There seems to be an obsession over monetization of online properties through advertising. The preferred formula is build a large audience, sell targeted advertising, get rich. Google perfected the model better than anyone but it's not easy to achieve and is often the wrong choice.
We come across many bright entrepreneurs that are easily seduced by ad supported business models when sometimes alternative types of monetization can be more effective.
Case in point - Facebook.
At its core Facebook is a utility used by members for communication, community, collaboration and expression. Facebook is providing a valuable service to consumers and deservedly should be compensated for its efforts.
If i was an investor in Facebook I would be strongly pushing a subscription model. Facebook has 175 million users worldwide and at $1 per user per month they could generate $2.1 billion in annual revenues. Even if half of the members paid FB would generate over $1 billion sales on a recurring basis. Of course not every user is active and a percentage will refuse to pay but I would argue that any user not willing to pay $1 per month isn't likely a great target for advertisers anyway. The average Facebook user is now ovr 25 years old and $1 would mean buying one less cup of coffee or can of Coke each month to cover the cost.
The beauty of adopting a low-cost subscription model is that it wouldn't rule out FB's advertising opportunities at all. Cable tv has figured out how to make both models co-exist successfully.
Facebook management just needs to have more confidence in the power of their platform and the value they provide to members.
Just one man's point of view but I would be interested in other views on this topic.