Now many of its users are in poor countries and may not be able to afford $10/year. If we just look at the US, Canada, and Europe, we see ~300 million users in Europe (same source) and about 180 million in the US+Canada, for about 480 million users total. That's $40/user/year, or $3.5/month.
At $10/month, Facebook revenue from just their US+Canada users would more than cover their expenses for 2017.
Now Facebook _does_ have a 50% profit margin in 2017. So if they wanted to keep their revenue, not their expenses, they would need to charge double teh above numbers. That brings us to the lowest number you cite: $20/month if they only charge in the US and Canada. Of course I would expect the number of users to drop a lot of they did that...
I appreciate the work you did to run those rough calculations.
Unfortunately, it completely ignores the most salient point. Empirically, most people seem to vastly prefer seeing the occasional (ideally targeted) advertisement, versus paying $20-40 a month of their own hard cash.
Hence, you cannot take total number of users, and divide by expenses. You can take maybe 1-2% (maybe less), and divide by expenses.
The actual conversion of these currently free users to paid users is what matters - and I doubt most people on Facebook would pony up.
For example, see the sibling post from Guest9812398 about his experiences running a popular community site - only 100 of the 100,000 users opted in to this, which doesn't even cover his hosting bills. The only way he can survive is through advertising.
The no ads model has been tried on the internet before, many a time - and the majority of people simply will not pay.
Oh, I think I agree that Facebook couldn't actually go to a fee-based model, for precisely the reason you describe. I just suspect that the revenue-optimizing number is still below $20/month for them. And even then they won't get enough conversions.
It's also nice to see how many of their engineers work on the product and how many of them work on ad targeting. I suspect that product layer is very thin compared to all ML plumbing behind it.
Sure we do. They're a public company; they routinely publish this information, as required by law.
https://investor.fb.com/investor-news/press-release-details/... says that in 2017 it cost ~$20 billion to run Facebook (see the "Total costs and expenses" line in the "Year Ended December 31, 2017" column). In 2016 it cost ~$15 billion.
According to https://zephoria.com/top-15-valuable-facebook-statistics/ (other places seem to have similar numbers) Facebook has around 2 billion users, which works out to $10/user/year for 2017.
Now many of its users are in poor countries and may not be able to afford $10/year. If we just look at the US, Canada, and Europe, we see ~300 million users in Europe (same source) and about 180 million in the US+Canada, for about 480 million users total. That's $40/user/year, or $3.5/month.
At $10/month, Facebook revenue from just their US+Canada users would more than cover their expenses for 2017.
Now Facebook _does_ have a 50% profit margin in 2017. So if they wanted to keep their revenue, not their expenses, they would need to charge double teh above numbers. That brings us to the lowest number you cite: $20/month if they only charge in the US and Canada. Of course I would expect the number of users to drop a lot of they did that...