UPDATE 26-09-11

You might have arrived at this site because you’ve seen status updates in Facebook over the past few days that suggest that premium subscriptions are coming to Facebook.    This post was originally published as an April Fool article back in April 2011, and as such should not be taken seriously.

 

Facebook has announced that as of May this year, they will be offering a premium account service to their 650 million worldwide members, while also reducing the functionality of standard accounts.

This is not a major surprise.  Despite having a huge membership base, Facebook has consistently struggled to turn the kind of profits that are expected by their investors.

Facebook + Logo

Facebook + Logo

The new service, named Facebook + will be offered to all members of the service, and will mean that many of the current networking features of Facebook will become accessible only to the people who are willing to pay the rumoured $10 per month fee for enhanced membership services.

Why Facebook, Why?

The simple reason for the launch of a premium service on Facebook is the need to drive increasing revenues ahead of their upcoming IPO.  Floral Cavendish, a leading investor said that the costs of offering the standard Facebook account cost an average of $95 per user, while revenues from those users created through advertising and the sale of customer data to marketing companies was just $75.  When asked about the need to charge members, Cavendish simply said:

If we don’t start, we stop.  Simple.

She went on to say:

When you compare the level of Facebook interaction with the likes of Spotify, who already use a similar charging model,  we think that Facebook + will offer incredible value to our members, and may even increase the number of people who want to sign up.

Non Premium Memberships

The 650 million users on Facebook at present will still have the option to retain their current accounts, although the level of interaction that they can have is going to be curtailed.  From May 1st, the standard Facebook Account will be capped at the following levels:

  • Maximum status updates: 1 per day
  • Maximum photo uploads: 1 per week
  • Cap on friends: 50
  • No use of external apps (eg Farmville)
  • Limit of 2 private messages per week
  • Removal of Facebook Places
  • Addition of 2 ad units onto the page
  • No access to Mobile Website (although iPhone App will still be available)

While there is still plenty of functionality within the basic account, many power users of Facebook may find that it no longer gives them the level of social interaction that they need on a day to day basis.

Premium Memberships: A stalkers charter?

One item that is likely to cause mass debate about the new premium memberships is that for the first time, users will be allowed to see all of the people who have looked at their profile page.

Echoes of LinkedIn

The freemium model  has already been used successfully by professional networking website LinkedIn, which is currently gearing up for it’s own IPO.  As of March 2011, LinkedIn had 100 million active members, of which around 1 million pay the premium membership fee.

If Facebook were able to garner a similar take up of the Facebook + service, it would net them around $780 million per year in additional revenue, although the expectation is that many more people will opt to pay for their memberships.

It has not yet been confirmed what rates businesses will pay to continue running their fan pages and communities on Facebook although current rumours suggest a fee of around $100 per month per 10000 fans – still a small cost compared to the benefits of having a Facebook community page.  It is also possible that business rates for appearing in the Facebook are likely to be tied into advertising spend, with bigger advertisers potentially getting their memberships at a discounted rate.

The End of Facebook?

Over the past 5 years, practically every change that Facebook have made, from their news feeds to the Beacon service has been met with claims that the network is about to lose huge numbers of members, however this has never been the case, and given their continued growth rates, and the lack of a credible alternative network, it is likely that users wanting to maintain their current level of social interaction will simply have to pay the piper.

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