I wonder how much money they currently make, but it looks like they're going the YouTube/Reddit path where they expect the paid user to pay much more than the money they currently make from ads.
Edit: indeed they are[1]
I'm not sure why they're doing that but I suspect they don't really want people to move to the paid/ad-free plan so they charge a premium for that.
I suspect it would be like most other services that have a different price in each European country. I would guess the $value is a conversion for the article from one example country.
Facebook is basically the only place on the internet where I actually like the ads.
I've discovered and bought many products from them and Facebook gives me a clean way to block and report ads that I think are bad.
Honestly my biggest complaint is that I'll often see something in a Facebook ad, want to buy it 2 months later and there's no way for me to look up which ads I saw on Facebook 2 months ago.
I actually feel the same way. Facebook actually has relevant ads to local events (some of which I am even interested in). As opposed to Google which is trying to drive my purchasing behavior. or Twitter which is borderline useless. It is really the local part the others I missing and where value is provided.
I wonder if that is an ease of use facebook thing for small marketers, better location data, or lower ad costs making it more worthwhile
> Facebook actually has relevant ads to local events (some of which I am even interested in). As opposed to Google which is trying to drive my purchasing behavior. or Twitter which is borderline useless
i wonder, has Google ever tried showing ads that were irrelevent to your current search query, but still relevant to your purchaser profile?
that way they could surface relevant search results (keeping you coming back and showcasing their core business case), while _also_ appealing to your interests
I welcome this move, even though social media isn't really my thing, so I wouldn't really be the target customer. (I deleted my Facebook account in 2016 after it gave me a terrible bout of anxiety and depression.)
The tech industry has been dominated by a few players who primarily gain leverage by offering services for free, preventing the entry of smaller players as well as leveraging user data in ways that people would find abhorrent. When you can charge users, you can offer social media services that don't require dark patterns and depend on user addiction to turn a profit.
Meta’s monthly average revenue per user in Europe was $5.96 as of 2023-Q2. $14/month is quite the premium to opt out of its privacy invasion. Does Meta really think it is worth more to people than Spotify or Disney+?
$6 is the average but the set of people willing to pay for add free are both the heaviest users and the ones with the most disposable income. Let’s say you offer this for $6, only the top 10% would pay for it. But the top 10% might generate $10. If you charge $10, only the top 5% would pay and they generate $12, and so on.
I wonder if creating a paid tier of users that won't see ads significantly devalues Meta's advertising proposition.
From the perspective of an advertiser, I don't really see the appeal in running an ad on a platform where all the users who have signaled they have disposable income and are willing to pay for online services don't see any ads.
Potentially these paying users weren’t the market anyway. Someone willing to pay to not see your ads maybe hostile to any brand forcing them in front of their eyeballs.
That's possible. I thought most people with that mindset would be running adblockers, so probably wouldn't be interested in paying for an ad-free experience.
I'm sure there are people who aren't aware of adblockers or aren't savvy enough to use them, but how many?
No problem, just sell their user data for a premium so they can be advertised too in other ways. Its worth squeezing this one in many extra ways since, as you said, they've signaled they are valuable targets.
Plus Meta can also change it to limited ads later and sell those for bigger money.
Depending on the ad system and your user tracking /fingerprinting setup, you can get that information and then track the user to other places on the internet and then show ads to them there.
I'd wager that 14$/month is actually really cheap given who will pay for it.
The average per user may be $5.96, but I imagine that the people who will pay 14 $/month have more disposable income and are therefore in the demographics that advertisers would pay a premium for.
There is a high correlation between people who opt out of ads by paying and folks advertisers want to target. This creates a dilemma which increases ad load on those who don't pay to make up the difference.
You assume that paid users are actually option out of privacy invasion. They aren’t seeing ads but that doesn’t mean Meta isn’t invading privacy to continue to build a profile if you and those who you connect with regardless of payment.
