Facebook is still reeling from its recent data privacy scandal that erupted in March of this year and the company’s business model may have to change if regulators have their way.
Facebook, and its CEO Mark Zuckerberg were caught up in a storm over the access to users’ data that was granted to a third-party, leading to a high-profile appearance before US and UK regulators.
Although the fallout has been limited for the company’s profile so far, it is certain to bring changes to how Facebook, and other social media companies, do business.
Although Facebook has always been known as a “free” social media tool, the recent data publicity has brought further attention to the fact that this, and other social tools, make their revenues from selling customers’ private data or space to advertisers with targeted material according to users’ habits.
If there is a risk of this activity being clamped down on by regulators then Facebook may start to look at monetizing their site in ways that are less reliant on ads, with a subscription model something that has been looked at in the past.
Facebook CFO, Sheryl Sandberg, recently spoke to Bloomberg and talked of a paid option to remove users from the advertising-based model.
How much would you pay for Facebook?
In a recent survey of US users, Recode magazine found that 77% of users would prefer to stick with a free version with ads. For those that would consider the option of a paid model, 41.6% would only pay US$1-5 per month.
How much would you pay per month for an ad-free facebook?
Facebook made $12billion of revenues in the recent quarter, which was all related to advertising sales. If the company were no longer allowed the same access to user data, or saw a fall-off in users, that would hit their revenue as advertisers see less success in using the service.Whether we’re a billionaire or a not, changing financial goals and priorities affect us all.
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Will paid-for social media be the norm?
If regulation does come in that forces Facebook to conform to higher privacy standards, this would have to be rolled-out across the media space and could see fees attached to using Google, or Instagram for example. These types of measures would bring big changes to the technology industry, which has seen uninterrupted growth from its humble beginnings in bedrooms and university dorms.
An interesting development in story was the resignation of one of the WhatsApp founders from Facebook’s board. Facebook bought the messaging service for US$19billion in the past and the founder was a key voice in keeping the service free. With new management now onboard, it may be that Facebook are preparing for a new business model that clears up the privacy and data protection issues through other means of monetizing their platforms.