Fixing Facebook … By Subscription
Let’s assume at this moment in Internet history, that Mark Zuckerberg is sincere about protecting the privacy of Facebook’s 2.2 billion users. Let’s also assume that his current headaches with data sharing are never going to go away, because Facebook’s business model is wholly dependent upon big data by advertisers. And, let’s finally let’s assume that virtually everyone hates advertising.
Sounds like the perfect cocktail to toast the launch of a premium (albeit fictitious) version of the the world’s most popular social media platform.
Problems, Problems Problems
Unless you’ve been under a rock, you’ve likely heard of the Cambridge Analytica scandal that put Facebook on the radar screen of the U.S. Congress and governments worldwide. In short, CA used a personality quiz app to gain access to the profile data of 87 million Facebook users in the U.S., which was then used to profile their political preferences in 2016’s hotly contested elections. The scandal came on the heels of Facebook removing the Internet Research Agency (IRA) from the platform for the Russian troll farm’s scheme to influence the political choices of 126 million U.S. Facebook users and 20 million Instagram accounts during the the 2016 presidential election with “fake news” posts and advertising from inauthentic accounts.
Those two scandals put Zuckerberg in the proverbial hot seat before a joint hearing of the Senate Judiciary and Commerce committees this week. He testified that Facebook was derelict in protecting its users from data harvesting and manipulation by bad actors like CA and IRA.
“It’s clear now that we didn’t do enough to prevent these tools from being used for harm as well, “ Zuckerberg said in his opening statement to the committee. “That goes for fake news, foreign interference in elections, and hate speech, as well as developers and data privacy … We didn’t take a broad enough view of our responsibility and that was a big mistake. It was a big mistake. And I’m sorry.”
Profitable Mea Culpa?
The problem with Zuckerberg’s apology is that it belies the reality of Facebook’s business model, and he knows it.
Facebook isn’t just the world’s largest social media platform — it’s also an extremely profitable mass surveillance tool. Columnists Sarah Miller and Matt Stoller had it right in their recent Daily Beast column, saying: “[Facebook’s] bottom line depends on sell[ing] off access to your mind to the highest bidder.”
Like it or not, Facebook will continue in that sorted business, because all of their operations — from Instagram to What’sApp — are wholly dependent upon advertising revenue.
Zuckerberg’s current woes might actually present an opportunity. I’ve maintained for years that, much like free newspaper web sites, Facebook is needlessly leaving billions in lost revenue on the table by keeping the service free. Even a 3rd grader can calculate that a $1/mo pay wall would bring in potentially $2.2 billion in new revenue from active monthly users. Much like sports fans who need access to the latest scores and analysis from news outlets, Facebook users depend on the platform for making and maintaining family/friend connections, easy photo storage, gaming and so much more.
That’s leverage. I know that the majority of my friends would ante up a buck a month just to save their photos. Concerns over personal privacy are also leverage. Users might actually pony up even more to safeguard their digital privacy — if its done right.
Zuckerberg is adamant that there will always be a “free version” of the service, so the quid pro quo from regulators will be greater transparency regarding its data harvesting practices and a more transparent presentation Facebook’s terms and conditions of use. That would not only take users out of the dark, but also create a pristine, lucrative opportunity for Facebook to introduce a premium subscription plan to answer user demands for complete control over their personal data, an ad free environment and, most importantly, access to premium content. For lack of a better moniker, and with apologies to YouTube Red, let’s call the service “Facebook Blue.”
This approach makes sense for reasons beyond preventing future privacy scandals. Facebook’s end goal is to become a media company alongside YouTube, Amazon, Netflix and Hulu. In fact, it has already begun developing original video content toward that end, and that content shouldn’t be free. A Facebook Blue member would get immediate access to programming that’s unavailable through a free account. If this sounds familiar, it’s Google’s recipe with YouTube Red at $10/mo with no ads and access to original programs. Hulu also offers an ad free option, but all users can access original shows.
All it takes is for one Facebook Blue show to go viral and Zuckerberg would begin offsetting lost ad dollars with new paid subscribers. He’d also be in a stronger position to deliver Facebook programming through connected devices like AppleTV and Roku, expanding the reach and profitability of the platform.
Steve Jobs once remarked:
“When you first start off trying to solve a problem, the first solutions you come up with are very complex, and most people stop there. But if you keep going, and live with the problem and peel more layers of the onion off, you can often times arrive at some very elegant and simple solutions.”
That’s the opportunity crossroads upon which Facebook now stands. It’s first solution — mass surveillance and data selling — is now extremely complex and threatening to its audience and bottom line. The only reason I could see for maintaining the status quo would be greed by shareholders. Facebook’s ad network and tracking technology is now so pervasive and profitable that playing a shell game with regulators and enduring future scandals might just be a cost they’re willing to suffer in return for billions in ad revenue.
However, if Zuckerberg is truly sincere about end-user privacy, he’ll find a “very elegant and simple solution” in a subscription option. Sure, it’s a long ball play, but with the right structure, he could potentially evolve Facebook into a more powerful media concern with even greater reach and profit.
He might even win back trust of his audience along the way.