What is Facebook worth? Study finds out how its users value their accounts
For all its faults, Facebook has become a nearly inescapable part of modern life.
It’s not just that it’s a place to find out what your friends and acquaintances are up to, or store and share your photos, or meet like-minded people in groups built around shared interests.
It’s because Facebook offers all of those functions on one platform – as well as 1.5 billion active daily users.
Add in the 800 million more people who Facebook claims sign in at least once a month, and approximately 30 per cent of the world’s population is using the service.
It’s enough to make one wonder just what it would take to get people to give up their Facebook accounts.
A group of American researchers recently put that question to the test, attempting to determine exactly how highly people value their Facebook accounts by asking them how much money they would want in exchange for abandoning the social network.
To encourage realistic answers, the researchers first asked the participants to name a price for giving up their shoes, and then took the shoes of the person who asked for the least money.
Their study, which was published in the journal PLOS One, found that Facebook users, on average, said it would take US$6.01 for them to give up their account for one day and US$38.83 for them to do it for one week. Three separate groups were asked about deactivating Facebook for one year, with average responses ranging from US$1,139 to US$2,076 – which equate to between US$3.12 and US$5.69 per day.
“I don’t find it at all incredible to think that the participants in our studies might on average value this at a few dollars a day,” Sean Cash, an economist at Tufts University in Boston and one of the study’s authors, told CTVNews.ca.
Cash compared the idea to charity campaigns encouraging people to sponsor people in developing countries, which often frame the cost of their request in terms of dollars per day.
Could Facebook charge fees?
Some analysts have speculated that Facebook might try charging its users, at some point, in order to raise revenue and appease shareholders.
The finding that users see significant value in having access to Facebook might seem to suggest that they would be willing to pay a comparatively small fee to maintain that access – but Cash doesn’t see it that way.
“My gut tells me that Facebook can’t do that, or at least not for very long,” he said.
“They might get a few subscribers for a while, but I think it’d the fast track to irrelevance for their platform.”
The problem, he says, is that even though Facebook’s users clearly value the platform, it is difficult to translate that benefit into actual payments. In this way, Cash compares Facebook to clean air and clean water.
“We don’t pay for them, but that doesn’t mean we don’t value them,” he said.
Users’ value to Facebook
So the Facebook experience might be worth a lot to the people who use the platform – at least as long as it stays free – but what are those users worth to Facebook?
Facebook releases “average revenue per user” figures with its quarterly financial reports.
The most recent set of numbers, made public last week, shows that Facebook took in US$7.37 from its average user during the final quarter of 2018.
There are stark geographic disparities, with American and Canadian users averaging US$34.86 worth of revenue for Facebook per quarter, compared to US$10.98 for European users and US$2.96 for Asian users.
The difference, Facebook says, is that North American users are much more likely to make in-app purchases than users in other parts of the world.
Regardless of where they live, though, it seems the value most people think they’re getting out of Facebook is far more than the value Facebook says it’s getting from them.