We’re willing to pay $8 per month for Hulu, $10 a month for Spotify Premium, and $11 per month for Netflix to consume media, but how much would you be willing to pay to stay in touch with friends in an ad-free Facebook world? If you shun ads and want to view Facebook distraction-free, it may cost as much as $11 to $14 per month for that privilege, according to an analysis by TechCrunch.
During his testimony on the Cambridge Analytica scandal amid data privacy concerns, Facebook CEO Mark Zuckerberg revealed that the company doesn’t “offer an option today for people to pay to not show ads,” leading some to speculate that a subscription tier may be in the works. “Even though some people don’t like ads, people really don’t like ads that aren’t relevant,” he added.
In order for a subscription model to work, its price must offset Facebook’s ad revenues, and TechCrunch hypothesizes that number to be at least $7 per month given that Facebook earned $19.9 billion last year from 239 million users.
However, Facebook remains committed to giving everyone access to its services, so the company may offer a premium tier for those who want a safer way to access their social network and a free tier for those who can’t afford to pay.
“Overall, I think that the ads experience is going to be the best one. I think in general, people like not having to pay for a service,” Zuckerberg clarified. “A lot of people can’t afford to pay for a service around the world, and this aligns with our mission the best.”
While Facebook’s floor for an ad-free business model may be $7, a subscription model could come in as high as $11 to $14 per month or $168 per year. According to TechCrunch’s analysis, Facebook earns more for serving ads to U.S. and Canadian users than those in other parts of the world because they have more wealth and disposable income.
“But those willing and able to pay are probably richer than the average user, so luxury businesses pay more to advertise to them, and [they] probably spend more time browsing Facebook than the average user, so they see more of those ads,” the publication said.
However, unless Facebook adds more features to a subscription tier, even those who could afford the price may not be willing to pay. With Spotify, opting for a paid subscription allows you to play the songs in your playlist however you like, and Hulu offers a higher price tier for interruption-free streaming without ads. It’s unlikely that Facebook would create a paywall to keep free users out of new features.
By creating a subscription model with rates as low as $7 and as high as $14, Facebook may best achieve its intended goal — that the company does deliver a valuable and meaningful service, and ads help to make this service available to everyone to use without a fee. Essentially, the sticker shock may drive more people to appreciate Facebook’s free model.
