[dkyc]

> They don't make anywhere close to $10 a month selling ads to a user.

This is somewhat incorrect. In Europe (which this is about), Facebook's average revenue per user is about $70 per year (~$6/mo), and in the US it's around $232 (~$19/mo). Taking into account the additional overhead of collecting payments from individual users, support, etc., it's definitely not orders of magnitude away.

All data from Meta's last annual report: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001326801/e574646...

[fallingknife]

I guess I was wrong about that. I remember reading years ago how shockingly little revenue targeted ads actually generate per user, but that must have changed. Also curious why FB is making 3x as much per user in the US vs Europe.

[wkat4242]

US customers have more spending power than the average EU customer. So the ads are worth more as there's more opportunity to sell.

[consp]

GDP with PPP compensated is on par or better in NW Europe and for all of the EU it's about 70% of the USA (which has about 100m more people than the USA). You'd expect it to be a lot closer.

Yes it is most likely to be less but not a factor of 3 simply based on purchasing power alone.

[wkat4242]

I'm sure it's not the only factor but it's surely one. Here in Spain we really make a lot less than in NW Europe. central and eastern Europe are even worse off.

[a1o]

What is NW Europe?

[_jal]

The US also has close to no data privacy protection, so you can also practice whatever targeting and manipulative nonsense you want on your subjects.

The delta there shows what that's worth.

[Nextgrid]

And generally no consumer protection, so you can milk the marks out of more money than you can in Europe.

[still_grokking]

Do you mean US advertisers are paying three times more to FB than the advertisers in the EU?

Please don't confuse things. FB users aren't FB's customers. FB doesn't get any money directly from the (on average just a little bit) richer US users.

[AlecSchueler]

Europe has stronger privacy laws.

[Zak]

I'd guess it's a combination of three things: GDPR reducing the effectiveness of targeted ads, the online advertising industry being more mature/established in the US, and Europe being generally more fragmented, reducing the size of ad campaigns.

[jerf]

"Shockingly little revenue targeted ads generate per user" is also relative to the context. I bang on these numbers a lot on HN because for many of us here, the amount of damage Facebook does to our lives, the amount of ads it shoves in our face, and the way it has contorted an entire industry into surveillance capitalism, is way, way more than $20/month worth of damage to our lives, culture, and society. It is also a good way to counter the frequently-proposed "what if the companies share ad revenue with their users?", which along with being sort of a "pull yourself up by your own bootstraps" problem if you really analyze what that entails, has the even more fatal problem that there really isn't any money to do that with. If we cut you in for 50% of the ads you see in a month, you might be looking at a whopping $15-20 a month, or, pretty close to a single hour at what is roughly the de facto minimum wage. Even if we ignore how that instantly pushes all these companies from megaprofitable behemoths to bleeding money out of every orifice, $15-20/month isn't enough to make a compelling story on that front.

I think a lot of people have a mental model based on the size of these companies that they must be making hundreds of dollars a month per user, and it's good to run the numbers to show they don't so society can make more reasonable plans.

[meindnoch]

Europeans are less likely to fall for ads.

[still_grokking]

People are on average the same everywhere, I think.

Culture may differ, but human brains work the same in the end.

[badwolf]

Also important to remember this is _average_ revenue per user. Consider that the cohort of users that are more likely to pay the monthly subscription are probably more valuable ad targets (more disposable income to spend online)

[simion314]

What is HN opinion on the practice to one day you show a popup to your user with new terms, you either accept or you leave , no way to enter and export your data or contacts. It is kind of shitty IMO all this ToS that are always updating, even with paid products you are forced into accepting the ToS or get fcked

[vanilla_nut]

Average revenue per user is $70/year in the EU and $230 in the US. But how much of that is profit? How to costs compare between serving a user ads and serving an ad-free user?

Server costs for images, text, and the occasional video can't be that high per user at Facebook's scale of billions.

But costs for the Rube Goldberg machine of ad hosting, recommendations, bidding, and serving? There's a whole lot of backend infra and middleware behind that. We should assume, at the very least, that ad-free users are cheaper for Facebook (unless they go through all of the backend recommendation processes for all users but simply hide ads from ad-free users). I assume that with some optimization ad-free users ought to be significantly cheaper to serve.

[fallingknife]

The backend cost per user is going to be about the same for a user anywhere in the world. So we can set an upper bound on the cost at the level of revenue per user in the market that generated the least revenue per user. That's going to scale with GDP per capita, so I feel safe saying that there are many markets where they get less than $10 per user per year, and therefore their marginal cost per user is less than that.