There’s a lot of ways to determine the value of something like Facebook. There’s the $13.7 billion in gross revenue the company brought in in the third quarter of 2018, up by 33 percent compared to 2017. There’s also the price of Facebook stock, which has plunged (along with many other major tech stocks) by over 40 percent from a mid-July peak. You could try to calculate Facebook’s value to society — whether it’s been a net boon or encumbrance in connecting 2.2. billion people across the world on one platform run by a little over 100,000 people. After two years of incredibly bad press, with everything from the Cambridge Analytica scandal to a genocide in Myanmar facilitated via Facebook, many are increasingly inclined to say Facebook hasn’t been all that great for the world we live in.
But what is Facebook worth to its users? The service, is, of course, free to use, barring a few lethargic attempts by the company to monetize its user base through things like paying for stickers to use in Facebook Messenger. But flip the question around: What would users need to be paid to not use the service?
That’s what four researchers attempted to quantify in a recent study. The results, published in PLOS One, show that the average Facebook user, contra the company’s bad public image, would demand a fair amount of cash to actually stop using Facebook.
The researchers used “second-price” auctions, in which participants place a bid — in this case, how much they would need to be paid to not use Facebook for a fixed amount of time — and winners are paid out the second-highest bid. (Second-price auctions are meant to prevent some of the tactical bidding that occurs in traditional auctions — there’s little point in bidding $500,000 to deactivate your Facebook to win, because you know you won’t actually get $500,000, but whatever the second-place bid was.) These auctions, it should be noted, weren’t hypothetical thought experiments — participants who won had to show they actually deactivated their Facebook account for an agreed-upon period, and then were paid actual money by researchers.
What the researchers found was that, on average, participants would need more than $1,000 to deactivate Facebook for a full year. College students valued Facebook even more than the average participant, requiring over $2,000 to forgo the service. Participants enlisted via Amazon’s Mechanical Turk were nearly as expensive, requiring over $1,900 to leave the service for a year.
It should be noted you can’t reverse these effects — Facebook couldn’t start charging $84 a month, because users would quickly flee the service for other free options. But it does show that for study participants, there’s enough value in keeping Facebook that they’d demand a significant sum of money to stay away. In the steady drumbeat of scandals wracking Facebook, it’s easy to forget that for many, the social network provides utility, whether it’s an easy way to keep in touch with a large group of people, for work, or simply a way to kill time when bored.
Of course, a more cynical observer might point out that Facebook’s actual customers aren’t the people who post photos and share posts; they’re the advertisers who use Facebook’s sophisticated automated ad-buying suite and its vast demographic data to target users. And as Facebook’s surging advertising revenue shows, those advertisers seem even less inclined than the site’s users to give it up.
