Did Facebook just miss a huge ($3 Million+) revenue opportunity?

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by Scott Hoffman on June 13, 2009

As reported over at Mashable by Ben Parr, Facebook registered 3,000,000 vanity URL’s overnight. For those of you who are unaware, as of midnight on June 12th users could register more personal (vanity) URLs for profile pages. For instance I added www.facebook.com/shoffman along with my old alpha numeric direct access to my profile page http://www.facebook.com/people/Scott-Hoffman/700410023 last night.

If Facebook used their new micro payment payment processing platform, as reported by the Huffington Post and priced the vanity URLs (reasonably) say at $.99 per URL, Facebook could have made almost $3,000,000 overnight.

Did Facebook make a mistake?

I want to hear you thoughts. Would you have paid? More than$.99 or less? Is there implications that I am not aware of?

If you haven’t registered your own personal URL it may still be available, click here to check out your availability. For now it is still free.

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  • http://www.flecksoflife.com Peter Fleckenstein

    Scott,

    As usual, it didn't take long for your perceptiveness to emerge. Yes, Facebook, missed a huge revenue opportunity. Let me expand upon it even further and see if this makes sense.

    What if Facebook used their micro-payment platform to charge consumers .99 PER MONTH on autopay? I think people would have had no problem with that. Then we're looking at a $36 million dollar missed opportunity with, IMHO, almost no drop off.

    Let's take a look at businesses. As a business would I pay $5 bucks a month for my vanity address which Facebook could verify as authentic? Absolutely. Just how many tens of millions of dollars did Facebook pass up? We'll never know the true number of that opportunity. It passed as of last night.

    I've been thinking about revenue models a lot over the past couple of months and looking at the current landscape of companies the biggest barrier they have is the fact that Facebook and a number of other web companies never started with a business model. It makes it that much harder to actually implement a revenue model when you have to back into one.

    Finally, when you have to back into one, then the roll out of that model leaves you wide open to lost revenue as you so correctly pointed.

    Pete

  • http://www.facebook.com/people/David-Berkowitz/8117934 David Berkowitz

    Facebook here is giving people something they expect on any other service – MySpace, Google, LinkedIn, etc. Creating a barrier to entry would have stood in the face of the democratization of social media. That customized names were needed at all was a design flaw. That they made it a PR coup was brilliant. That they left revenue on the table was a smart business decision.

    As an aside, it wouldn't have been anywhere near $3 million. I'm sure a large number who did it enjoy the bragging rights and badge of honor, but it's not something they'd pay for.

  • http://www.cliqology.com scotthoffman

    I think your IMHO is correct, not to mention the annuity on that revenue. That is just with the personal profiles. Fan Pages with 1,000 or less followers were precluded from participating with the Vanity URLs. Imagine if corporations were able to overcome that obstacle with $$$, I think you would have seen corporation ponying up multiples to secure their URLs.

  • http://www.cliqology.com scotthoffman

    Thanks Dave, as always your perspective is huge. Do you really think it is just a “badge of honor”? Or an essential element for a some of the marketing campaigns that you and I are both involved in?

  • David Honig

    Agree with DB. I would not pay. It's free. I would suspect most people would not pay. Don't see any real value having vanity URL with FB. Although I did get mine /dhonig.

  • http://www.cliqology.com scotthoffman

    I just paid $.99 for an iPhone app, and I think that many of the people that registered last night would have done the same. Although I am getting a huge amount of Nay Sayers on this post…maybe I have it wrong, Facebook should give everything away for free.

  • http://www.marketersstudio.com/ David Berkowitz

    For marketers it's becoming more and more essential. But what fraction of the 3 million are involved in marketing? A bigger question for Facebook's model is regarding keeping branded Pages free. As much as I like free stuff for my clients and agency, I'm all for some kind of B2B revenue model. This was just one area, and one of many, where I think they were especially smart, turning a usability bug into a successful stunt.

  • http://www.facebook.com/people/Sally-Price-Hoffman/699238754 Sally Price Hoffman

    i would have sent them $1…. i give that to the guy that gets my car at the lot…. after paying $35 for two hours….

  • http://www.flecksoflife.com Peter Fleckenstein

    Dave,

    Even though we've never met or conversed your great rep precedes you. I agree the PR was great. I do have to take issue with you on the badge of honor.

    A great example is vanity license plates. Millions of dollars are being generated every year because of bragging rights, we can see these badges of honor everywhere. Vanity names for personal r not so much for marketing, rather they're about someone putting a stake in the ground saying – I'm special. I think people would pay for that.

    Now as for the B2B revenue model. Spot on.

