There was an article on TechCrunch regarding Facebook growing much faster than their current investments. According to the article, estimated costs include $1 million a month on electricity, $500,000 in bandwidth, then there is their equipment costs and payroll for it’s employees. These numbers don’t really surprise me all that much. It seems about right and maybe even a little lower for the bandwidth number than I would expect. I talk to clients and entreprenuers a lot and the big trend in the industry is user generated content focused on media (images, audio, video, etc). People want to create sites like Facebook or YouTube competitors and have no idea how much monthly costs are to run an infrastructure like that. People just figure they’ll hire someone to build the site and throw it on a shared server somewhere and make a ton of money. The people at Facebook I would assume know all this and the clients I work with are on a much smaller scale, but let’s say you have 1% of Facebook’s user base the sites bandwidth costs are still quite a lot.
It’s hard to monetize a system like that and I’ve read articles in the past where MySpace has had similar issues. I haven’t really been too impressed with the direction MySpace has gone in order to generate more revenue. It’s always really been put anything and everything on your page and see what happens. I’ve never really liked going to friends profiles and have 10 random videos load at once. It’s just not a great user experience for me. Because of that I left MySpace to join Facebook.
So how is Facebook going to generate revenue in order to keep up with its rising costs? In the comments of the TechCrunch article, people were suggesting charging a yearly fee for users. Some said they would pay others thought that people wouldn’t pay for something they want for free. I think I’m one of those type of users. I’ve joined quite a few social networks and the only one I’ve paid for is Flickr and that’s debateable on whether that is a network or not. I paid because I’m interested in photo backup and not for the social aspects of the site. I’ll probably also pay for larger space on Dropbox for the same reason. For real social sites, Pownce offers a free and pro account setup, but I haven’t really felt like I should pay for the pro account. It might be that I don’t have as many friends on Pownce so that might make a difference. I think if Facebook did a similar scheme as Pownce that might work out for them. I’m not sure how well it’s working for others using that model. I still think they need to have a tier system instead of an all user paid system.
I think if they did charge I’d search for another alternative. So I’m wondering for others out there, would you pay to use Facebook?
I went to login to my Brightkite account and saw that they allow login via Facebook Connect. It’s nice to see that more and more sites are starting to adopt the process.
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