Congratulations to Mark Zuckerberg and Facebook on their upcoming IPO. This is a big step for the company and their growth. I’ve been a Facebook user since 2005 when it was only open to post secondary students, and was seen by many as “that other site like MySpace”. Since then Facebook has become a household name. Even my grandmother knows what Facebook is – but a lot of people don’t really understand (or haven’t stopped to think about) how Facebook really makes their money.
Facebook’s product is you. Using the information and data you put into their system, Facebook sells that data to third parties who want to be able to target you. More so than any other online ad network, Facebook knows you personally…your age, hometown, relationship status, alma mater, family members, level of education, brands you like, and much more. Being able to target users with these specific demographics is very powerful for marketers. Unlike Google’s AdSense network, which is based around targeting users based on keywords and search queries, Facebook can target users just based on who they are and what the system knows about them personally.
There are a lot of social networks competing for social network market share. Twitter and Google+ are the best known, but Path and Pinterest have been gaining a lot of traction as of late. Granted, almost no other social network is as well-funded as Facebook – Google+ has the full Google empire behind it, and Google has made it known publicly that they are focusing on their new social strategy, which means that Google+ could be the network to really give Facebook a run for its money. With Facebook’s stock predicted to smash records when it goes on sale, Facebook needs to find a way to guarantee its users stay on the platform in the long-term and don’t jump ship to a competitor. If there were to be a mass exodus of users from Facebook to a competing platform (like what happened when users exited MySpace for Facebook in the mid 2000’s), Facebook’s value would plummet.
This got me thinking…I know it’s a crazy idea, but what if Facebook financially rewarded their users for being active on the Facebook platform? I know the notion of paying your products is crazy, but bear with me on this one.
So How Would I Get Paid?
Before I go any further – I am not a lawyer, accountant, nor do I know anything about the inner workings of the stock market or tax law.
What if Facebook were to offer active users a financial incentive to ensure Facebook’s long-term success and keep people on the platform? I wouldn’t expect that Facebook gives a financial stake to every single one of their over 845 million users, but what if they made your ability to be eligible for a “part” (I’ll call them that for a lack of a better term) contingent on a minimum amount of activity on the network every month. Then over time users “parts” would go up in value as the site makes more money. Of course, the payout on these “parts” would be much smaller than the publicly traded shares, and don’t have the same privileges (a user can’t sell their “part” for instance, and wouldn’t be able to use their “part” in any sort of investment plan or for tax breaks).
To make this work, Zuckerberg and company will need to establish some minimum requirements to ensure that for users to be eligible for a “part”, they are actually using Facebook. I don’t want to speculate exactly what these minimum requirements would be, but could include a lot of different interactions from playing games, clicking ads, interacting with brands…to logging in or commenting through third party sites using a Facebook account. The idea is for Facebook to make sure that users are engaging with the platform and advertisers enough to earn their “parts”.
Each month that the user meets these minimum requirements, their “part” would remain active, and based on the fluctuation of Facebook’s value on the stock market, the value of “parts” would either stay the same, or go up or down in value. If a user doesn’t meet the minimum requirements for 3 months straight, they’d forfeit their “part” and any future earnings.
I think it would be logical for Facebook to roll out a system like a lot of affiliate programs where users could cash out their “parts” after they hit a minimum balance in their account ($25 or $50 are common). Facebook could allow users to request a cash out at any time once they hit the minimum threshold and pay the users by converting their “parts” into Facebook credits, or by sending the money via an online payment service like PayPal or Google Checkout, and maybe for a small fee Facebook could even send the user a cheque in the mail.
Giving users a chance to earn money – even if it’s a very small amount – creates incentive for users to continue to use the Facebook platform. Even if some users were to jump to another service, I imagine that many would cross-post and still keep at least one foot inside the walled garden of Facebook to ensure the ecosystem remains healthy and prosperous so that they can continue to profit from their “parts”.
Would this just cause more spam and low quality content on Facebook as people just try to meet the minimum requirements to get their “part” each month, or would it encourage quality conversation? What do you think, would this type of system work?