How ad-free subscriptions could save Facebook

At the core of Facebook’s “well-being” problem is that its business is directly coupled with total time spent on its apps. The more hours you pass on the social network, the more ads you see and click, the more money it earns. That puts its plan to make using Facebook healthier at odds with its finances, restricting how far it’s willing to go to protect us from the harms of over use.

[Update 4/10/18: The potential for ad-free subscription access to Facebook is especially relevant given recent scrutiny of Facebook’s data collection practices in the wake of the Cambridge Analytica scandal. When asked by CNBC if Facebook could let users opt-out of their data being usedt target them with ads, Facebook COO Sheryl Sandberg said “We don’t have an opt-out at the highest level. That would be a paid product.”

The Senate asked Facebook CEO Mark Zuckerberg during his testimony in front of the joint commerce and judiciary committee about whether Facebook has considered letting users pay to opt out of seeing ads. But Zuckerberg merely explained that Facebook does not “offer an option today for people to pay to not show ads”. He followed up, saying “there will always be a version of Facebook that is free”, though that does not prohibit it from offering a paid subscription option too.]

Why Facebook Sticks With Ads

The advertising-supported model comes with some big benefits, though. Zuckerberg has repeatedly said that “We will always keep Facebook a free service for everyone.” Ads lets Facebook remain free for those who don’t want to pay, and more importantly, for those around the world who couldn’t afford to pay.

Ads pay for Facebook to keep the lights on, research and develop new technologies, and profit handsomely in a way that attracts top talent and further investment. More affluent users with more buying power in markets like the US, UK, and Canada command higher ad prices, effectively subsidizing the social network for those in developing nations where ad rates are lower.

The issue is that the ad model rewards Facebook for maximizing how long we spend using it, often through passive content consumption via endless News Feed scrolling. Yet studies show that it’s this kind of zombie browsing that hurts us. Spending just 10 minutes passively consuming Facebook can make us feel worse.

We fall into envy spirals. The study’s author write “Continually exposing oneself to positive information about others should elicit envy, an emotion linked to lower well-being,” the authors wrote. A 2011 study concluded “people may think they are more alone in their emotional difficulties than they really are” after browsing everyone’s manicured life highlights on Facebook.

This research has clearly had an impact on Zuckerberg, who explicitly announced on the Q3 2017 earnings call that “Protecting our community is more important than maximizing our profits . . . Time spent is not a goal by itself. We want the time people spend on Facebook to encourage meaningful social interactions . . . when people are spending so much time passively consuming public content that it starts taking away from the time people are connecting with each other, that’s not good.”

To that end, Zuckerberg has announced a slew of changes to Facebook, though they’ve been relatively minor. Facebook is showing fewer news articles, public posts, and viral videos while prioritizing what leads people to comment and interact with each other. The result was a 50 million hours per day reduction in how long people spend on Facebook. That might sound big, but it’s actually only a 5 percent decrease.

Making truly forceful changes could have a much more significant impact on time spent, and potentially ad revenue. That creates resistance to confronting people with how long they spend on its apps, reducing spammy reengagement notifications, or creating more powerful ‘do not disturb’ options.

And so, we have a company that wants to make us feel better but earns money off making us feel worse, and that promises to stay free despite the negative incentives inherent in ad-based business models.

That’s why I think Facebook should introduce an ad-free subscription option in addition to its existing ad-supported free service.

Combining Profit With Data Privacy

By charging a monthly fee to remove ads, Facebook coud decouple its business from time spent, allowing it to keep revenue stable even while making changes that enhance well-being while decreasing how long we spend on its apps. It’s not a totally foreign idea for Facebook, as WhatsApp used to charge a $1 per year subscription in some countries.

For users who can afford the fee and want to pay, they’ll get a more purposeful experience on Facebook where they only see what they want in the News Feed. This would allow people to reclaim the time they see viewing ads, and spend it having meaningful interactions with their friends and communities — thereby fulfilling Facebook’s mission.

For users who can’t afford the fee or don’t want to pay, their Facebook experience remains largely the same. But as the percentage of total users monetized by ads decreases, Facebook gains more flexibility in how it builds its apps to be more respectful of our mental health.

Facebook could charge a similar rate to what it currently earns from users via ads (and the tiny amount it still gets from game payments). In the U.S., Facebook earned $84.14 per user, while earning an average worldwide of $20.21. Charging $1.65 per month, or even $7 per month to remove ads from Facebook could feel very reasonable to some users. The rate would increase yearly to stay in-line with ad revenue or follow its current growth trajectory.

Facebook could charge a higher premium and offer additional features, though that would open it up to criticism of making non-subscribers second-class citizens with less functionality. Syncing subscription prices without bonus options to revenue per non-subscriber would let Facebook continue to concentrate on developing features for everyone.

Facebook might only get 4 percent of people to pay, but that would still be 88 million people. And if it did add bonus features that significantly improved the service for hardcore users without making non-subscribers feel betrayed or slighted, that number could grow over time. I imagine advanced manual News Feed curation controls and filters could be a popular offering.

One risk is that Facebook benefits from having a giant unified user base all accessible to advertisers who crave scale. The ability to hit a huge percentage of a demographic with promotions in a short time, such as for a new movie release, attracts advertisers to Facebook. That appeal could decrease if a portion of users subscribe and never see ads.

But Zuckerberg has already committed to some short-term loss of profits in his quest to promote well-being. In the long-run, letting users pay if they want could keep them loyal while letting Facebook configure its News Feed algorithm for what enriches everyone. Building safeguards against overuse today could save Facebook from a stronger backlash in the future. Facebook should always be free, but letting some people pay could give Facebook the freedom to make itself a healthier part of our lives.

[Update 4/10/18: This article was originally published on February 17th 2018, but that link doesn’t work for all readers after TechCrunch’s redesign. We’ve republished it here.]