Will Facebook start charging users?

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There’s a lot of rumours going around about how the social media giant, Facebook, is going to start charging its users for keeping a profile. This is definitely not true. Facebook issued a statement recently stating that they had absolutely no plan or intention of charging their customers.

Even though the internet is in no short supply of unfounded rumours and gossip, it’s not hard to believe where average users would have gotten the idea.

These rumours spread across the internet for fear that many changes would be made to Facebook’s price structure. The rumour is largely a hoax, but many have been worried about the substantial changes occurring to Facebook that are planned in the upcoming months.

Mark Zuckerberg recently announced the most dramatic change yet to the social site and will implement the “timeline” feature. It will take all of your information and create a timeline of your life.

Facebook's LogoZuckerberg is extremely excited about the change, but most people aren’t so thrilled. Some argue, that this is just another move by Facebook that greatly infringes on users’ online information and privacy. Either way, it’s site is free and will remain free for the foreseeable future.

Facebook simply wouldn’t survive a charge based membership services. There’s too much competition in the social media scene right now. Anything remotely resembling fees would sound the death of Facebook’s online supremacy.

Though it makes many wonder if there might come a time when social media sources will eventually switch to a pay system. Across the board, right now, we’re seeing some online features, once free to everyone, now being charged for or in the process of it.

Presently, most online social media sites depend largely on advertising as their main revenue stream. With millions of users interacting with these sites, advertisers are able to gain massive exposure.

Yet, it’s this issue that’s raised a lot of concerns and has begged the question, “Is Facebook selling your information to advertisers?” Facebook has vehemently denied these allegations, but it’s still unclear. For right now, no, Facebook will not charge for using it’s site, but no one can tell what the future of social media could bring.

Google Plus – a breath of fresh air?

For years websites like MSN and Facebook have been growing in numbers. Many rivals, less efficient and less popular social networking website, have died out as they are crushed by the giants. But Facebook seems immune from the possibility of extinction, with a growing number of users currently at over 640 million users!

MSN had a golden period and enjoyed strong competition with Facebook. But the Microsoft owned site has 120 million users and falling. It looks like MSN will be joining the likes of Bebo, Digg and Myspace.  I myself deleted my Myspace account when I decided to hop onto the Facebook bandwagon.

But for years it seemed that Facebook would never be challenged, and that was the case, until, now! A company which has 15 times the amount of revenue is stepping up to the plate. Google. The internet giant is taking over world computing. With 85% of the world using Google as their search engine, 15% of internet browsers in the world are Google Chrome – but this is fast growing – and now the $30 billion company is preparing to take on Facebook with its own social network – Google+.

In its two month infancy it is showing similar trends to Chrome and is rapidly growing in usage with 20 million worldwide users at the moment. Although this may seem puny, bear in mind it isn’t open to the world public entirely just yet.  At the moment, Google+ is an invitation only site until it opens fully in a couple of months.

I have put my name down to use it on its somewhat large waiting list. But what is all the hype?

Key Feature:

  • Circles – This allows me to group my friends, so for example:
    • Music pals – Joe, Tom, Abby…
    • School pals – Michael, Adam…
    • Work Colleagues – Jane, Adam, Monica…
  • Hangouts – A 10 people group video chat
  • Sparks – Using Google’s search engine you can search for interests
  • The Stream – Users can see their Circles’ updates – similar to Facebook’s wall
  • +1 – Allowing people to recommend items and websites

These are just some of the functions available to use on +.  But is it what we are looking for?

The Google+ ProjectIn my opinion yes, just like Google Chrome did with Internet Explorer it will provide a breath of fresh air to the social networking industry and I think will be a very realistic competitor to Facebook.

It seems like it is made with much more quality and with far more enhanced features than Facebook, which has many problems, technically and pragmatically.

So I for one am really looking forward to joining it and setting up my profile when it becomes open to the public.

How do social media sites make their money?

Facebook has an Alexa traffic ranking of 2. Not a very big number is it? If you have never heard of Alexa before, you may think that that isn’t very good, but what it actually means is that it is the second most visited site on the net – the first being Google.com.


Twitter has and Alexa rank of 9, LinkedIn has a rank of 16, Flickr 32 – the list goes on.

This means that these sites need some serious server power to handle the millions upon millions of visitors they get each day. The problem is servers are extremely expensive to buy and run, due to them needing to be kept cool and have a super fast internet connection, both download and upload.

So how do social media sites run if it is so costly? Where do they make their money? How does Facebook make it’s money? How does Twitter make money? How do LinkedIn, Foursquare, Twitter, Bebo, Flickr, Myspace etc. all make their owners billions?

It’s complicated…

Unfortunately I cannot provide you with a hard and fast answer which applies to each social media site, as they all use different methods, but what I can do is tell you how individual sites like Facebook and Twitter make their money.

How does Facebook make money?

On Facebook there are adverts, you may have noticed them at the side of some of the pages. Often they are very well designed to blend in with the theme of the site, so that you almost think that they are just more recommended pages.

Facebook's LogoThese adverts will be potentially get hundreds of millions of views each day. This probably means that they cost a fair bit to buy, so ‘the Facebook Team’ will be cashing in big time on them.

So Facebook make their money through advertising, right? Well actually only some of Facebook’s revenue comes from advertising. The exact figures are only known by a select few, but I would estimate that less than half of Facebooks revenue comes from it’s adverts. So where does the rest come from?

Facebook credits.

Since Facebook introduced it’s credit scheme last year, a whole host of new applications and offers have sprung up, all giving you the option of using Facebook credits to provide a service (e.g. watch movies on the site) or improve an experience (e.g. level up faster in a Zynga game).

Facebook currently takes 30% of the money spent on credits for itself, and at just over £2 for a movie or 25 ‘farm cash’ that doesn’t really seem that much.

However, with over half a billion registered users, if each user buys just 50 credits (around the price of one movie – £2 ish) a year, assuming the 30% cut Facebook gets, it could be turning over almost £1 and a half billion each year, on credits alone!

With over 400 games and apps where users can go and spend their money, Facebook are sure to be gaining a lot of cash via their credit scheme!

Facebook has recently been valued at a figure of somewhere around £30 billion ($50 billion) but in the future, who knows how high this figure could climb!

How does Twitter make money?

Twitter has no ads, so how does it make it’s money? Twitter is a microblogging platform which many users use from their mobile phones. Twitter charges users who update their feed via mobile, and it generates an awful lot of money through this.


Twitter's Logo

Despite it costing mere pence per transaction, often users will update their feed mutiple times each day. Millions of users posting millions of updates, many from mobile devices, every day is why Twitter is now valued at almost £5 billion.

Twitter is still a multibillion pound firm in the making, as I am sure it has may more money making schemes and pans up it’s sleeve ready to launch in the near future.

Other sites

How do Foursquare make their money? Well a lot of it comes from their recent deal with American Express, in which I believe it is making around the same amount as Facebook per transaction, although it doesn’t have the same sized member base that Facebook has.

Many other sites like Flickr and Bebo currently don’t appear to be making any money, as their founders set out with a goal of improving the web, not making money. However in years to come no doubt these sites too will become as successful and profitable as Facebook and Twitter, that is of course if we don’t all just switch to using the two giants: Facebook and Twitter!