If this were to become a major income for Facebook or any similar company, the economic calculus would change such that all the tracking becomes an expense that doesn't generate a return (since we can't use it to serve ads). If this program succeeds and goes the distance it will eventually come to someone's attention that they can cut their costs quite significantly by stopping tracking subscribers beyond the minimum required to implement the non-tracking.
It won't happen overnight and it won't happen if this is always a fringe use case not worth worrying about.
This also impacts some of the revenue analysis other people have posted. If Facebook makes a bit less money on someone but can cut their costs by more, Facebook can still come out ahead with a subscription. Obviously this won't be true right out of the gate because they won't be able to rely on it initially, but possibly in the future this may impact things.
I mean, after all, if you cut out the immense spend they're making to throw ads at you, how much would it actually cost to provide the "good" part of Facebook's services to an average user? It really isn't much and it continues to drop.
> I mean, after all, if you cut out the immense spend they're making to throw ads at you, how much would it actually cost to provide the "good" part of Facebook's services to an average user? It really isn't much and it continues to drop.
I've often wondered about this. A social network could be operated quite inexpensively if you didn't have to pay for sales, marketing, attention hacking, etc. (Twitter is kind of testing this hypothesis.) Social networks should be as boring and everyday as blogs and email.
I have a better solution for ad free facebook and instagram access.
Bibliogram or any other open source frontend to access public profiles.
Otherwise, just stop using Meta's products.
EDIT what's most interesting is that people from here are actually considering it to be a good deal. Paying to have your privacy "preserved" by a super shady and unethical company like Meta is not a win. You're negotiating with the devil. As others pointed out, it doesn't mention if your data will stop being sold to third parties to have personalized ads for you. In the future they might even decide that it's simply a dumb decision they took and sell people's data regardless if they paid or not; hell, they can even make it worse by adding a line to the dataset saying that you actually have money to pay for useless, placebo features like the one just announced.
I expected more of HN and not just being condescending to an unethical big tech that milks every data out of its users for a profit.
Judging from the article, it seems that the only reason for this is to shut down regulators with this argument: "You want us to stop tracking users? Users already have that option, it's a subscription". So I believe the pricing is intentionally outrageous, it's not really meant as a reasonable choice.
Doubtful. Facebook's mission is to maximize profits, not to maximize ads served. If they thought they could generate more profits by lowering priced subscriptions or even getting rid of the free, ad-supported tier, they would absolutely go for it. The inconvenient truth is that the only way to get a lot of users to pay for Facebook is through ads, because they won't pay for a subscription, no matter the price point. If the free tier disappeared, there would be a mass exodus of users from Facebook to a free, ad-supported, competitor.
On the other hand, if successful it would also mean a huge pivot for Meta to shift ad business to social media, something they barely have experience with.
Also, how would they prevent people posting ads from falling through the cracks?
Price is determined by how much someone is willing to pay, not by how much you might have made if you had a different business model.
There is no magical formula in determining how much someone will pay beyond offering a price and see if anyone bites. It may turn out that $14 is too high and they will have to temper their expectations later. But maybe $14 will turn out to be just fine and people will be quite willing to spend that much.
If you are using Meta properties so frequently that you notice it has ads, it is likely that you can find more than $14 worth of value from your usage. If you can't even muster a paltry $14 worth of value from using it over the course of a month, why are you using it at all?
They don't sell your data, the whole way they make money is by keeping hold of your data and selling targeted ads. Why would they sell away their competitive advantage?
Selling targeted ads is selling your data (not directly, but selling products that depend on your data). Are they going to continue to use your data to sell targeted ads to others?
Selling your data = "pay us $$$ and we'll give you the name, email, phone number, DoB, SSN, interests, credit score of a million users". Plenty of companies do this today (both legal and illegal), but Facebook isn't one of them.
Selling targeted ads = "pay us $$$ and we'll show your ads to people who match the criteria you select". This is very different from the former.
