After the whole Cambridge Analytica data breach happened last month, there's been a big spotlight on Facebook, and its CEO Mark Zuckerberg even testified before Congress last week. Zuckerberg was asked about getting rid of ads and potentially charging users to use the platform. Zuckerberg stated that it might be something they do in the future – marking the first time a Facebook executive has ever said the company would be open to charging for its services. Now, according to analysis from TechCrunch, Facebook would need to charge between $11 and $14 per month, to offset the revenue lost from removing ads.
Currently, Facebook's revenue is solely based on ads – and it is the second largest advertiser on the web, behind Google. The estimated revenue that each user brings into Facebook is around $11 to $14, depending on how much time the user spends on the platform. But charging users is going to become a double-edged sword for Facebook. Simply, because those that are willing to pay for the service are also the ones that would spend the most time on the platform, and the ones that advertisers would want to target. Thus costing Facebook even more cash. So it's not as easy as simply charging for an ad-free Facebook experience, if users don't want Facebook collecting so much data about them.
Facebook isn't the only company that collects a ton of data about its customers, Google and many other companies do as well. This is what helps them better target ads to the user, making it more likely that they would be interested in the ad and making its advertisers happy. That's also what keeps big sites running, like Twitter, Facebook, Google, Snapchat, etc. without charging its users. And this whole Cambridge Analytica thing with Facebook could drastically change the Internet – hopefully for the better. And it wouldn't be surprising to see Facebook start offering a premium tier of its service, perhaps with more features, and it could possibly be a bit higher than the $11 to $14 average mentioned in this analysis.