The case for a paid version of Facebook

After his grilling last week before US Congress, Facebook CEO Mark Zuckerberg has some serious thinking to do about which direction his company takes now – not only to avoid government interference across the world, but also to find less privacy-invasive methods of growing revenue.

One of the intriguing notions to come out of Zuckerberg’s testimony was the hint that Facebook might introduce a paid version of its social network.

Zuckerberg was asked by several senators whether he’d consider a paid, ad-free version of Facebook. The idea is that Facebook users would pay a subscription fee to opt out of targeted adverts.

Republican Sen. Orrin Hatch was the first to ask Zuckerberg whether Facebook “would always be free”?

Zuckerberg replied that “there will always be a version of Facebook that is free.” While he didn’t explicitly say Facebook is considering a paid version, a number of media outlets seized on the word “version” that Zuckerberg used. It implied that other, non-free, versions might be in the works.

Another senator brought up comments made earlier this month by Facebook chief operating officer Sheryl Sandberg. She had told NBC News that opting out of Facebook adverts – if such a feature was ever introduced – “would be a paid product.”

“Senator, a number of people suggest that we should offer a version where people cannot have ads if they pay a monthly subscription,” Zuckerberg responded, “and certainly we consider ideas like that.”

Zuckerberg conceded that “they’re reasonable ideas to think through,” but he reiterated that he thinks the advertising model is best for Facebook and its users.

Is it though? A paid version of Facebook is an idea with a lot of potential benefit for users.

Think about how you currently use Facebook; that is, if you haven’t already obeyed the #DeleteFacebook meme and signed out for good. But for the rest of us, a key use case for Facebook is to use it to communicate with friends and family. I would say that’s my primary reason for using Facebook. Most of my friends and family don’t live in the same city or country as me, so Facebook is a great way to keep in touch.

I’m not alone in having a good proportion of family and friends overseas. New Zealand has the second highest percentage of people living abroad in the OECD, at 14.1% according to Statistica. Only Ireland is higher. So with our large expat population and the huge global network that Facebook has, you could argue that Facebook is an essential product for kiwis.

What if Facebook embraced a paid version of its product and did more than simply remove the ads. What if it made connecting with close friends and family even easier?

I would love the ability to better filter my friends list, for example. How many people do I actually interact with every year? Give me that data, along with a tool to bulk unfriend people I no longer interact with, and I’d gladly pay for that. That would help declutter my news feed too.

In its current, free, version, Facebook has made it deliberately user unfriendly to remove people you haven’t interacted with in years. The reason it does that is directly related to its advertising business model. Because the more friends you have, the better Facebook can target its ads – to them and you.

But that incentive to provide a bad user experience is removed if you’re paying Facebook for a better, more useful product. After all, you wouldn’t pay for a product that’s frustrating to use. It’s called the “premium business model” for a reason.

Before you protest about paying for a social media product, remember that it’s already common to pay for online media services. I pay for family accounts with Netflix ($18.49) and Spotify ($22.50), as just two examples. So a Facebook Pro version is completely viable in this era of the Internet, particularly if the product offers real benefits to you and your family.

The ultimate paid version of Facebook would be one that enables you to not just opt out of ads, but opt out of all data tracking and collection. I suspect this is a business model that will become increasingly common in the years to come.

Think about all the data you’re currently giving up to get discounts at service stations and grocery stores. You typically get a 6c or more discount if you use a certain loyalty card when you fill up your car. There are apps, such as BPMe, that make this process even easier. But in exchange for the discounts and convenience, you’re giving the service station a lot of data about how you spend your money.

Grocery stores get even more data – and highly granular at that – on your buying habits, every time you swipe your customer loyalty card at the checkout counter. If you buy a bottle of red wine each time you do your groceries, that’s data that could be used by the store to target adverts at you.

Of course Facebook is an even more sophisticated version of the data-tracking, ad-targeting business model.

It doesn’t have to be this way though. The first grocery store to offer a guarantee that it won’t track and store your data, perhaps in exchange for a slightly reduced discount, might be onto something in terms of customer acquisition. Sure it would lose out on all that targeted data. But if enough customers decide it’s worth forgoing a couple of cents in discounts in order to protect their privacy, it would quickly become a compelling business model.

The same theory could apply to Facebook and social networks.

Currently Mark Zuckerberg seems reluctant to let go of his preferred advertising business model. But if he continues to hoard user data and withhold enhanced features, that’s something a new social network can (and should) exploit on a massive scale.

Forget “move fast and break things,” Facebook’s original motto. “We won’t track your data” could be the mantra for the next big social network.