of Facebook’s 2 billion monthly users would be willing to shell out.

But even if subscriptions were prorated by market, and even if a privacy-positive network were to grow to Facebook-sized proportions, it would take less than $84.41 a month in the U.S. and Canada to turn a healthy profit. The trouble with relying on a lot of ads is that you need to store a lot of content. These days, that includes lots of video, with its lucrative “pre-roll” and “mid-roll” ads. To keep up with demand, Facebook has aggressively tried to get users and companies to post their content directly on the social network. When you get into the business of hosting large amounts of original content, however, your bill for storing and indexing rises quickly. Facebook doesn’t disclose its exact obligation for running massive warehouses around the world, but it’s safe to assume it’s a fair portion of its $20 billion in expenses. Without the burden of being a major content platform or pouring money into sophisticated algorithms to serve ads based on rigorous analysis of a person’s profile, we can estimate that $75 a year would cover the operating costs and generate a healthy profit.”

If Mr. Wilson’s math is correct, I monthly subscription price of $6.25 that would serve a user no adds but give them the valued connections to friends, family, and information they specifically want would still net Facebook a healthy profit.
As the Time article points out, Facebook would have to drastically change their business model and cut the costs of hosting video intensive ads for this to work. But I have to believe that for a significant portion of users, especially in the US, Canada and much of the EU, a subscription-based Facebook could be acceptable.

If I were going to pay a subscription fee for Facebook, here is what I would want in that service:

1-Facebook would not serve me any ads of any type and not use any of my personal dates for this purpose or share that data with advertisers even if it was to be used for market research purposes of any advertiser. My data is may data and not for Facebook to use in any way other than to serve me.

2-I would want a secure connection to my friends and family and be assured that I have complete control of what I can send them and what they can see as part of this service. More importantly, Facebook is not profiling me or my friends and family and just allowing me to communicate with them and share stuff of interest to me in a secure, safe haven environment.

3-I would want the Facebook messaging service to be encrypted and as secure as Apple’s current messaging service. While Facebook is the medium for making these connections, I do not want them to store that data or have any access to my messages for any purpose.

4-I would be open to them curating the kind of information I want to see based on my preferences. I am willing to let them know I like Golden Retrievers and stories about dogs. I am ok that they know I am a scuba diver and send me stories about scuba diving. But I would set the preferences for what type of information I am interested in and, using AI and machine learning, check articles related to my interest to make sure they are legitimate and not based on fake news.

This is the minimum I would want in a Facebook subscription that I pay for monthly.

Given Facebook’s business model today, I doubt that they would create this kind of service for their users, even if millions of us want this type of privacy and control of Facebook. However, if they don’t deliver this type of true secure safe haven for existing Facebook users, give us more control of our data, make sure our data is truly secure and protect us from fake news, millions upon millions of users will #deletefacebook and look for some other type of social media platform like the one I describe above and opt for this type of social media service instead.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

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