Are You Ready to PAY for Facebooking?
Ronak is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Now that Facebook (NASDAQ: FB) has gone public, what more is in store? As it was earlier stated by Mark Zuckerberg that Facebook would always be free for its users, we now have a big surprise! It is expected that the users have to pay a certain sum (around $0.99 - $1.42 for the basic service, which has not been disclosed as of now) to popularize their posts. This is because currently around 88% of our friend lists do not see the status updates of each user on a random basis. This is a similar technique they had applied for their advertisers who have paid a certain sum for advertisements to be placed on Facebook.
Facebook owns around 55.1% of the whole social networking market with a user base of over 900 million users. As a result, there are too many posts by its individual users, which makes it difficult to display all at one time. Most of the people lose out on a lot of updates making it more like Twitter (which holds 11.7% of the market share).
Facebook is trying to capitalize on its brand image and squeeze out as much revenue as possible from the advertisers. It is using the age old idea of nickel and dime. They would begin to squeeze in pennies, which would eventually multiply into dollar. I would say it's a very smart move by them. Market analysts are estimating that such a program would help the company to earn in excess of $50 billion in revenues. However at the present moment Facebook is free, thus it can change its privacy rules without intimidating its users. Once they start charging, the users might have a change in their attitude.
Not all the users would opt for such a service and might quit or opt out of Facebook. This would give Google+, owned by Google (NASDAQ: GOOG), a big opportunity to latch on to those consumers who would be looking to stay in connect with the social world without having to spend anything from their pocket. Google+, which is already working and developing its ability to compete with Facebook, would like to cash in on this opportunity to gain market share.
Also with the purchase of Yammer (Enterprise Social networking website) - Microsoft (NASDAQ: MSFT) has already given an impression that they are looking to create a foothold in the networking industry. Thus with this news they would be looking to attack the user base for Facebook and create its market share.
On the other hand, a user who would pay might expect a value for money experience like higher level of service, feedbacks and customized privacy. With a recent change in its privacy policy, Facebook can use a user's face to advertise products outside Facebook. Now the question arises that if the users are charged in order for their friends to see their posts wouldn't they be thinking of charging facebook for using their pictures to sell products?
15th of July,2012 is referred to as FACEBOOK DAY! The website would apparently shut down or this new program would make it attain great heights and rewrite history, this is something to watch out for!
ronlovesyou has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook, Google, and Microsoft. Motley Fool newsletter services recommend Google and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
