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Facebook and Revenue – You Make the Call

BusinessWeek wonders outfacebook-logo loud in an article about Facebook whether there are premium membership offerings in the future of the social media big shot. Facebook’s COO, Sheryl Sandberg, spoke with Stephen Adler of the magazine to discuss, what else, how the company was going to make money. You would think that BusinessWeek would have the clout to get them to reveal the secret sauce for monetizing the 200 million users they have. The result is actually speculation of what might happen based on what wasn’t said rather than what was said by Sandberg. For instance:

ADLER: Does Facebook plan on charging a membership fee? Over three-quarters of its users are going into a panic-induced assumption that this is true, even though there hasn’t been talk of a membership fee from the business press or Facebook itself. So can you calm the panic?

SANDBERG: The answer is no, we are not planning on charging a basic fee for our basic services. Once again, that question stems from people thinking we’re growing so quickly we’re running out of money. We’re growing really quickly, but we can finance that growth. We’re not going to charge for our basic services.

The rest of the article is then used to guess as to whether Sandberg intentionally left a door open to the possibility of premium paid services in the future based on her use of the term ‘basic services’. Looks like a fishing expedition to me but what do I know?

Sandberg basically said that Facebook is in the business of advertising. While they may not be profitable yet they are generating revenue and that should continue to climb as their user base does. One area of concern is the fact that while MySpace pegs each user as being worth $6-$7 annually in ad revenue while the numbers for Facebook are $1-$2. Considerably lower for sure but why? One must consider that international users aren’t even part of the advertising efforts for Facebook yet so that could tell quite a bit of the story.

Forrester Research’s Jeremiah Owyang doesn’t foresee the premium member option as being viable anytime soon. Interestingly enough he doesn’t see advertising as the main revenue generator either. His thought is ‘e-commerce, media services, and new branding tools as more promising paths to profitability for Facebook in the long term’.

One reader in the comment section said that he was willing to pay $10 bucks a year to NOT see any advertising at all! Now there’s a novel revenue generating scheme! Pay Facebook NOT to advertise to you. Almost sounds like it might be worth the money. Sounds like the free ISP models of old. Where are those now?

  • http://www.izgodnobg.com/ Geo

    “One must consider that international users aren’t even part of the advertising efforts for Facebook yet so that could tell quite a bit of the story.”

    In fact Facebook is not neglecting people outside the US. I’m in Bulgaria and a friend of mine has recieved a coupon for free advertising on FB for 100USD. I myself tried the service with my own money and ran some ads just to see what their ad platform looks like and how it converts. In my case I’d like to see better geo-segmentation of visitors. FB promises geo-targeting will come soon to Bulgaria like it is in the US.

  • http://ligamusic.com Anmen

    Talk about having the rug pulled under their feet, it looks like a bubble is growing and Facebook has to be careful not to burst it. This news will be syndicated by more blogs later and the buzz will ever increase. Do I feel this leak was on purpose? Yes. Do I think the numbers are accurate? No. However, I feel it’ll get people to think about how they valuate Facebook. It hurts, not helps Facebook’s cause to go public in 2009.