What if Facebook Charged Users $1 Per Month?

By Kyle Austin

September 30th, 2009

Facebook has been buzzing again in publicly noting that it’s now over 300 million users, and perhaps even more importantly cash flow positive.

The latter of which surprising even those that follow the company daily. Earlier this year Marc Andreessen, who sits on Facebook’s Board of Directors, said the company “would do $500 million in revenues in 2009, up from an estimated $280-$300 million in 2008.”

However, this latest news means that the company could do even better than Andreessen’s predictions for 2009, with eyes on a potential late 2010 or early 2011 IPO.

The one question that remains is if advertising will be the singular revenue stream for the company. Yes, the ads we see on our profile pages and news feeds are lucrative, driving the company’s current revenue growth, but are they missing other opportunities to capitalize on a site that has now outpaced Yahoo! as the second most traffic’d site on the Web (Alexa graph). 

Douglas Macmillan of BusinessWeek hypothesises today that Facebook’s users can afford to pay for Facebook’s services and Facebook should charge them.

His basic thesis: Facebook users are no longer college kids with little discretionary income,  media companies are planning to charge so why not Facebook and they’re in the unlikely Internet position of having power over their consumer base who are devoted to their product.

Some quick math asserts that Facebook would reach the billions in revenue – Andreessen believes they’ll reach in a few years – in a year’s time by charging only $1 per month to its 300,000,000 active users. To the tune of $3.6 billion in annual revenue. Even if Facebook did it to offset advertising to a percentage of users that didn’t want to be bothered with ads, it’d still be fruitful.

So would users pay? The jury is out on that. I have to believe that there are more creative revenue strategies through engagement points (think of them as frequent flyer miles) or even corporate accounts (brands paying to host their Websites / Fan pages on Facebook). On the other hand the thought of pulling in $3.6 billion by only asking for $1 per month from each user is pretty tempting.

Entry Filed under: Branding & Advertising, Digital media relations, Facebook, Social Commerce, Social Media, Twitter