August 30, 2012
In an August 29, 2012, article at Huffington Posts’s blog, readers are asked if they’d be willing to pay one dollar a year to use Facebook. In the grand scheme of things, one dollar doesn’t sound like much and most people wouldn’t even think twice about anteing up. But we’re talking about 900 million people here and that means $900 million. Instead of waving dollar bills, we should be waving red flags.
Saini’s blog post focuses on Facebook’s investors, whose fortune seems to be hanging in the balance. The stock closed at $19.10 on Wednesday, August 29, down 50% from the IPO price and it’s no secret that investors are pressuring Mark Zuckerberg to find some way to make the site profitable.
The suggestion that Facebook users help Zuckerberg out by passing the hat is just that – a suggestion, for now. But don’t think those investors haven’t thought about it.
Would there be an outcry from users if we were all asked to pay an annual fee of $1.00 to access Facebook? Probably not. Oh, there’d undoubtedly be a few dissenters, but not enough to make a difference. After all, if Zuckerberg’s numbers are correct there are at least 850 million registered users on the site. Even if half opted out, that still means Facebook walks off with more than $400 million every year – on top of what they’re already making.
Should Facebook be allowed to make a profit? Should Zuckerberg and his investors be allowed to charge us all an annual fee? Absolutely. This is still America, the land of free enterprise. It’s not even an issue.
But the real questions is this: Should Facebook users be forced to pay a price simply because Facebook investors are losing money as a result of their own ignorance, laziness and greed? Because that’s what it really comes down to.
Those Wall Street executives were chomping at the bit when Facebook first hit the market, as evidenced by the IPO price of $38.23. For months they’d been watching Zuckerberg’s numbers grow – first 700 million, then 800 million, 850, and then 900 million registered users.
Did they bother to check these figures before they bought up that stock? Of course not. They didn’t even think about questioning the real number of Facebook users until they started noticing that their real number of dollars were beginning to dwindle. Then they made a connection.
Did the investors bother to learn anything about Facebook before they stepped up to the bar? Again, the answer is no. If they had, they would have known about the fake accounts, the fake ad clicks, and the fake “likes”.
More important, if investors had done their research before greedily snatching up the stock, they would have known how difficult it is to monetize any site on the Internet, especially a social network, a place where people gather to, well, socialize, not buy stuff.
Facebook advertisers say the only gain they’re seeing is in increased awareness for their products. In other words, each add click that they’re paying for isn’t converting into an actual sale. Investors are blaming poor results on a “social media bubble”, as if suddently there’s an overabundance of social networks and the time for the boom has passed. Had they done the research, had they actually used the site themselves, they would have know that “increased awareness” is the most important benefit of advertising on Facebook. In fact, if you expect more than that, especially without doing the work, you shouldn’t be allowed to handle money.
There are thousands of bloggers and Internet marketers making good money with Facebook pages and ad campaigns because they get in there and actually engage their community. They don’t just set up a page and hand people a coupon in exchange for a “Like.” They don’t just post links. They do the work to establish a loyal fan base.
But Facebook advertisers, and the investors backing them up, seem to think all they have to do is flash a few ads and watch the money roll in. And since it’s not, well, maybe we should all pass the hat to help the out, right?
Except for a few invasion of privacy issues, Facebook was rolling along at a nice little clip before Wall Street investors got involved. And we all know what happens when Wall Street and Big Money decide they want a piece of the pie.
But if it’s one dollar this year, how much more will it be next year? And where do you, personally, draw the line? Because once you ante up that first buck, the line gets a little fuzzier every year.
Think about it. You pay $1 for annual access to Facebook this year. All year long you’re loading up your pictures, sharing recipes, collecting birthdays and anniversaries on your Facebook calendar, and making dozens of new friends and connections.
Next year, when they ask you to pay $5 to renew your Facebook membership (because that’s what it’ll be then, a “membership”) you’re going to balk, but you’ll probably come up with the money because now you’re even more deeply entrenched in the site than you were last year.
Again, should Zuckerberg be allowed to charge a membership fee for Facebook? Absolutely. His greedy investors even have the constitutional right to pressure him into charging that fee.
Should we bale him out, because, after all, he is Mark Zuckerberg, he’s a nice guy, and he did give us Facebook? Maybe. We’ve all helped friends and strangers out of a bind every now and then.
But here’s the difference: Most of those friends and strangers we’ve all helped were grateful for the assist. And most never came back the next year asking for another hand-out. We all know that once we open our wallets to these Wall Street investors, they’re just going to keep coming back, year after year, asking for more, demanding more, and by then it’ll be too late. We’ll all be too deeply entrenched in Facebook.
Just remember. It’s one dollar out of your pocket, but it’s at least $850 million into theirs. And who knows how much it will be the year after that?
And here’s an even bigger question: When’s the last time somebody from Wall Street passed a hat to help you out of a financial problem?
Donna Anderson’s articles also appear on Examiner.com.