Charles Hugh Smith Of Two Minds, November 1, 2012
How many people would click “despise FB” and “abandon FB” if those were offered alongside the new “promote for a fee” button?
Just in case you haven't noticed, your Facebook activity may not be reaching the FB audience you enjoyed a few months ago.
If you want to reach your previous audience, you need to click that little “promote” button and pay the fee.
My friend Richard Metzger of Dangerous Minds alerted me to a remarkable coincidence: shortly after Facebook's May launch of the “promote” option for business accounts, business users noticed an 85% reduction in their FB reach. Facebook: I Wany My Friends Back.
Like many other “stealth” revenue campaigns in social media, the “promote” revenue stream was first introduced as a marketing tool for enterprises and groups: Facebook's tempting ‘Promote' button for business (CNET).
It was presented as a way to expand one's reach on FB, to friends of friends, etc. What was not highlighted was the “stealth” reduction in reach to “encourage” use of the “promote” option: Broken on Purpose: Why Getting It Wrong Pays More Than Getting It Right:
Many of us managing Facebook fan pages have noticed something strange over the last year: how our reach has gotten increasingly ineffective.How the messages we post seem to get fewer clicks, how each message is seen by only a fraction of our total “fans.”It’s no conspiracy. Facebook acknowledged it as recently as last week: messages now reach, on average, just 15 percent of an account’s fans. In a wonderful coincidence, Facebook has rolled out a solution for this problem: Pay them for better access.
As their advertising head, Gokul Rajaram, explained, if you want to speak to the other 80 to 85 percent of people who signed up to hear from you, “sponsoring posts is important.”
In other words, through “Sponsored Stories,” brands, agencies and artists are now charged to reach their own fans–the whole reason for having a page–because those pages have suddenly stopped working.
Facebook is broken, on purpose, in order to extract more money from users.
Does anyone else smell the stench of burning opium in the air? Step right this way, ladies and gentlemen, for free access to exciting new marketing thrills–unlimited reach to a global audience!
Next, encourage them to depend more and more on your product for their marketing and thus financial survival.
Excellent! They're now addicted, and without really noticing the rise of their dependence.
Now reduce their reach. We're sorry to hear you're experiencing withdrawal symptoms; but unfortunately we've run out of the “free” good stuff. We do, however, have a substitute that will fill your need, but there is a modest fee, of course.
Yes, it's the addict-pusher model.
Since few addicts complained or refused the new paid substitute, Facebook is testing the addiction level of personal-account FB users: Facebook’s ‘promote’ button rolls out beyond pages to some personal accounts (9/18/12, Inside Facebook).
The “promote” service is being, well, promoted, as a way to spread the word about your garage sale this weekend, for instance. With the promote button, all the friends of your friends in Ningbo, China, will helpfully find out about your garage sale in Phoenix AZ. Just how helpful is that?
And all for only $7, if you have a small audience. The price scales up along with your audience. Richard calculated that promoting all of his site's daily posts would require $672,000 annually. The price of that once-free marketing is now rather stiff.
I have always been skeptical of the entire social media phenomenon. I recounted some of my experiences in How I Friended a Dead Guy and Became a Social Media Zombie (February 22, 2011).
I have also opined that Facebook Is a Utility Which Can't Charge Its Users (July 22, 2010) for the basic reason that Facebook has the same customer satisfaction ratings as hated cable providers and the I.R.S. Users view Facebook as a free utility, and tolerate it because it's free.
I have also commented on the underlying dynamics of social media:
800 Million Channels of Me (February 21, 2011)
Are You Loving Your Servitude Yet? (July 25, 2012)
The Last Refuge of Wall Street: Marketing To Increasingly Insolvent Consumers (December 12, 2011)
What's happening is that Facebook is realizing the advert model of revenue is fatally limited. Adverts just don't generate billions of dollars in profit, even with 1 billion users. So it was inevitable that those using the FB platform to generate revenue in some fashion would be squeezed to “share” their revenues with FB.
Previously “free” distribution would no longer be free, and users would face a stark choice: either start paying for distribution or lose 85% of their audience.
The response depends on the users' level of dependence. Those who are well and truly hooked on the FB platform can either make ineffectual protests and end up paying to reach their former audience, or they can quit: cold turkey, baby.
The alternative FB hopes they don't choose is to do nothing, accept their reduced reach and audience, and move their social media energy elsewhere. Most personal account holders don't really care about their reach; as long as their inner circle still get their posts and photos, they're happy.
So FB will eventually have to decide if it can profit with a customer base in which 99% don't pay anything. They could try squeezing users in more “stealth” ways, for example, making the first 10 friends and first 10 posts a week free, and charging for useage above a low threshold. If it follows this revenue model, it will follow MySpace down the path to hosting tens of millions of zombie users.
Or FB (and Wall Street) could accept that it is fundamentally a low-profit utility and always will be. It could charge individuals $1 a month–a utility fee, in effect– $10 a month for groups and small enterprises and $100/month for corporations and large organizations. This model would recognize FB is basically offering server space. If users aren't getting $1 a month in value, then why be users at all?
How addicted are we? It's a good question of all social media, especially the (currently) “free” stuff. How many people would click “abandon FB” if that were offered alongside the new “promote” button?
NEW VIDEO: CHS and Gordon Long discuss The Constitution in Peril: the erosion of civil liberties and the emergence of a new Police State (25 minutes, 25 slides)