Anonymization is a myth. If you sell ads on proxy data, that data can be deanonymized. Also, Facebook may not directly sell your social security but they sure will buy it from the less scrupulous (but more honest) companies.
HBO Max is $16 and is an entire world of ad-free quality movies HBO has to purchase. I have my doubts many will pay $14 for ad free Facebook and Instagram. $14 to not bother you with ads reminds me of protection rackets from organized crime.
> The perpetrators of a protection racket may protect vulnerable targets from other dangerous individuals and groups or may simply offer to refrain from themselves carrying out attacks on the targets, and usually both of these forms of protection are implied in the racket.
Will it give me the option to only see stuff from people I follow? Because the worst part of Facebook and Instagram is not the ads but the content that is shown to me to keep me engaged. I want to scroll my friends pictures and when there are no new pictures I want the feed to stop. I'd pay for this even if am still shown targeted ads.
This is already a feature and has been for a long time. Instagram allows you to only see posts from people you follow and will tell you when you've seen all new content from the past X days.
Oh, they want you on the app, so they would specially not show you stuff from friends, so you have to scroll more. If you know that there is no updates - it is not engaging.
But if I pay for no ads, do they need me to engage? Their income is fixed to 14$/month no matter the amount of engagement. Actually, they save server costs if I engage less.
Stock holders, fixed :)
It is a pretty good metric of how the company is doing. I.e. if paying customers still spend a lot of time on the app, they would pay the next time. If the time decreases, there is a risk they would not prolong subscription.
There are some commenters here scratching their heads over the business mode, which makes sense, because who would pay for Facebook? It is silly. But,
> The Silicon Valley-based company has until the end of November to comply with a Luxembourg court ruling from this year which found that Facebook “cannot justify” the use of personal data to target consumers with ads unless it gains their consent. The court said companies should explore a subscription model in its ruling.
This is obviously not a serious offer, it is just so they can tell the court “I told you so.”
Facebook’s business model is not really compatible with a society that values privacy. But I don’t think anybody wants to be responsible for pointing out the incompatibility.
I've never been clear on how HN unifies these posts; does it matter at all that WSJ is paywalled but this article links to a publicly available article?
Same price point as YouTube Premium. While I do think there is a dollar value for ad-free Facebook & Instagram, $14 is too much for what it currently offers.
I think this is a "trick" to get around the GDPR. Many European newspapers already do this:
The GDPR says that it is not allowed that the user who denies their personal data to be stored experiences negative consequences because of that.
So in theory, behavioral advertising is dead in Europe. Because nobody would voluntarily agree to be tracked.
For some reason, many companies go the "Our service is available in two flavours: With behavioral advertising and as a paid service" route. And it seems that has not been challenged in court yet.
I wonder how it could be legal, because not having free access is a negative consequence, isn't it?
"I wonder how it could be legal, because not having free access is a negative consequence, isn't it?"
I think even in Europe the claim that any company has an obligation to serve you for 100% free, getting nothing out of it whatsoever, is not going to fly very far.
It isn't even a moral issue per se; it's just impossible. Companies need some sort of income. One can speculate on how nice it would be if that were not the case, but if it weren't we'd live in a very different world anyhow, beyond the realm of speculation (it isn't necessarily all better than ours in every way).
If you look at the number of official government announcements, emergency broadcasts, breaking news, communications by politicians and various state and local bodies etc. from all over the world that are posted exclusively on platforms like Facebook and Twitter, you can easily make a case that free access to them is necessary.
It's not that there is an obligation to serve you for free. But the only alternative to personalized ads can't be a subscription.
What do you do if a user refuses the use of their data for ad targeting? In the worst car you show them untargeted ads. Ideally you target ads on ways that don't require that user's personal data, such as being based solely on the page content.
The newspapers are blatantly violating the GDPR, and it is kind of disgusting that the DPAs are choosing to selectively not enforce the law due to political reasons (governments can't afford to be seen as being against the local media).
For comparison:
Its even more than Netflix 4k, which here has reputation for costing too much.