  • http://www.ryze.com/go/lisabarr Lisa Jo Barr

    maybe its simply that “money isn't everything” and that they will get their “payment” through it's users enjoyment. This is a good lesson for us.

  • http://www.cliqology.com scotthoffman

    Thanks for your comments Lisa, I always believe that in your personal life “money ain't everything” but for a corporation…”money is everything” it is the fiduciary responsibility of the company to pay the shareholder (or stakeholders) the value of their investment.

  • http://www.twittad.com/ James Eliason

    Hey Scott! I think you are right, there was a opportunity to make at minimal $3,000,000. On a much larger scale Facebook is probably behind the scenes working on a more powerful revenue generation model with vanity URL's and their payment system. I can just see the day where millions of users interact with a Best Buy application, and at the end they are given the option to purchase through the app (discount given!) and pay via Facebook dollars. That is pretty powerful. Companies like Paypal will probably want to think of ways to combat the on-coming frieght train of purchases on Facebook.

    I would have paid $1 for http://www.facebook.com/jameseliason and as you know, I would glady pay for http://www.twitter.com/jameseliason especially if I could advertise on Twitter :)

  • http://www.porres.com/ Eric Porres

    Given that they haven't raised the floor yet on the ability to buy highly targeted social ads, I think Facebook is missing a multi-Bn dollar opportunity by not charging users $0.99/month for use (and yes, I would paid $0.99 for the vanity URL…Apple “app” like = rounding error). FB has such ubiquity now and no other social service comes close to matching its ease of use. The “switching cost” with respect to time involved to port friends, apps, and preferences over to another social service is way too high with respect to time-value to do so. Once your significant other gets on Facebook, you cease to care that much about other social services.

    Someone made an interesting comment below about a Facebook payment service; could we seen Facebook vanity URLs replace OpenID as a payment / verification of identity solution? Maybe…on the Internet, you're no longer a dog.

  • http://www.cliqology.com scotthoffman

    Eric you are on to something with the last comment – “could we seen Facebook vanity URLs replace OpenID as a payment / verification of identity solution?” wow that blew my mind…

  • http://robertsandie.com sandieman

    Not sure how much ill-will it would have caused. Also what is $3M anyways to a company making most it's revenue off of ad revenue?

    And could only imagine the amount of revenue taken off the top from $.99 transactions.

  • http://www.cliqology.com scotthoffman

    Thanks for the comments, and I am a big fan of Viddler. I used the service on http://www.Lotame.com

    While I was at lunch today, I had an epiphany. Facebook should have charged for the URLs for several reasons:

    Revenue: even if it doesn't feel like a lot of revenue you have to start somewhere (and they now have 6,000,000 URLs registered as reported by Silicon Alley Insider) They did just take $200 Million in Venture Capital…I am not certain about the transactional cost, but Apple has figured it out with the $.99 app.

    Premium Service: Facebook has stated (and restated) that they want to find premium services to charge for…this could have been a first try. And like so many things in life, once you give something away for free, it is very hard to charge for that item or service in the future.

    Testing: They could have proved out their new Micro-Payment platform, and set the stage for 1st and 3rd party payments in a secure way.

    When I started this debate, I was fairly neutral, but now I am leaning toward the position that they should have tested applying a small annual fee for this service.

  • http://www.cliqology.com scotthoffman

    Eric you are on to something with the last comment – “could we seen Facebook vanity URLs replace OpenID as a payment / verification of identity solution?” wow that blew my mind…

  • http://robertsandie.com sandieman

    Not sure how much ill-will it would have caused. Also what is $3M anyways to a company making most it's revenue off of ad revenue?

    And could only imagine the amount of revenue taken off the top from $.99 transactions.

  • http://www.cliqology.com scotthoffman

    Thanks for the comments, and I am a big fan of Viddler. I used the service on http://www.Lotame.com

    While I was at lunch today, I had an epiphany. Facebook should have charged for the URLs for several reasons:

    Revenue: even if it doesn't feel like a lot of revenue you have to start somewhere (and they now have 6,000,000 URLs registered as reported by Silicon Alley Insider) They did just take $200 Million in Venture Capital…I am not certain about the transactional cost, but Apple has figured it out with the $.99 app.

    Premium Service: Facebook has stated (and restated) that they want to find premium services to charge for…this could have been a first try. And like so many things in life, once you give something away for free, it is very hard to charge for that item or service in the future.

    Testing: They could have proved out their new Micro-Payment platform, and set the stage for 1st and 3rd party payments in a secure way.

    When I started this debate, I was fairly neutral, but now I am leaning toward the position that they should have tested applying a small annual fee for this service.

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