Does Facebook Want to Profit From Your Inbox?
While analysts and investors who have been concerned over how Facebook (NASDAQ:FB) would monetize its network will have to wait for its mobile display ad network to be launched officially, the company has begun experimenting with another money-making strategy.
Facebook announced on Thursday that it would be testing a feature that charges users one dollar to send messages to people that are not in their network, as part of the its efforts to update its messaging system. LinkedIn’s (NYSE:LNKD) InMail is a similar service.
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Why did Facebook implement this change?
As the social network stated on its Newsroom page, the change is “a small experiment to test the usefulness of economic signals.”
“This test is designed to address situations where neither social nor algorithmic signals are sufficient,” Facebook added. “For example, if you want to send a message to someone you heard speak at an event but are not friends with, or if you want to message someone about a job opportunity, you can use this feature to reach their Inbox.”
The paid messages will be capped at one per week, but users will not be able to opt out of the service.
CHEAT SHEET Analysis: Will this legislation be a positive catalyst for Facebook’s stock?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. While the update may seem like a ploy to give advertisers easier access to consumers, Facebook has said that marketers and brands will not be allowed to use the service. But that does not mean that the company is not trying to generate revenue from an alternative source. The message charge could be an effective way to limit spamming, but it could also set a precedent for Facebook to sell access to users’ inboxes.
However as AllThingsD contributor Peter Kafka noted, the paid-message service in its current form would not be a strong revenue generator. “If Coke wants to get my attention on the social network, Facebook has an ever-expanding series of ad options it wants to sell them,” he wrote.