Should Facebook Share Its Riches?

In case you didn’t know, Facebook announced earlier this month that it will debut its stock publicly this year in an effort to raise $5 billion dollar and make many of those who already own private shares many times richer. While the few current shareholders will likely make money out of this social media success, the companies, the new media artists and the individuals that post, browse and stalk on Facebook get zero. Don’t they deserve to tap into the potential riches?

In an interview with NPR’s “All Things Considered,” theorist, entrepreneur and author Jaron Lanier believes that Facebook’s potential to make more money by going public should be extended to the everyday people who use the social media network. He argues that since the user produces the content for Facebook to make its money, it would be in the company’s “self-interest to find a way to increase the wealth of its users.”

So how much does Facebook make out of advertising revenue? According to its IPO filing, in 2011, the company earned nearly $3.2 billion in advertising revenue. That’s about $3.79 per user if you consider the 845 million. While the money per user ratio may be small, it’s not surprising why theorists like Lanier (and a good number of people) would want to cash in on Facebook success without paying down for stocks when it debuts later this year.

In some instances, Lanier’s points could be justified—the more traffic a brand attracts through its posts that Facebook uses to collect information for advertising purposes, the more monetary incentive the company should give that brand to keep it going. Then again, those who use Facebook are joining for free, therefore others can chime in and say little monetary incentive is justified.

Although pundits like Lanier want Facebook to share the potential wealth from its soon-to-be-issued IPO, others like Georgetown University professor Sandeep Dahiya think that paying for posts isn’t good business for Facebook. He said to NPR,

“I do not think Facebook users create value for a broad audience. It is like a telephone company paying its subscribers for talking on the phone.”

In addition such an idea has not been implemented before.

It would be interesting to see if Facebook takes Lanier’s ideas seriously, but chances are that sharing the wealth with non-stock holders is unlikely to happen. However, we can all imagine that it would be nice to pocket a little bit from posting stuff constantly.

Comments are closed.