Would You Pay for Facebook?

As to be expected, the spectacle of Facebook continues, with its IPO expected to launch this Friday on the NASDAQ at roughly $34-$38 per share. According to Bloomberg, this puts a value on Facebook at $104.2 billion. Some investors have wondered if Facebook is worth the price, but to build demand for their IPO, Facebook convinced investors that they could be profitable.

One way Facebook is looking at generating revenue is through charging for posts. In spite of what you may think, currently about 12% of your friends see your posts. This is because of Facebook’s algorithm based on “presumed relevancy,” which measures the affinity between you and your friends from comments and responses to various posts.

In Facebook’s new “Highlight” feature, you would pay a fee to have your post highlighted and made visible to more people. This could be important for a realtor who has a home to sell or a professor who wants to promote a book he just authored. A student who just landed an internship and needs to sublet her apartment for a few months could also benefit from this add-on because more of her friends would see the announcement.

However, it is unclear and too early to tell if this “Facebook extra” would be worth the price, which is currently being tested in New Zealand at around a $2 price point.  Also, part of the attraction with Facebook is the way you are able to connect with people for free. If posts start becoming advertisements that are not really important, that could make the Facebook experience more like stale bread than the pleasant aroma of freshly baked chocolate chip cookies you happily share with a friend.