How Facebook Could Generate $1B in Annual Revenue From Users
It’s no secret that Facebook’s IPO back in May and the subsequent aftermath that followed has been a disaster. After an initial stock price of roughly $38/share, Facebook barely trades at half that value at the time of this article. Furthermore, the problems that have followed the IPO (possible SEC violations, insider trading allegations, 40 lawsuits filed, etc.) have been what most would consider to be the exact opposite of what Facebook hoped would happen.
Combine this with the fact that Facebook continues to alienate users by imposing unpopular features such as the timeline, trying to milk cash out of brands and businesses with their ‘Sponsored Posts’ nonsense, and perpetually making people leery of even logging into their Facebook accounts at all with their cryptic and ever-changing privacy conundrums and it’s safe to say that Facebook has made a lot of wrong moves, moves that could have rendered a smaller entity irrelevant. But there is still hope for the Social Network.
As I pointed out right after their IPO, Facebook now HAS to make money. It’s no longer optional. Currently, Facebook is making a play to try to extract revenue from those they perceive to have the deepest pockets. This is a mistake that is turning off companies and encouraging influential people like Mark Cuban to publicly discuss moving their Social Media activities to other platforms. Luckily for them, there’s actually a great way for them to make some money and more importantly do so without pissing anyone off.
Facebook could generate billions of dollars in revenue annually by becoming the world’s largest dating site. Same may argue that it unofficially already is anyway.
This could be executed in a variety of ways, but a paid option that unlocks matchmaking and profile features not otherwise available would be a decent approach. It could be set up so that you could only see who had a ”dating’ page if you yourself have one. If you don’t have a ‘dating’ page, you still get the regular Facebook features, and you only see other users’ regular pages regardless of whether they have a paid account or not. This of course, is just one idea.
Facebook has by some accounts over one billion registered users. For simplicity’s sake, let’s say discounting the duplicate and fake accounts, and then removing the accounts registered to individuals under the age of 18 leaves us with 500,000,000 registered users eligible to purchase the dating service.
There are many dating sites on the Web already, and they range in price from free to as high as $60/month (eharmony.com). According to this article on RealSimple.com, Match.com has the largest userbase with 2.75 million people, with memberships fees coming in at $30/month. A price of $20/month for a Facebook dating account is probably a fair price.
At a very reasonable conversion rate of 1%, that would be 5,000,000 paid accounts spending $20/month. This is $100,000,000 per month in gross revenue, or $1.2B annually – and would be a way to generate revenue in an under-the-radar sort of way without irritating the masses.
What do you think? Share your thoughts by leaving a comment below.