It's not just fear of money. In consumer apps, "free" means the potential of having hundreds of millions of users globally. This includes people in relatively poor countries, who would never pay for anything online. Nevertheless, they pad your numbers. Not to mention that you can have multiple accounts, sock puppets, etc.
The market rewards this behavior: Facebook is worth $40B not because of ads, but because of the potential to eventually sell something to a significant fraction of its billion users. App.net would have a hard time being worth several billion dollars if you do the math, which is completely fine. Perhaps they could have 100k real users paying $50/year = $5M. That might justify a valuation in the tens or hundreds of millions, depending on growth rates. Fantastic for a bootstrapped company. Not nearly good enough for Twitter's investors who put over a billion dollars into the company.
I think the jury's still out on this one. Most active Facebook users would say they're willing to pay a few bucks a month to keep using it, and there are many successful consumer products using a freemium model.
If App.net's ARPU can hit about $120 (100x that of Facebook), then it can capture only 1% of the market and be equally successful.
Citation? Who are those "most active users" and who asked them? By the way, what users say they would do and what they actually do are very different things. Anyone who ever started charging money for something that used to be free knows this.
I haven't found any more significant, peer-reviewed studies, so I would just say that it's my nonfactual opinion that a nontrivial percent of people would pay a premium for access to Facebook in the same way people used to pay a premium for access to AOL over a dump pipe/no value add ISP (and to many people, Facebook is the Internet).
Completely agree that what users say and what they do is very different. The whole point of my post is that until you actually start charging money, you have no idea whether people will pay for your product, no matter what they say.
I agree. Quite honestly what sane person would pay for the ability to use a social media website?
What does facebook offer that is unique and worth paying for, other than a large user base?
The moment that facebook starts charging their user-base there is really nothing from stopping them to use it and move on to the next free social-media colossus.
People routinely paid for photo sharing on the Web before Facebook. Mentally strip out the rest of the site if it helps understand, and you're left with a site where you can instantly publish pictures to your friends and family from your mobile phone. People have and do pay for that feature alone on other sites.
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It's not just fear of money. In consumer apps, "free" means the potential of having hundreds of millions of users globally. This includes people in relatively poor countries, who would never pay for anything online. Nevertheless, they pad your numbers. Not to mention that you can have multiple accounts, sock puppets, etc.
The market rewards this behavior: Facebook is worth $40B not because of ads, but because of the potential to eventually sell something to a significant fraction of its billion users. App.net would have a hard time being worth several billion dollars if you do the math, which is completely fine. Perhaps they could have 100k real users paying $50/year = $5M. That might justify a valuation in the tens or hundreds of millions, depending on growth rates. Fantastic for a bootstrapped company. Not nearly good enough for Twitter's investors who put over a billion dollars into the company.
I wrote a blog post about this yesterday: http://diegobasch.com/the-dangers-of-being-a-product-instead...
I think the jury's still out on this one. Most active Facebook users would say they're willing to pay a few bucks a month to keep using it, and there are many successful consumer products using a freemium model.
If App.net's ARPU can hit about $120 (100x that of Facebook), then it can capture only 1% of the market and be equally successful.
Citation? Who are those "most active users" and who asked them? By the way, what users say they would do and what they actually do are very different things. Anyone who ever started charging money for something that used to be free knows this.
Somewhat relevant: http://www.useit.com/alertbox/20010805.html
I have doubts about the methodology so I think there's still uncertainty, but one study shows ~50% of users would be willing to pay something: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2050916 Another one had a small sample, but found 30% are willing to pay: http://www.mediabistro.com/fishbowlny/30-of-people-surveyed-...
I haven't found any more significant, peer-reviewed studies, so I would just say that it's my nonfactual opinion that a nontrivial percent of people would pay a premium for access to Facebook in the same way people used to pay a premium for access to AOL over a dump pipe/no value add ISP (and to many people, Facebook is the Internet).
Completely agree that what users say and what they do is very different. The whole point of my post is that until you actually start charging money, you have no idea whether people will pay for your product, no matter what they say.
I agree. Quite honestly what sane person would pay for the ability to use a social media website? What does facebook offer that is unique and worth paying for, other than a large user base? The moment that facebook starts charging their user-base there is really nothing from stopping them to use it and move on to the next free social-media colossus.
People routinely paid for photo sharing on the Web before Facebook. Mentally strip out the rest of the site if it helps understand, and you're left with a site where you can instantly publish pictures to your friends and family from your mobile phone. People have and do pay for that feature alone on other sites.
I'd pay a few bucks a month for the value I get out of facebook.
I'd consider paying a few bucks a month for an ad free non data mining facebook, but, that won't happen.