6 Comments

Social Media – Would You Pay To Play?

A couple of months ago, we summarized a report indicating that even though people are spending increasingly long amounts of time on Facebook, ad clicks are not increasing, much to Facebook’s chagrin. There are many potential reasons for this discrepancy between time spent on the site and the lack of advertising success, but one thing seems certain – people on Facebook don’t pay much attention to ads, even though the ads can be targeted based on demographics and keywords.

Given all of that, we found it interesting that Slate reported on a new social media platform called app.net last week. The main difference between this new platform and those that have come before is that app.net would charge $50/year where all other sites are free to use. However, app.net, unlike Twitter and Facebook, would not depend on advertisements or “promoted stories” to make their income. The environment would be ad-free.

Not A New Model Except for Social Media

Most major media channels have experienced a change like this. Consider radio, which now offers ad-free listening via Sirius-XM. Television combatted the advertising models with premium channels like HBO and Showtime. The concept of offering an ad-free platform in exchange for charging something extra is not revolutionary in and of itself. For the world of social media, however, this is a pretty new idea. Sites like Twitter, Google Plus, and Facebook have never charged users. LinkedIn offers a premium version of its site that people can pay for, but the site is still useful even if you don’t use the premium version.

Of course, Twitter and Facebook, like many online and social media companies, have arrived at the realization that when you offer site usage for free, it can become extremely difficult to monetize it. Reuters reported last Thursday that Facebook is continuing to experience a share price that is now about half of their opening IPO price because the company cannot come up with a plan to increase revenue. Forbes reported back in January that Twitter, despite a massive amount of users, hasn’t been able to generate much revenue either. With social media participants balking at ideas like promoted stories (updates that appear prominently in a stream because they are paid positions) in a Facebook news feed, it’s difficult to imagine how Facebook and Twitter will ever be able to generate the revenue they seem predestined to make.

The Problem For Marketers

This is all interesting if you are a person who uses Facebook or other social media platforms to keep in touch with family and friends. If you use social media as a marketer, however, this is an important story to follow. If Social Media is moving towards a “pay to play” model, which would eliminate advertisements and promoted stories, would the marketer’s ability to use the channel as a marketing tool disappear? Companies have also begun to realize that simply talking to people, while it can increase your network, is not enough to generate sales or even leads most of the time. If advertising is banned, would marketing-related updates also be frowned upon? Would social media remain a vital part of a marketer’s tool box or would it shrink in value like the fax machine? While you might enjoy the ad-free model as a platform user, the inability to promote your products or services could represent a major disadvantage for you as a marketer.

What are your thoughts on this issue? Would you ever pay $50 a year to use a social media platform? Are you worried that social media might shrink in importance as a marketing tool?

We’d love to hear your thoughts!

Image Credit: http://www.flickr.com/photos/68751915@N05/6736150457/ via Creative Commons

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6 comments on “Social Media – Would You Pay To Play?

  1. Facebook has been a useful medium for sharing the message of WVFarm2u and another blog of mine, The Wild Ramp Market. I urge people to go to the blogs to see the photos but that seldom happens. If a social media site begins to charge there are two things that will happen: we all will pay OR someone will start up another free site.

  2. Personally, I don’t think that people are going to pay for something that they can get for free. Sure, the ads and the constant changes are annoying at times. But, it’s free. What do we expect?

    The value of a social network is based on who is a member of the network. I believe that most people aren’t annoyed enough to pay the $50. You might get some bleeding-edge early adopters trying it out. But, long term, I don’t think that it will succeed.

    The only way that I think a lot of people will pay to use a social networking site is if the site offers some specific value. For example, Jay Berkowitz created the Internet Marketing Club. It has its own social network that people pay $470 per year or $47 per month to be a member of. However, even this site is based on a freemium model, where you can get basic access for free.

    I could be wrong, but I think that if the only thing that is unique about the social network is that it doesn’t require users to see ads, it won’t succeed. Furthermore, I think that if Facebook ever tried something like that, it would lose users fast. That is, unless they offered a free version with ads and a premium version without ads.

    Therefore, I don’t think marketers need to worry.

    However, only time will tell.

    • You raise a lot of good points, Chad. Your first point reminds me of comedian Louis CK – he insists that while everything is amazing right now, people just refuse to be happy. You can communicate with people from all around the world (for free) currently, but you have to see a few little ads. Ohh nooooo!! Let’s freak out! It is really kind of silly.

      As we know, no one really clicks much on Facebook ads. Unless it’s perfectly targeted and perfectly timed, people just won’t give you a click. I would suspect Facebook would try to find some other revenue source (which they need to do) before asking people to pay, but there are only so many options for a site that has promised to be free, you know?

      It will be interesting to see what happens. I think the next 6 months to a year are going to be pivotal in the online space.

      • I’m currently reading Marty Weintraub’s book, “Killer Facebook Ads.” He seems to disagree about the efficacy of Facebook ads. He does point out that they are good for branding, but they can also be effective in getting the click if done correctly. I think he would argue that the problem is in the execution (no pun intended) and that advertisers are just using Facebook ads incorrectly. However, I don’t have any firsthand knowledge, so I’m not sure.

        Interesting post, as always.

      • As I mentioned on Twitter, I noticed that you made a similar point after I posted my last comment. Again, this was an interesting post.

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