Commentary

Study: Facebook Users Paid To Shelve Service Get Their Money's Worth

If only for a year, would you deactivate your Facebook app for $100? Maybe, $1,000? More?

On average, a diverse sample of Facebook users were only willing to ditch their social media accounts (for a year) for more than $1,000.

That’s according to a newly p ublished study in PLOS One, the peer-reviewed journal published by the Public Library of Science.

The authors of the study began as two separate teams, which independently designed experimental auctions to estimate the economic value of Facebook.

The resulting auctions -- which were very real and paid participants real currency -- ultimately found that people required somewhere between $1,139 and $2,076 to shelve their Facebook service for a year.

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The study’s authors interpret the data to mean that Facebook’s users are still getting a pretty good deal. 

Why? Well, Facebook reached a market capitalization of $542 billion this past May, at which point the network boasted about 2.2 billion active users. That means that each user was worth roughly $250 to Facebook and its investors, in March.

At the time, every cent less than $250 (or whatever each user was actually worth to Facebook) represented what economists call “consumer surplus” -- or the difference between the most a consumer is willing to pay for a service and the price she or he actually pays to use it.

So, if a sample participant was willing to give up Facebook for no less than $1,000 -- and users are actually worth $250 to the company -- then his or her “net benefit” from being able to access the app would be equal $750.

“This reinforces the idea that the vast majority of benefits of new inventions [namely, digital services like Facebook] go not to the inventors but to the users,” the authors write.

Of course, all numbers that enter into the authors’ equations change every minute, let alone every year. One might argue that what a consumer is willing to pay for a service doesn’t equal its true worth. 

Still, the data does suggest that Facebook’s users believe the service to be worth more than its market value.

This finding challenges Facebook critics, who suggest the company exploits its community of users -- surreptitiously trading their social connections, personal data and virtual activity for ad dollars.

Be it a Faustian bargain or not, might Facebook users actually be getting their money’s worth?

2 comments about "Study: Facebook Users Paid To Shelve Service Get Their Money's Worth".
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  1. Henry Blaufox from Dragon360, January 3, 2019 at 9:42 a.m.

    I am one who has commented in these columns and other publications that the risk for FB is no user really needs it, and abandonment could follow. Thie findings here indicate that risk is very limited.

  2. Paula Lynn from Who Else Unlimited, January 3, 2019 at 1:48 p.m.

    How much would people PAY to use it ?

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